Category Archives: Commodities

17Apr/13

Morning Market Commentary – US$ impact on US equities, SPX, Nasdaq, RUT continuing to weaken;

Commodities, Currencies, Gold & Precious Metals, Oil, Gas & Energy

The fact is, the US$ index is down over 33% in the past 35 years. Below we have added a few charts elaborating on a major subject which we clearly part with the “so called experts” on economics, and stock markets, who are now predicting a period of US$ strength, paired with simultaneous strength and outperformance of US equities:

Well, for those “experts” and their opinions, let’s see if they have a point, as we believe a few pictures are worth a few million (wasted) words. Let’s look at the chart of the US$ versus the S&P 500 going back to 1980.

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16Apr/13

Morning Market Commentary-Major breakdowns for US stocks, sectors, Oil, Gold, Silver, WTI, another -15% downside risk

Commodities, Currencies, Gold & Precious Metals, Morning Market Commentary, Oil, Gas & Energy

Equity markets around the world recorded significant technical weakness yesterday. Much of the weakness was recorded prior to the Boston explosions. The explosions accelerated weakness near the close. The 9.1% one-day slump for the price of gold was the steepest fall in 30 years. Gold prices had recovered by as much as 2.0% this morning. The CME Group Inc. said yesterday it was the minimum collateral requirements for trading in benchmark gold, silver and other precious-metals futures contracts. The CME also raised the margin to trade palladium by 14%, and for platinum by 19%.

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15Apr/13

Morning Market Commentary & Weekly Charts – PROFIT TAKING in global equities; Commodities

Commodities, Currencies, Gold & Precious Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

Well, the profit taking has started. Despite continued resilience in the US equity markets, benchmarks around the globe have begun to trend lower, showing a series of lower-lows and lower-highs, a characteristic of a negative trend.   

“Sell in May” has come early for equity markets in Canada, Germany, France, United Kingdom, and China. Negative pressures in equity benchmarks around the globe combined with significant declines in commodity markets is resulting in an increased probability that a top in United States equity markets is near, if not already realized.   Trend line support for the S&P 500 is presently just above 1550, making this a logical point to trigger the conclusion to the seasonally favourable period for the market, which ends on May 5th, on average.

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09Apr/13

Morning Market Commentary US$ impact on EPS, EUR/US$ reversal

Commodities, Currencies, Metals, Morning Market Commentary, Oil, Gas & Energy

As per our prior warnings, sell side analysts have been like usual late to the plate with regards to currency adjustments for US companies.

For now, consensus estimates show that first-quarter earnings reports released by major US companies will be sluggish. Consensus earnings estimates for the 30 Dow Jones industrial average companies shows an average (median) gain of only 3.1 per cent on a year-over-year basis.

With 25% of S&P 500 earnings coming out of Europe, and 6% coming from Japan, we think that most sell side analysts are behind the curve on this. The negative impact on first quarter earnings by international companies due to strength in the US$ on a year-over-year basis will be mentioned frequently when first quarter reports are released during the next three weeks. The US$ Index averaged approximately 81.0 in the first quarter of 2013, up from approximately 79.0 in the first quarter last year. At the end of the quarter, the Index was at 83.14 versus 79.00 last year. However, the US$/Yen has fallen by -31.5% since September 2012, which is in line with our forecasts, and this will weigh significantly on EPS for Q1 and will continue to be a negative surprise for analysts throughout 2013, particularly, as we anticipate the US$/Yen to be at 1.12 by year end 2013.

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08Apr/13

Morning Market Commentary & Weekly charts

Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

“Sell in May & Go Away” or is it “Sell in April”, like it was in 2012?
Japanese companies see the continued weakening of the Yen as an opportunity to increase investments abroad, and are buying foreign assets. European companies are generating more than 50% of their earnings from outside of the Eurozone, and for the Eurostoxx 600, about 30% of earnings are coming from emerging markets. Hence why we see better buying opportunities in Japanese and European stocks.

