Commodity prices are on the upswing in early European trade, with markets beginning to show cautious signs of recovering risk appetite. A corrective bounce seems reasonable. The prospect of Greece exiting the euro zone – the catalyst behind the latest rout across the spectrum of risky assets – appears to have run out of shocking power for the time being as traders wait for a repeat of the general election on June 15 to get their cues on the situation. In the meantime, the negative news-flow already out there has likely entered prices already, encouraging a period of profit-taking.
Thursday, May 17, 2012
Copper, Crude Oil May Rise as Greece Fears Digest
Commodity prices are on the upswing in early European trade, with markets beginning to show cautious signs of recovering risk appetite. A corrective bounce seems reasonable. The prospect of Greece exiting the euro zone – the catalyst behind the latest rout across the spectrum of risky assets – appears to have run out of shocking power for the time being as traders wait for a repeat of the general election on June 15 to get their cues on the situation. In the meantime, the negative news-flow already out there has likely entered prices already, encouraging a period of profit-taking.
Death of Our Exponential Money & Credit System
Recently I was asked by a high school teacher if I had any ideas about why students today seem so apathetic when it comes to engaging with the world around them. I waggishly responded, "Probably because they're smart."
In my opinion, we're asking our young adults to step into a story that doesn't make any sense. Sure, we can grow the earth's population to 9 billion (and probably will), and sure, we can extract our natural gas and oil resources as fast as possible, and sure, we can continue to pile on official debts at a staggering pace – but why are we doing all this? Even more troubling, what do we say to our youth when they ask what role they should play in this story – a story with a plot line they didn't get to write?
Strong Dollar Spells Death for Commodities
Panic is on deck, to use the baseball terminology that my foreign readers are often attempting to decipher. That is the only conclusion one can reach after getting gob smacked by the price action on Monday. Copper got spanked for eight cents, oil burned $2, gold shed another $26, and silver puked 70 cents.
Commodity Update - Risk is Relative
Energy: The selling is slowing as Crude has reached extremely oversold levels. Aggressive traders should be scaling in on weakness and as I've said of late the closer prices get to the $90/barrel the more aggressive a buyer I would be. $90-92.50 is my advised buy window in front month futures. Obviously I would be buying forward contracts though so to stay with the trade on a bounce that gets legs. RBOB penetrated $2.90 breaching the 200 day MA after being above that critical level for the last five months. I think it could get ugly very short term but we should be close to our value zone. If Crude holds near $90/barrel there should not be more than 10-15 cents of risk in RBOB...trade accordingly. Heating oil is approaching six moth lows losing just shy of 2% today. Hedgers are advised to lock in prices at these lower levels. My take is we are very close to a turning point. If for whatever reason prices settled below $2.75 back to the drawing board because we're likely headed lower. The 8 day MA continues to act as solid support as natural gas crept to eight week highs today. We could inch higher but when the 8 day MA is breached step aside. That level come is at $2.50 on June.
ISE adds forex options to weekly expirations
NEW YORK, May 17, 2012 - The International Securities Exchange (ISE) today expanded its offering of weekly options to its ISE FX Options® product portfolio. The euro/U.S. dollar option (ticker: EUU) was the first cash-settled FX product to list with a weekly expiration. Kris Monaco, Head of New Product Development at ISE, said, "We are pleased to expand our weekly options offering to include our FX options product suite. The launch of a weekly option on the euro/U.S. dollar currency pair will provide greater flexibility for investors seeking to hedge short-term currency movements."
Gold Higher as France Refutes EU Fiscal Pact
The wholesale market gold price jumped at the start of New York trade on Thursday, cutting the week's previous 3.3% dive to 5-month lows in half as the euro fell and euro zone stock markets slumped once again. The gold price touched $1,558 per ounce before easing $3 lower. Silver did not follow, failing to break this morning's earlier dollar high at $27.86 per ounce. German Bund yields fell to fresh record lows, but Spain had to offer investors in new three-year debt an annual yield of 4.37%, up from the 2.89% charged at the last comparable sale in April. The European Central Bank confirmed it has ceased working with some Greek banks because it believes them to be insolvent, while Portugal's Diario Economico newspaper claimed a joint visit by the ECB, IMF and European Union to assess Lisbon's €78 billion bail-out will also discuss contigency plans should Greece quit the single currency.
E-Mini S&P 500: With this drop – where will it stop?
