Believe it or not we have an "oil rush" right here in the United States, in North Dakota and Montana. It is called the Bakken Formation, as reported in IBD. The area is said to contain 4.3 billion barrels of oil. Some estimates go as high as 24 billion barrels.

Today North Dakota produces 400,000 barrels per day. With upgrades in infrastructure, production could go to 600,000 to 800,000 barrels per day.

As is often the case, growth and recovery in America begins at ground level. Current upbeat news from regional food producers is signaling good news for many companies, including Deere & Company (DE). While developing industrial bases such as China and India have taken on the lion's share of mid to heavy manufacturing duties, they are also developing increased needs to feed hungry work forces. Indeed, they are also developing the capital to feed those needs.

The spin-off from this morphing consumption dynamic is a surge of growth in America's agricultural and food production sectors. Indications are that the increased demands being put upon American agricultural output is fueling an increased demand for heavy weight farm tractors and is requiring food processing facility expansions. "Sales of 100-horsepower tractors, which cost about $75,000 to $100,000 each, were up 27 percent last month over the same month last year, said Charlie O'Brien, vice president of agricultural services for The Association of Equipment Manufacturers, in an Associated Press interview.

The calculation here is that the National Bureau of Economic Research, the nation's widely-recognized arbiter concerning when recessions and expansions begin/end, will probably announce an end to the recession soon.

The NBER is careful to point out that its committee emphasizes economy-wide measures of economic activity when evaluating the economic cycle, and it argues that domestic production and employment are the primary measures of economic activity.

The retail industry got some good news today as the Commerce Department announced that retail sales rose more than expected last month.

Before today's report, analysts had predicted that we would see a 0.7% jump in retail sales last month, but the actual figures showed a much higher 1.3% increase during the month. This comes on the heels of a 1.1% increase in October.

The stock market is putting on quite a show, had the best month (in July) in years. Earnings weren't all that great either. Most companies reported about what was expected (lower than last year) with a few exceptions like IBM (NYSE: IBM), GE (NYSE: GE) and especially Coca-Cola (NYSE: KO). Earnings don't explain the enthusiasm investors are showing for all stocks. That comes from a renewed sense of hope, with some data behind the emotion.

Almost every company that made earnings announcement so far said the same thing: the worst seems to be over. They could see where sales were holding, a few were even reporting increases, though not many. But the clear majority said they could see the end in sight for the continuing downward spiral of lower revenues, more lay-offs, continuing cuts in spending.

In looking back over 2008, there is one piece of good news -- but it's a silver lining on a black cloud. What am I talking about? In 2008, the U.S. had the lowest inflation rate since 1954 -- 0.1%. Back in 1954, prices actually fell 0.7%. The 2008 inflation report is good news in one sense, and ominous in another.

The good news is that the price of gasoline fell so much. In December gasoline lost 17.2%, the largest monthly decline in records that go back 71 years. Overall energy prices also dropped by a record 8.3% as home heating oil and natural gas showed declines.

If only it weren't for the reason that prices were falling, this news would put a smile on my face. And the reason for the fall is that the economy can only grow if consumer spending grows. And that's not growing because consumers are making less money and they can no longer borrow to make up the difference. This means that demand is dropping for just about everything -- including gasoline.

If you look at commodity prices like gold, oil and grains you are seeing that prices have fallen sharply since last July. Bucking this trend is a lesser known commodity, namely cocoa, which traded at 1,820 British pounds per tonne.

The questions you are probably asking are: why is the price of cocoa so high? and what is causing this big jump in price? For the past three years and especially this year, a combination of events have come together to set this price rise in motion. First, the weather has been bad in the Ivory Coast, a leading producer of cocoa, with cold weather and heavy rains. Also there has been a disease called the black pod disease which attacks the cocoa plant. Add to this a series of strikes by farmers and finally growers used less fertilizer this year because the cost was too high. Taken together these factors caused a 40% drop in production to 251,000 tons from the Ivory Coast.. Cocoa inventories are now only 39% of global production, down 54%

If there is a lessening of demand next year, perhaps prices will level off a bit, but for now prices remain at these very high levels.

OPEC announced that it would cut production by 2.2 million barrels per day or 7%, in an effort to shore up the market. Is it working? We just need to look at the price of light sweet crude this morning, which is $33.06 -- down $3.00. Instead of raising the price of oil, it seems that the cuts have had little effect.

This is somewhat confusing, but there is a logical explanation. We have a glut of oil swishing all over the world. In fact, storage has become so tight that oil is now being stored in large tanker ships off shore. If we look at the forward contracts in light sweet crude we have what is call a contango. A contango is when the nearest contract is selling at a discount to more distant contracts. It translates into an excess of oil in the spot market. Until some of this excess oil is worked off the market, prices will tend to hover at these low levels.

Potash Corp of Saskatchewan (NYSE: POT - option chain) shares have jumped higher today after the company announced it will cut potash output in 2009 by 2 million tonnes (metric tons), or about 20%, due to weakening demand. Competitor Agrium (NYSE: AGU) also announced production cuts today, which is helping to send agricultural futures higher. Lower production levels could keep prices from falling further. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on POT.