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25Mar/13

Morning Market Commentary & Weekly Charts

Commodities, Currencies, Gold & Precious Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

Cyprus deal done. Stocks advanced strongly on Monday morning after 11th-hour talks to save Cyprus from default resulted in a last-minute bailout deal with the Troika. Following a meeting of Eurozone finance ministers that lasted almost 12 hours, Cyprus agreed to a EUR 10 bn aid package that doesn’t include a controversial across-the-board bank-account tax but involves forcing big losses on uninsured depositors.

Cyprus is about as economically significant as the German city-state of Bremen, and yet the attention of citizens and politicians alike was focused on the debt-ridden country on the continent’s periphery last week and through the weekend. Since Cypriot parliament rejected the initial bailout plan, one crisis meeting followed the next in Berlin, Frankfurt and Brussels as concepts were presented, revised, rejected and resubmitted. In the end, the European Central Bank (ECB) imposed an ultimatum on the country. The message from ECB President Mario Draghi was that either Cyprus agrees to the bailout conditions or it could be the first member of the Eurozone to declare a national bankruptcy.

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22Mar/13

Morning Market Commentary

Commodities, Currencies, Gold & Precious Metals, Morning Market Commentary, Oil, Gas & Energy

Global equity markets have had a very mixed performance so far, the question begs, is it time for the inevitable correction?

Or is there a bit more room on the upside?

If all the BRIC countries are struggling, that is a big concern. Maybe the SENSEX rallies from here. The chart above shows a very important pattern that usually identifies major tops. Taiwan and Singapore are starting to soften on the ETF’s. Most of the commodities looked like they were at a pivotal point too, be it related to the US$’s recent temporary strength.  The Rest of the World dragged down the US market in 2011. If commodities, and emerging markets are not rallying from here onwards, then we see cause for a softening of US equities in a rather large move down through the summer. $COPPER would suggest the move is to the downside. US housing starts and Transports would suggest the move is to the upside.

We do not say that the trend for global equity markets has reversed, but surely a correction of 5% – 8% is not far ahead, and we are advising our clients to add towards strategic equity positions when it will occur. When looking at aggregate performance since January 1st 2012, the Nikkei 225 is up 48%. In the last three weeks alone, the Nikkei has risen 8%. Frankfurt’s Xetra Dax is second best, with a gain of 36%. The Nasdaq is next, followed by the S&P 500. Continue reading →

11Mar/13

Morning Market Commentary & Weekly Charts – Global Equity Markets

Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

Weekly Investment Conclusion:

Strength in US equity markets last week triggered by surprising strength in economic indicators was unexpected. US equity markets quickly regained short term momentum. Positive psychology related to the Dow Industrials reaching all-time highs also helped. This week, economic data is expected to be positive again and the S&P 500 Index (a more significant US equity index) will have a chance of reaching its all-time high at 1,576.09, despite short and intermediate technical indicators once again have returned to overbought levels.

Selected sectors with favorable seasonality at this time of year remain attractive purchases candidates on weakness. The trigger could be a rollover of the US$ from a highly overbought level. When it happens, and we do think this will happen within days, commodity stocks including metals & mining, energy, coal and steel stocks will come alive. All recorded exceptional gains on Thursday and Friday.

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04Mar/13

Morning Market Commentary & Weekly Charts – Currency Wars Musings

Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

We still see the current US$ temporary strength as a good opportunity for investors to increase equity holding in international companies. The current temporary strength of the US$ and its inverse impact on global commodities prices as a good opportunity for US institutional investors to increase their weightings in foreign equities and commodities, and particularly to those benefiting from a seasonality point of strength, we advise investors to add towards the following equity markets and sectors: …..