The E-Mini S&P 500 succumbed to another drop today in the midst of mediocre US data overshadowed by Euro bank concerns! The US Initial Jobless Claims remained unchanged this week at 370,000 while forecasts were set at 365,000. The stagnant news comes after the last US Unemployment report showed a scant 115,000 jobs added. The US Unemployment rate remains at 8.1 % last month from the 8.2 % in March. The Philadelphia Federal Reserve Bank reported its business activity index decreased to -5.8 from + 8.5 in April. Contraction is basically any number below zero, expansion is any number above zero. The US Housing Starts increased 2.6 % to a seasonally adjusted 717,000 units while forecasts were set at 680,000 unit rate. The single-family homes increased 2.3 % while the multi-family housing increased 3.2 %. The US Housing permits decreased 7.0 % to a 715,000 unit pace while forecasts were set at 730,000 unit pace. US permits to single-family homes increased 1.9 % in April to a 475,000 unit pace while the multi-family housing decreased 20.8 % to a 240,000 unit pace. The housing market seems to have bottomed out or is close to bottoming out as home prices are appealing and borrowing rates are low. RealtyTrac has observed the foreclosure activity reaching the lowest level in five years. The mortgage delinquency rate dropped to 7.40 % from 7.58 % in the first quarter. The National Association of Homebuilders housing market index increased by 5 points to 29 in May. The Facebook Inc. (IPO) Initial Public Offering has gathered some steam with all the media attention priced at $38 per share with a $104 billion valuation to start trading Friday on the Nasdaq. All the media attention has investors intrigued, but many brokerages may not be allowed to offer the IPO and it was even rumored to perhaps only be available to institutional and/or accredited investors. Walmart reported better earnings lifting the shares 5.0 % to $62.17. Sears Holdings Corp. was up 4.8 % to $53.31 after announcing it will keep its focus on the US instead of Canada.
Yen Jumps Versus Dollar
Yen Jumps Versus Dollar - WSJ.com
The yen shot to a three-month high against the dollar, in its biggest single-day jump in over a year, after a weak reading of mid-Atlantic manufacturing cast new doubt on the health of the U.S. economy.
The Federal Reserve Bank of Philadelphia's manufacturing index fell to -5.8 for May, well below economists' average forecast of 9.3. Anything below 0 indicates contraction in Philadelphia-area business activity.
Negative indicators play into expectations that the Federal Reserve will have to resume buying bonds in order to prop up the economy.
The Federal Reserve Bank of Philadelphia's manufacturing index fell to -5.8 for May, well below economists' average forecast of 9.3. Anything below 0 indicates contraction in Philadelphia-area business activity.
Negative indicators play into expectations that the Federal Reserve will have to resume buying bonds in order to prop up the economy.
Crude Settles Below $93
Crude Settles Below $93 - WSJ.com
Crude-oil futures declined despite news that the Seaway pipeline in the Midwest will open its spigots, a move expected to reduce a glut of oil and narrow the difference between the oil market's two benchmark contracts. Though the news was generally bullish for crude prices, the West Texas contract still fell, settling down 25 cents, or 0.3%, to $92.56 a barrel on the New York Mercantile Exchange.
Corn Traders Most Bullish Since March on U.S. Heat: Commodities
Corn Traders Most Bullish Since March on U.S. Heat: Commodities - Bloomberg
Corn traders are the most bullish since March on mounting concern that hot and dry weather will curb U.S. yields at a time of accelerating demand from China, the second largest buyer of U.S. farm goods.
Nineteen of 27 analysts surveyed by Bloomberg expect prices to gain next week and three were neutral, the highest proportion since March 30. Iowa, Illinois and Indiana, which produce 40 percent of the U.S. crop, are poised for a seventh consecutive month of above-normal temperatures, the most since 1895, T-Storm Weather LLC said yesterday. U.S. export sales of corn surged 83 percent in the week ended May 10, from a week earlier, U.S. Department of Agriculture data show.
Nineteen of 27 analysts surveyed by Bloomberg expect prices to gain next week and three were neutral, the highest proportion since March 30. Iowa, Illinois and Indiana, which produce 40 percent of the U.S. crop, are poised for a seventh consecutive month of above-normal temperatures, the most since 1895, T-Storm Weather LLC said yesterday. U.S. export sales of corn surged 83 percent in the week ended May 10, from a week earlier, U.S. Department of Agriculture data show.
Dollar Wary China Soon To Be World's Top Gold Buyer
Maybe it’s a love for bling or just uncertainty over the dollar’s direction, but make no mistake about it, the Chinese have the gold bug.No other country on earth can be credited with supporting gold price fundamentals as China. Even India is waning by comparison.
According to the World Gold Council, China will overtake India as the world’s leading gold consumer any day now. They are already the world’s leading gold producer. But what really interests gold lovers is demand. And China demand is up 10% this year to a record breaking 255.2 metric tons of the precious metal bought in the first quarter alone.