POT opened this morning at $63.90. So far today the stock has hit a low of $63.26 and a high of $68.95. As of 12:15, POT is trading at $68.59, up 6.73 (10.9%). The chart for POT looks bullish and S&P gives POT a positive 4 STARS (out of 5) buy ranking.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $45 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.4% return in just five weeks as long as POT is above $45 at January expiration. POT would have to fall by more than 34% before we would start to lose money. Learn more about this type of trade here.

POT hasn't been below $47.50 at all in the past year and has shown support around $62 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in POT or AGU.

General Motors Corp. (NYSE: GM) will be joining up with a former Soviet territory to produce and sell Chevy-branded vehicles. GM and Uzavtosanoat (located in Uzbekistan) have signed a partnership agreement for a joint venture that will target consumers in that middle-Asian country. Initially, the joint venture is projected to produce about 250,000 cars annually.

GM continues to invest in emerging markets worldwide to offset sale problems here in its domestic market, and this should be a good move for the auto giant. The ex-Soviet republic had a falling out with the U.S. over a 2005 citizen uprising (and human rights violations en masse) in Andijan, but has warmed back to American business with this rather large partnership.

The GM/Uzbekistan joint partnership will take advantage of a plant that exists in the town of Asaka where Uzavtosanoat already has a factory that recently operated as part of a joint venture with the failed South Korean automaker Daewoo. Ironically, that plant already assembles cars from shipped-in assembly kits supplied by -- GM . well, GM Daewoo Auto & Technology Company, anyway. GM Daewoo is the South Korean unit of the auto giant which happened as a result of GM's buying Daewoo's assets over five years ago.

The August 2007 sales numbers for foreign automakers Honda Motor Ltd. (NYSE: HMC), Toyota Motor Co. (NYSE: TM) and Nissan Motors (NYSE: NSANY) were up in the U.S., as all three boosted production output to meet increased demand in both the U.S. and Asia. According to the latest global figures, Toyota increased production 7.8% to 670,838 vehicles, while Honda bumped production 8.4% to 311,117 vehicles. Add Nissan's increase of 17% to 267,390 vehicles and you have a wallop of a production increase here.

Both Ford Motor Co. (NYSE: F) and Chrysler may have lost market share to this trio in September as well, possibly due to a growing number of buyers opting for more fuel-efficient vehicles. In many cases, the fuel-efficient offerings from all three Japanese automakers are perceived to be more readily available and more stylish compared to models from domestic automakers like Ford and Chrysler.

Indeed, increasing sales of fuel-efficient vehicles like the Toyota Corolla and Honda Accord are driving growth at both automakers. Japanese passenger car sales were up for the first time in 26 months in August, with higher sales of Honda's Fit compact and the CR-V small SUV leading the way. In addition, Honda says July shipments to the U.S. increase 44% due to record demand.

Are the domestic automakers really hurting due to high gas prices and the housing market slump, or are the Japanese-based competitors selling more cars and trucks to customers based on fuel economy alone? It's hard to say whether gas efficiency or better perceived reliability are reasons here, but based on the particular Japanese models selling like hotcakes, gas prices are at the forefront of many a car purchase decisions these days.

Oil prices have continued to add on to recent gains today, with prices blowing through the previous intra-day high and heading closer to the psychological $80 barrier. Today's move comes in reaction to a government report that showed a much larger than expected drop in crude inventories.

With oil prices heating up over the past couple of weeks OPEC tried to step in and cool off the market by lifting its daily output quota yesterday, but analysts are now thinking that yesterday's move was too little, too late. Earlier this week the oil cartel was indicating that no production increases would be needed, but that all changed once Saudi Arabia stepped in and convinced the other members that a 5000,000 barrel a day increase was needed.

With the high demand winter heating months on the horizon, industry experts are expecting to see a further supply crunch in the months ahead, but some OPEC nations were cautious that the weak housing market would slow down the economy and reduce the nation's demand. After today's inventory report it is looking more obvious that supply is definitely lacking demand.

Analysts had been expecting to see a drop of around 2.7 million barrels last week, but the Energy Department's inventory report showed that the decline was actually much higher than expected at 7.01 million barrels.

As a result of today's reports oil traded up to a new record high of $79.78 and is currently up $1.42 to $79.65.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer

[photo FreeWine]

Ford Motor Company (F) has announced plans today to slash third and fourth quarter production. In today's announcement the company stated that third quarter production would fall by roughly 20,000 vehicles, but for the fourth quarter, the reduction would shoot up to around 168,000 vehicles with much of the reduction being in trucks and sport utility vehicles.

Ford enacted its "Way Forward" plan back in January which called for the company to shut down 14 plants and lay off between 25,000 and 30,000 employees by 2012. Today's announcement will mainly affect production at the Louisville Assembly Plant, but many other plants will also experience some downtime.

"We know this decision will have a dramatic impact on our employees, as well as our suppliers," Mr. Ford said. "This is, however, the right call for our customers, our dealers and our long-term future."