Another week of hard declines in most markets makes me wonder: Is this glass half full or half empty?
The past week was a complete commodity collapse, as world traders, investors and funds took money off the table in every sector. Concerns about a global banking failure is reminiscent of the 1930s Great Depression, and news commentators on CNBC, Bloomberg, Fox News, and CNN along with authors on the Internet continue to make it their mission in life to alert the public to the looming disasters and the consequences that will rob people of their wealth and the good life that we Americans have become accustomed to.
My data shows selling of pre-owned homes was forecast to be up by 1.4 percent, and the data show sales were up 7.7 percent. Some will be quick to point out that many of those homes are foreclosures. Perhaps, but those homes still are going into new ownership, and 7.7 percent is a lot. Not only that, but 29 percent of the homes sold were bought by investors with cash.
The Fed indicated recently that inflation is at 2.2 percent, and that is higher than it has reported in some time. Homes are selling, farmland prices are sky-high and companies such as Apple, Starbucks, McDonalds and Aflac are making money and have huge cash reserves. Those are not the only stocks in a positive position. Siemens and Lloyds of London have pulled cash out of European banks. Rumors had it that French banks were seeing runs on their reserves as well. Gold and silver, often said to be the safe havens in times of uncertainty, were not immune from the declines or cashing-in by investors, either. Gold dropped as much as $100 an ounce while silver fell as much as $6 an ounce. Investors were quick to move money out of the euro and into the U.S. dollar. Yes, the dollar has seen a slide, and the U.S. economy is struggling, but the U.S. still is viewed as a better or safer place in the world.
In August, 10 of the largest U.S. banks pulled 30 percent of their holdings out of European banks. To me, that has helped slow down the blow to the U.S.
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Seasonals, negative rhetoric on overseas economies and fears that China is not going to buy soybeans as rapidly this fall as it has in the past two years is helping drive the corn and soybean markets south as they were loaded a bit too long. For livestock producers, the break is helping to shore up some feed costs as hog producers would indicate. This decline in corn values greatly has changed the hog-to-corn ratio to aid hog producers. CNGOIC (a Chinese think tank) estimates that China will need to import 20 million metric tons of corn by 2020. That number could be nearly 11 million metric tons by 2015. Will China use this break to come to the U.S. for corn?
Bottom line: The masses still will be fed. Especially in times of economic hardship. It is the only way to keep peace. "The chicken in every pot," so to speak. My thought is, at the end of the day, the world will see the U.S. as not an empire in decline, but a place that saw a setback and still is safer.
My glasses are rose-colored and my glass is half full. The cattle-on-feed report was termed as bullish, and cattle futures are forecast to open 100 to 150 points higher Sept. 26. The September cattle-on-feed supply was pegged at 105.3 percent of last year and placements during August came in surprisingly at 99.2 percent of last year with marketings higher than expected at 106.5 percent of last year.
