Corn

Long time readers know our guilty pleasure of following the grain markets. We've posted up about rains at Rivieria CC during the PGA stop, Mavericks big wave surf and Peruvian anchovy harvests. The drought out here on the left coast has been coupled with fierce wet weather from Texas into the Heartland. Wheat, Beans and Corn have all broken out into Summer.

Hooper has been quietly advising the trade. (Along with a very nice short in Oil) Here we look at the Corn market in both Dec and Sep on both the daily and weekly patterns, respectively

ScreenShot116ScreenShot117

.In the 3rd daily pattern up in Dec Corn, Hooper had support in the Trap Gap between 411.4 and 416.6. (It is important that this area did not come back and trade- thus only longs from the preceding pattern could be held ) The high today is 439.6 and the Hooper objective is 443.

On the Weekly - basis Sep - The breakout is also on its 3rd pattern with the latest dating from the 6-26 session. The Trap Gap support was 381.6 to 388.2 and the objective was 423.2. Those levels were only playable in the 6-26 session.Today's range is 418.4 to 430.6. The new Pattern Sunday night will be moving up the cut level significantly. Given that the Trap Gap did not come into play on the last run, the probability of setting back has now increased.

Developing

Classical Thursday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots
upside retracements

downside retracements
regression channels

support and resistance
On the Economic Calendar:-
08:30 Nonfarm Payrolls (Consensus 230 K v Prior 280 K)
          Unemployment Rate (Consensus 5.4% v Prior 5.5%)
          Average Hourly Earnings (Consensus 0.2% v Prior 0.3%)
          Jobless Claims (Consensus 270 K v Prior 271 K)
09:45 Bloomberg Consumer Comfort Index
10:00 Factory Orders (Consensus -0.3% v Prior -0.4%)
10:30 EIA Natural Gas Report
11:00 3 Month Bill Announcement
          6 Month Bill Announcement
          3 Year Note Announcement
          10 Year Note Announcement
          30 Year Bond Announcement
16:30 Fed Balance Sheet
          Money Supply

Classical Wednesday

30 minute atr
240 minute atr
daily atr
daily pivots
weekly pivots
upside retracements
downside retracements
regression channels
support and resistance
On the Economic Calendar:-
All Day Motor Vehicle Sales (Consensus 13.6 M v Prior 14.2 M)
07:00 MBA Mortgage Applications
07:30 Challenger Job-Cut Report
08:15 ADP Employment Report (Consensus 220 K v Prior 201 K)
08:30 Gallup US Payroll to Population
09:45 PMI Manufacturing Index (Consensus 53.7 v Prior 54.0)
10:00 ISM Manufacturing Index (Consensus 53.2 v Prior 52.8)
          Construction Spending (Consensus 0.5% v Prior 2.2%)
10:30 EIA Petroleum Status Report

Classical Tuesday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

support and resistance
On the Economic Calendar:-
08:55 Redbook
09:00 Case-Shiller HPI (Consensus 0.8% v Prior 1.0%)
09:45 Chicago PMI (Consensus 50.6 v Prior 46.2)
10:00 Consumer Confidence (Consensus 97.4 v Prior 95.4)
          State Street Investor Confidence
11:30 4 Week Bill Auction
Speaking Today:-
17:00 James Bullard (St. Louis Fed)

 

Classical Monday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

support and resistance
On the Economic Calendar:-
10:00 Pending Home Sales (Consensus 0.6% v Prior 3.4%)
10:30 Dallas Fed Manufacturing Survey (Consensus -13.5 v Prior -20.8)
11:00 4 Week Bill Announcement
11:30 3 Month Bill Auction
          6 Month Bill Auction
15:00 Farm Prices

The Known Unknowns

 

Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.[1]

Sec. of Defense Donald Rumsfeld

I was thinking about the SOMA account today; because, you know, that's what you do on a beautiful Friday morning in wine country, and concluded we are going to be hearing a lot more about this in the months ahead. I put in a call to @interestarb to flesh out some ideas and, as always, the conversation was enlightening.

here's the standard op boiler plate from the NY Fed: http://www.newyorkfed.org/markets/lttreas_faq.html

and here's the meaty quote : Under this distribution, the Desk anticipates that the assets purchased will have an average duration of between 5 and 6 years. The distribution of purchases could change if market conditions warrant, but such changes would be designed to not significantly alter the average duration of the assets purchased.

SO, the Fed will see 212 B in maturities over the next year representing the apex of re-investment activities. As @groditi has posted about at various times earlier, the Fed has essentially continued a "stealth twist" on the term structure because of their activities. Their hefty (we have called them "just another big clumsy player" for years now) presence is already a concern as to deliverable supply and squeezes on the contract.

The "known unknown" is the possible change to the investment buckets as a way to pre-pave the road to halting re-investment. I have made peace with the reality that my preferred action would be balance sheet first, then rates but the Cognoscenti do not agree. If they continue to act in the present fashion then curve flattening could accelerate after the initial hike or two bumps into a couple hundred billion in buying. If they shorten the duration bucket - another idea I would be in favor of - then the rising funding rate further works against their own portfolio. A third idea, deemed most attractive by @interestarb and myself, ( thus almost certain to NOT be followed !) would be to stop telling participants where and how much they will be buying.

If they shorten the bucket by announcement, then they would spend countless mind numbing speeches proclaiming the adjustment as "technical" and not a "policy adjustment." But If the go silent, and let the Bid to Covers do the talking for them, a refreshing market price discovery for new Treasury issues could emerge. One can still hope. The distrust of market participants (and thus market prices) runs deep at government operations. Our track record gives them decent right to be wary. However, the still significant (212B this year 180B-ish next) FOMC sloshing around in debt obligations is the prima facie case against sound monetary policy by the most powerful economic force on the planet. The time has come to set a better example.

B.H. – Before Hilsenrath

Greek Crisis Highlights Euro Paradox at Heart of Eurozone’s Plight
Common currency fuels imbalances while curtailing member countries’ ability to address them
By GREG IP

Before there was Jon "Jon is it?" Hilsenrath, there was Greg Ip. If an Ip article appeared in the right hand column of the WSJ under his byline, the "sources" were believed to be Greenspan himself. And markets responded aggressively.  I'm very glad to see Mr. Ip back at the Journal where his information can be utilized more quickly than the Economist.

The above quote comes from today's article about the fundamental flaws in the single currency concept that is the Euro. The article is a must read, not just because we have held many of the same critical views here, but because Mr. Ip's by-line tells me participants high in the EZ food chain are questioning the Euro's core mission.

We highlighted some similar views last week here:

http://contrariancorner.com/?p=15917

 

 

Classical Thursday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

support and resistance
On the economic calendar:-
08:30 Jobless Claims (Consensus 273 K v Prior 267 K)
          Personal Income (Consensus 0.4% v Prior 0.4%)
          Consumer Spending (Consensus 0.7% v Prior 0.0%)
09:45 PMI Services Flash (Consensus 56.5 v Prior 56.4)
          Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Report
11:00 Kansas City Fed Manufacturing Index
          3 Month Bill Announcement
          6 Month Bill Announcement
13:00 7 Year Note Auction
16:30 Fed Balance Sheet
          Money Supply
Speaking today:-
08:00 Daniel Tarullo (Fed Board Governor)
08:45 Jerome Powell (Fed Board Governor)

 

Classical Wednesday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

support and resistance
On the Economic Calendar:-
07:00 Mortgage Applications
08:30 GDP (Consensus  -0.2% v Prior -0.7%)
          Corporate Profits
10:30 EIA Petroleum Report
11:30 2 Year FRN Note Auction
13:00 5 Year Bond Auction