Good Article from Barrons on the Currency Wars

Read this article.  I think it will help.

Yuan Devaluation

The Latest from Jeff Gundlach

I like his reference to Chuang Tsu

Oil Prices Not Listening to Goldman Sachs Head of Commodities--Move Higher

Ole Hansen, head of commodity strategy at Saxo Bank has an explanation that may last at least until the Crude Oil Inventories number comes out at 9:30 central time.

https://www.tradingfloor.com/posts/crude-oil-soars-as-focus-switches-from-opec-to-the-us-5139337

Shenzhen Market P/E Ratio 66--Classic Asset Bubble. Get ready for a correction

Bill Gross comments make news at Bloomberg.

http://www.bloomberg.com/news/articles/2015-06-04/bond-rout-not-enough-for-gross-as-china-stocks-seen-next-to-drop

Shenzhen Exchange Web Page

http://www.szse.cn/main/en/MarketStatistics/MarketOverview/

No way I know for Joe Blow to trade the Shenzhen Composite yet.  But here are a handful of China ETFs to look at.  EWH, FXI, ASHR, PEK, and CNXT.

Goldman Forecasts Oil Price at $50 by year end

Jeff Currie ventured his year-end forecast of $50 after this week's OPEC meeting.  West Texas Intermediate Crude spot price is currently $58.88.  If he is right, there would be no rush to buy USO shares yet.  The 30-week moving average and the current price are converging, but may not cross for several months if the oil price heads lower between now and the end of the year.

http://www.benzinga.com/media/cnbc/15/06/5573006/goldman-sachs-oil-will-be-at-45-in-october-and-50-by-year-end

Oil Bottum Revisited

Trying to show the USO chart with 30-week moving average

 
 



Negative Duration--The Long and Short of It

When interest rates eventually start rising, the price of bonds will fall.  The longer the duration of the bond, the steeper the decline.  Portfolio managers are using some tools to decrease the "duration" of their portfolios.  The following link introduces this subject of negative duration and how it is possible.

Morningstar Article on Negative Duration

Gundlach and Gross are Drooling about Shorting the German Bund

Tom says check it out.


http://www.bloomberg.com/news/articles/2015-04-29/euro-area-bonds-decline-before-13-billion-of-debt-auctions

http://www.bloomberg.com/news/articles/2015-04-21/janus-s-gross-says-german-10-year-bunds-short-of-a-lifetime-

Crude Oil Continues to Bottom. Could be time to buy soon.

Although there is no magic in the 30-week simple moving average,  there must be some kind of bottom in place for a price to cross over this moving average from below.  The price of USO fell below its 30-week moving average last July and has remained there for the nine months since.  But now the indicator has moved down below $22, while the price closed today around $20.50.  I expect to see the price of USO cross back over its 30-week average in a few weeks.  When this technical event occurs, it might be a better time to buy crude oil than it has been for quite some time. 

Crude Oil Inventories Number Moves Market Again

The market was expecting an increase of 3.5 million barrels of oil inventories this morning, but the Energy Information Administration revealed a smaller increase of 1.3 million barrels at 9:30 CDT.  This was bullish for the price of crude.  Within 10 minutes of the news release, the price increased by $1.25 a barrel.  The price continues higher and at 10:36 is trading $2 higher for the day.

This weekly report is getting a lot of attention these days, and moves the market.   Please make a note of it.

Crude Inventories and the Tentative Bottom

 

 

Analysts were expecting an increase of 3.3 million barrels of oil this week, but according to the Energy Information Administration release at 9:30 central time:

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.9 million barrels from the previous week. At 482.4 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.

As a result of this supply side surprise, the price of crude oil quickly fell by one dollar a barrel to $52.88, a drop of 4%.  Since then, the price has continued a bit lower. 

Oil had rallied the first two days of this week from $50 to $55, a gain of 10%.  The price remains above the 50-day moving average price of $49.07 for several days now.  This is the first time the price has held above the 50-day moving average since oil prices began falling last summer.

Stan Weinstein, a market technician I remember from the early 1980s when I was working in Beverly Hills, would probably caution against buying oil until the price crosses above the 30-week moving average.  This could take awhile

(See Secrets for Profiting in Bull and Bear Markets, p. 97)

World Bank Lowers Forecast for 2015 Growth

Here is the three-page version.  Maybe just look at the pretty picture.
They are blaming this report for the market correction yesterday and today.

Global Economic Prospects

For extra credit, you can read the full report (216 pages) here.

Global Economic Prospects--Having Fiscal Space and Using It

Place Your Bets

The Federal Reserve maintains a steady hand, signaling "normalization" (higher interest rates) to come in the middle of 2015.  The dollar rallies. Stocks rally.  Bonds sell off.  I buy the USD/JPY and sell the EUR/USD.  The correction in the stock market seems to be over.  Santa Claus is here.

El-Erian's Oracular Buzzings

Mohamed El-Erian expects the dollar to be strong next year.  He also describes a multi-track global economy.

Dollar rally to continue.


Multitrack Central Banking

Goldman Sachs/Jan Hatzius' Take

Click here for Jan Hatzius' Take

Stopped Out

After a wild ride in the cattle market for two days, I exited my position at no loss.  The fundamentals haven't changed, but timing is important.  I may try again, if I see an opportunity I like.

Less Cattle This Year

Last year's drought and high feed prices resulted in some leaving the cattle business.  This year there is less beef production and prices are up.  The shortage should continue through the first quarter of next year, and the markets continue to adjust.  Meanwhile, global demand for beef is still strong.  I have taken a long position in February Live Cattle Futures.  Maybe the price of beef will go up a nickel a pound.

Economic Forces at Work--Markets Adjusting

I have moved 100% to the sidelines as the markets adjust to lower global expectations of growth.  10-year US Treasuries were steady today. Equities and energy prices not so much.  

Comparing the S&P500 to the 10-year US Treasury yield

As the S&P Index has risen this year, the yield on the 10-year Treasury Note has fallen.  On a closer look, it seems that there is a "risk on, risk off"  interconnection between the two on a daily basis going on at the moment.  Let us say that when the S&P500 falls, money moves out of stocks and into bonds, thus "risk off."  Bond prices go up and the yield goes down.  When the stock market rallies, money moves out of bonds and into equities, "risk on."  Bond prices go down (less demand) and yield goes up.

Theoretically, as the Fed buys less bonds, there should be less demand, and yields would go up.  But the market may have already priced the Fed's action into the market.  So today's release of the Fed's minutes, absent some surprise, should not move the market much.  Risk on.  Those are my thoughts before the Fed releases its September meeting minutes.

World Economic Outlook according to IMF-- Growth revised lower