Monthly Archives: June 2014

Corn

Back in Feb we suggested watching a few clues for the grain market. The Peruvian anchovy harvest. The Maverick's surf competition. Some rain on the PGA west coast swing. The lofty prices have retreated most of the Spring. Now take a look at the Mid-West. the flooding from Nebraska to Minnesota has reached record levels. Corn popped on 2 good sessions to end the week. As we signaled to begin the year, we are looking to spend the Summer buying corn and selling bonds. If you're looking for a year to compare try 1988 !

Into the Gloaming redux

In a tribute only E. Grayden Carter and Spy Magazine's "Logrolling in Our Time" (#GIK) could love, Hilsenrath [John is it?] gushes over Greg Ip's Economist post on slow growth and the Fed.

HILSENRATH’S TAKE: DID THE FED MISDIAGNOSE THE EXPANSION, AND KILL IT?

The article is just a plug for Larry Summers and the growing meme that we are fated to slower growth rates in the US. Slow to "get it" but not incorrect Hilsenrath wonders if "The Fed was too loose in 2000 fueling a housing bubble and too tight in 2006 helping to end the expansion." Don't go too far out on a limb there John.

Left out of the discussion, but certainly known to Mr. Summers, is the tax and sequester adjustment that took place in 2013. The plutocrat cognoscenti would prefer you accept stall speed growth and blame the Fed rather than admit their own mistakes. Again, we do not subscribe to the view the Fed "misdiagnosed" anything. The loose and restrictive policies and consequences are typical of all Fed history. Structurally Trapped post-crisis economies need sharply lower IS/LM curves AND aggressive fiscal programs. The key is to target them to new infrastructure and industry and not the archaic and inefficient  areas associated with the collapse (read banking, housing and autos).

My advice is to take a step back and recognize that the "Into the Gloaming" crowd were also vocally hyping the bond market around Memorial Day. The demographics of the Boomer generation will be a huge input over the next 20 years. The right leadership and the right policies can keep us out of the gloaming.

Classical Thursday


30 minute atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

price support and resistance
On the economic calendar:-
 
08:30 Jobless Claims (Consensus 313 K v Prior 317 K)
09:45 Bloomberg Consumer Comfort Index
10:00 Philadelphia Fed Survey (Consensus 13.0 v Prior 15.4)
          Leading Indicators (Consensus 0.6% v Prior 0.4%)
10:30 EIA Natural Gas Report
11:00 3 Month Bill Announcement
          6 Month Bil Announcement
          2 Year FRN Announcement
          2 Year Note Announcement
          5 Year Note Announcement
          7 Year Note Announcement
13:00 30 Year TIPS Auction
16:30 Fed Balance Sheet
         Money Supply
POMO:-
 
10:15 - 11:00 Outright Treasury Coupon Purchases between $2.25 - $ $2.75 billion

 

S&P Trading Levels 19 Jun

Hooper completed another upside target today at 1950.25. The big kahuna longer term weekly target remains 1964. Prices are overbought on many measures, but until Hooper gives a sell signal, no shorts can be elected. It's OK to disagree with the dog, just don't trade against it.

This will be the last chart until I return from vacation on the 28 Jun. I'm planning to update the Hooper model while on vacation, before the session's open.

Support & Resistance Levels for multiple time-frames on the on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size)

S&P Globex 11:55 PM

ScreenShot022

FOMC Fodder

The Fed will grace us with its creative writing skills later today. The big wire houses have sent out complicated and "all bases covered" missives on rate hikes and blue dots. Its all getting very tiring.

Our take remains market determined rates (such that they still exist) are going up. Jobs and the end of the credit crunch mean quicker velocity and demand for credit. Some will opine that the quality of borrowers across the spectrum is less than stellar, this is a problem for farther down the road.

The focus on the Fed, from LSAP to Death Star to moving the base rate is a popular delusion. The Fed is not advancing a preemptive agenda. This Fed is cautious and reactionary. The second half of 2014 (yep, its almost half over) will be about the term structure reintroducing itself as a feedback loop policy makers. The flatter curve saved a lot of misguided notions about market direction in Q2 (guilty), Now, I'm less confident about the shape of the curve but more confident the direction is down.

Here's our advice: Avoid the noise and quick over analysis of the statement. Look for a dissent to challenge the Yellen/Dudley idea of "slower and lower". Keep in mind the fanciful tales of May as to why the Note market was up. Pay fixed.

Classical Wednesday


30 minute atr
daily pivots
weekly pivots
upside retracements
downside retracements
regression channels
price support and resistance
On the economic calendar:-
 
07:00 MBA Purchase Applications
08:30 Current Account (Consensus $-99.8 B v Prior $-81.1 B)
10:30 EIA Petroleum Status Report
14:00 FOMC Meeting Announcement (Consensus 0 - 0.25% v Prior 0 - 0.25%)
          FOMC Forecasts
          Chair Press Conference
POMO:-
 
None today

 

Classical Tuesday


30 minute atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

price support and resistance levels
On the economic calendar:-
 
07:35 ICSC-Goldman Store Sales
08:30 Consumer Price Index (Consensus 0.2% v Prior 0.3%)
          Housing Starts (Consensus 1.036 M v Prior 1.072 M)
08:55 Redbook
11:30 4 Week Bill Auction
POMO:-
 
10:15 - 11:00 Outright Treasury Coupon Purchases between $0.85 - $1.10 billion