We’ve been watching the Japanese Yen’s movement closely this year as it has gained strength against the U.S. Dollar in spite of the actions of the Bank of Japan and their explicit commitment to weakening their currency across global markets in order to prop up their export driven economy. We’ll refer to our story from two weeks ago to provide the deeper history. In the meantime, we’ll update a few data points that should continue to keep you watching for a dramatic turn in the Japanese Yen vs U.S. Dollar currency pair.
The interest rate sector has been going crazy trying to determine what to do since the Federal Reserve Board (FRB) chose not to raise rates at the September meeting. My email has been inundated by interest rate related mailings. The basic point of most them was, “Now that the Fed held steady, what corner have they backed themselves into?” Most of the boxing in is focused on the FRB’s historical actions. I went back through 45 years of data to determine the scarcity of an October or, December rate hike along with Presidential election cycle analysis which isn’t supposed to be linked to the FRB in any way, shape or, form (wink.) We’ll also move through the individual futures charts to determine what the big money is suggesting with respect to FRB action, history be damned.
We’ve been writing about the metal markets quite a bit, having recently published articles at Futures Magazine, Equities.com and TraderPlanet. We’ve seen major churning by the commercial traders which is indicative of a broader change in sentiment. Obviously, when it comes to the metals markets like gold, silver, platinum and copper, the major questions on everyone’s mind is, “Have we bottomed?” We’ll review the current setups in these markets and attempt to answer just that question.
The El Nino event of 2015 is expected to become the strongest on record. Considering the impact this event is supposed to have on our southern states, it’s time to review what has happened in the past as well as what may be coming. We’ll let the National Oceanic and Atmospheric Administration (NOAA), finish our intro. From NOAA’s analysis of the 1997 event. “The winter of 1997-1998 was marked by a record breaking El Nino event and unusual extremes in parts of the country. Overall, the winter (December 1997- February 1998) was the second warmest and seventh wettest since 1895. Severe weather events included flooding in the southeast, an ice storm in the northeast, flooding in California, and tornadoes in Florida. The winter was dominated by an El Niño influenced weather pattern, with wetter than normal conditions across much of the southern third of the country and warmer than normal conditions across much of the northern two-thirds of the country. ”
The National Oceanic and Atmospheric Administration (NOAA) has repeatedly stated the growing case for the 2015-2016 El Nino event. While much has been discussed in the headlines, very little of the conversation has focused on the commodity price impact that the most significant El Nino weather pattern since 1997 could have on U.S. crops. This week, we’ll begin our look at how the U.S. grain markets performed during 1997-1998 El Nino and continue this line of thought through the global grain markets next week before finishing this segment with a look at El Nino’s impact on energy prices.
This week will be a short myopic view of the internal workings of the interest rate futures market sector focusing on a potential short selling opportunity in the 10-year Treasury Note futures.
As Greece defaults, we think it’s time to take a step back and look at the big picture emerging horizontally as China and Russia move towards political and economic objectives that will define a new trading block across Europe and Asia.
The general gist of these headlines is twofold. Janet Yellen and the U.S. Federal Reserve Board of Governors is doing everything they can to talk the market into behaving in an orderly fashion as the Fed prepares to enact the shift in interest rate policy that they’ve been telegraphing since the end of the taper announcement last summer. Secondly, the reason the Fed is trying to talk some sense into the markets is because the markets don’t seem to believe the in the Fed’s intentions.
I frequently talk about using the commercial traders as a proxy for fundamental information. Commercial traders’ pinpoint focus on the markets they trade takes into account the supply and demand structure within their individual markets, including stocks and bonds. Furthermore, their actions within the markets they trade literally, tell us what they expect to happen within their market going forward. Thus, our thesis that, “No one knows the markets they trade like those whose livelihood is based directly upon the correct forecasting of their market.” All things being equal, when my analysis of the fundamentals seems confounded, I defer to the respective experts within their markets. Finally, when the market sectors are analyzed in total, commercial traders’ actions can lead to a bigger picture. The recent shift in their positions within the financial markets leads me to believe Continue reading Expected Turbulence in the Financial Markets
There are three markets in the meat futures sector with enough volume and liquidity to attract both hedging and speculative activity. These are the lean hog futures along with the feeder and live cattle markets. The live cattle market is best thought of as cattle on the farm while feeders are the cattle that have made the journey from the farm to the feedlot for fattening prior to slaughter. We’ve written extensively on the broad nature of global supply and demand fundamentals within these markets and included links to our previous research at the end. This week, however, these three markets appear to be setting up for a classic trading opportunity.