The stock market is rallying. Commodities are on a tear. Yet the dollar is falling. Why?

There are several reasons for the drop in the dollar, but the most obvious and simple answer is that investors around the world are selling dollars and using the money to buy stocks and commodities, particularly oil and gold.

Last week India announced that it had bought 200 tons of gold from the International Monetary Fund (IMF.) At an average of say $1000.00 per ounce, the transaction amounted to about $7 trillion dollars. Chances are that India sold dollars from their sovereign fund to buy the gold.

Sometimes you can get an indication of market trend by looking at the prices of futures contracts in the forward months. Oil futures contracts trade out as far a 2017. Oil futures contracts for the year 2017 are trading a just a shade under $100 per barrel, while spot crude was trading at $77.65 per barrel (spot prices are cash prices.)

The International Energy Agency has said that last year's spike of oil prices to $147 per barrel was a contributing factor in tipping the world into recession. It damaged trade balances, reduced household income and dampened growth, putting pressure on inflation and interest rates.

Wednesday, the Fed announced that interest rates would remain at zero to 0.25% for at least the next six months.

The Fed statement read as follows: "weak conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." The only change in the Fed's policy was a tweak in the amount of corporate debt that the Fed intends to buy.

According to Emmanuel Jayet of Agricultural Commodities Research at Societe Generale in Paris, wheat prices are expected to drop 13% by the end of December. The last big drop was during 2002 when prices fell by 19%.

Stockpiles of wheat will jump 12% by next May. Investors predict a further decline due to an overabundance. On October 30, there were 6.265 put options at $4.50 per bushel, more than any other grain contract ( a put option is an option to sell.)

• US dollar December futures contract traded at 76.125, up .525 (the US dollar is based on a basket of currencies.)
• December euro is at 1.4866, down .0134
• The December S & P contract is down 10.60 at 1066.30
• December crude oil is at $78.40 per barrel, down $2.10
• December 30 year bond is at 118.10, down 23.
• December wheat is at 530.6 down 17 cents (each penny equals $50.00)
• December gold is at $1043.40 per ounce, down $13.00 (each $1.00 equals $100.00)

Like oil, sugar is an international commodity. Unlike oil, sugar is an agricultural crop dependent on the weather. This year has seen droughts in some parts of the world and wetter than normal weather in other parts of the world where sugar is grown. Both extremes affect the growth of sugar cane.

Here are some reports from various sugar-growing countries:

• India is both the largest exporter and importer of sugar. This year India will be an importer of sugar. India's inventories will fall 50% to 4.54 million tons, equal to three months consumption. Reports from farmers indicate that plants are only one foot high compared with normal growth of five feet. Rainfall was 64% below normal in the growing regions. To fill the gap, the Indian government is extending duty free imports.

What are Roubini's new predictions? This time the noted economist is future casting the price of commodities. He is looking for the global economy to move toward growth in the later part of 2009 into 2010.

When the world moves into greater production, the need for raw materials rises. Roubini, sees commodity prices moving up during this expansion stage.

Already China's $585 billion stimulus package has spurred lending and sent share prices skyrocketing. China's economic growth surged 7.9% from a year earlier and is well on the way to meeting its target of 8% growth this year. China's purchasing manager's index stood at 53.3 in July, up from 53.2 in June. A reading above 50 indicates expansion in the the economy.

Some trends are obvious enough and visible to all investors. Others are more subtle but are just as potent, and these often slip "under the radar."

Case in point: Water and energy use is trending lower, and a good example is the City of New York. Water consumption has been dropping on per capita (or per person) basis, basically, for 25 years.

Why did this happen? Berry and Rees reported that today the Agriculture Department released its report on corn plantings which forecast 87.035 million acres up from 85.982 million acres planted in 2008. More acres mean more corn and more corn means lower prices.

On June 23, the CEO of the world's largest dry bulk cargo shipping company warned that he actually sees a decline in shipping volumes. That's very bad news for the bullish global trade argument and a smack to the head of the Green Shoots Brigade. Dry bulk cargo is how the world ships coal, steel, and other raw materials. The Baltic Dry Index -- the daily average of prices paid to ship these materials -- has long been a key leading indicator of industrial production. And after a spectacular triple digit run, the Baltic Dry Index rolled over this week and headed steeply downwards.