Live Cattle Futures Breaking Out to The Upside
Live cattle futures, overnight and early this morning are in the process of breaking out to the upside. There are no specific news items to explain the action, at the moment. I believe the market is anticipating a combination of items or events. First, it appears that the cash market, at worst, will trade fully steady this week at $1.20 and could easily be a $1.21 to $1.22 event. Second, the trade might be anticipating a bullish surprise in the placement figure in the upcoming cattle-on-feed report. Third, cattle futures did close above several moving averages yesterday, likely triggering some fund buy signals. And fourth, this one is under everyone's radar, Japan's economic growth in the first quarter was reported better than expected at 4.1% growth. Why is this important? Japan is our largest beef buyer. Rarely does the press put any fanfare on "good news" such as this. The bold headlines are always reserved for the "bad news" that sells newspapers or grabs high rating on the TV. Yes, I'm bullish and long and holding.
Don’t wait for Greece to leave the Eurozone
Only a few months ago, most analysts were saying that the eurozone debt crisis was easing. Greece had accepted an austerity plan in return for bailout funds, Italy and Spain had conservative governments that promised to put their financial houses in order, and the euro was holding firm. Then came the Greek elections, where voters, fed up with austerity, rejected both major parties and France’s election of Socialist Francois Hollande, who vowed to combat the German-led policy of financial austerity.
Paul Tudor Jones' fund bet with JPMorgan
May 15 (Bloomberg) -- Tudor Investment Corp., the $11 billion hedge fund run by Paul Tudor Jones, bought shares of an exchange-traded fund that tracks financial companies, and a stake in JPMorgan Chase & Co., during the first quarter. Tudor purchased 8.66 million shares of the Financial Select Sector SPDR Fund, making the ETF its biggest U.S. stock holding as of March 31, according to a filing today with the U.S. Securities and Exchange Commission. The fund bought 1.27 million shares of JPMorgan, making the New York-based bank its second- largest equity position.
Euro could challenge 2010 lows; S&P to retrace 2011 close
ECM12:
- Short Term Trends are bearish.
- Confirmation of a top with a range violation on 05/03/12 @ 1.3123. Confirmation of a top on a close violation 05/04/12 @ 1.3089. Downside Targets = 1.2935 – 1.2805 – 1.2623.
- Bearish ERVB (Extended Range Vertical Bar) generated on Tuesday making new lows on current move @ 1.2723. Downside Target over 160% achieved.
- The June Euro FX broke sharply lower as Greece has now called for a new government and raised fears that the country may be forced to leave the Eurozone and put other European nations at risk.
- If Greece cannot come to terms with the austerity package laid out by the ECB and IMF, the euro will most likely face a massive run on the currency and could continue the free fall down below the 2010 lows towards 1.1600. We still like our Q2 projected low @ 1.2324.
- Projected Daily Range: .0095
- Projected Weekly Range: .0201
- Projected Monthly Range: .0429
Gold bottom may be forming, bounce to $1,604 possible
GCM12:
- Short Term Trends are bearish.
- Confirmation of a top with a range violation on 05/03/12 @ 1645.90. Confirmation of a top with a close violation on 05/03/12 @ 1634.80. Downside Targets 1599.10 – 1528.10.
- New lows made on current move @ 1526.70. Downside Target over 225% achieved.
- June Gold broke lower again on Wednesday and traded a mere $1.40 through the Intermediate Term downside objective of $1,528.10 before rallying most of the day.
- Gold is making a very strong bottoming formation right now and while there may be a little more pressure in this market, a sharp bounce back to $1,604.40 may appear in short order.
- Projected Daily Range: 26.50
- Projected Weekly Range: 57.70
- Projected Monthly Range: 92.10
China Cosco in Talks to Restart Freight Derivatives Trading
CME Amends Grain-Trading Plan After Industry Complained
Futures mixed on jobs data as Europe churns
Gold Rallies More Than 2.6% After Slump
Index of US leading economic indicators unexpectedly falls
Oil Trades Near Six-Month Low as ECB Curtails Greek Banks
U.S. Stocks Fall on Unexpected Drop in Leading Indicator
Chalco Targeted as Mongolia Seeks to Limit State Deals
The draft law, submitted to parliament two years ago, was accelerated after a public outcry following state-run Aluminum Corp. of China Ltd.’s move last month to take control of SouthGobi Resources Ltd. (SGQ), Vice Finance Minister Ganhuyag Chuluun Hutagt said in an interview. The law isn’t likely to apply to any existing operations, he said. Rio Tinto Group is developing the $6 billion Oyu Tolgoi copper mine in the nation. Tightening the legislation would mean Mongolia joins Indonesia and Argentina in seeking to control ownership of resource assets to secure their economic future.
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