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28Feb/13

Morning Market Commentary March favorable for stocks; VE reiterate “buy”

Commodities, Morning Market Commentary, Veolia

Historically, the month of March has appositive seasonal bias for US and global equities’ indices. March has had the fourth best seasonal impact for US equities and particularly on the S&P 500, when looking back 50 years. The Dow’s and the fifth best performing month for the Dow Jones Industrial Average and the eighth best performing month for the NASDAQ Composite. Average gains per period were 1.1% for the S&P 500 Index and Dow Jones Industrial Average and 0.6% for the NASDAQ Composite. Most of the gains were recorded in the second half of the month.

We think that for 2013, March will be another strong month, ahead of the seasonal “Sell in May & Go Away” phenomenon.

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25Feb/13

Morning Market Commentary & Weekly Charts Bullish on Oil, Gold,

Commodities, Currencies, Gold & Precious Metals, Morning Market Commentary, Oil, Gas & Energy

Weekly Investment  Conclusion: The current, and shallow correction between now and the end of March will provide investors with an opportunity to accumulate sectors on weakness that have a history of seasonal outperformance until the traditional “Sell in May & Go Away” period, which may start this year, again like in 2012, ahead of its usual acclaimed season. Last year, we did forecast the “Sell in May & Go Away” equities peak correctly as of April 2nd.

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11Feb/13

Morning Market Commentary & Weekly Charts-Currency Manipulation vs Gold

Commodities, Currencies, Gold & Precious Metals, Morning Market Commentary, Oil, Gas & Energy

As we have written in the past years, most countries are artificially pushing down their exchange rates in an attempt to obtaining competitive advantages at the expense of others. And if they all manipulate their own currencies, all sides will end up losing out. At the EURO summit, as well at other Central Banker policy meetings as of late, we have heard over and over that currency wars are impacting policies and inherent competitiveness issues.

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08Feb/13

Global Markets Strategy & Equities Outlook – Bullish on Japan & China

Allianz, ArcelorMittal, Banking, BMW, Commodities, Currencies, EADS, FORD, Gold & Precious Metals, Hyundai, Industrial Manufacturing, Jabil, MAN, Mitsubishi, Nestle, Oil, Gas & Energy, SAP, Seimens, Sony, Strategy, UBS, Unilever, Utilities, VW

As you know we turned very bullish on Japan and China in September 2012, and have been advising to overweight allocations towards the Nikkei and the Shanghai Indices, as we recognized major turning points in those markets due to changes in government leadership and implicitly new and improved stimulus policies going into effect as of Q4 2012.

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04Feb/13

Morning Market Commentary & Weekly Charts

Commodities, Currencies, Gold & Precious Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

History shows that US equity markets in the year after a Presidential election move higher into the first week in February in conjunction with fourth quarter reports, weaken thereafter until the end of March and moves higher thereafter. Given political events scheduled in the US during the next two months, history is repeating. Continue reading →

28Jan/13

Morning Market Commentary & Weekly Charts

Commodities, Currencies, Gold & Precious Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

Global Equity Markets, what next?  Overheated?  Or much more to go?  While funds continue to flow into stocks, as we were forecasting since mid-December, money continues to move away from the bond market; particularly treasuries that have seen yields spike almost 400 basis points since the start of December.

Treasury yields have broken firmly above a long-term declining trend line that had remained intact for almost two years, diverging from the positive trend of equity markets over the same period.

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03Oct/12

Morning Market Commentary – Bull or Bear?

Apple, Commodities, Currencies, Morning Market Commentary, Oil, Gas & Energy, Porsche, Tesla, VW

Bull or Bear?  and European Nuclear Power Plant Problems

The weekly chart below of the Dow Jones Industrial Average over the past few years shows a massive rising wedge formation, which has severe bearish implications should the price action break below the lower limit of this pattern.  Given the easy money policy in the US and other parts of the world, a certain amount of skepticism of the bearish implications is warranted.  However, the merit of this pattern is supported by a negative momentum divergence over the same period.

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01Oct/12

Morning Market Commentary & Weekly Charts

Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

End of Q3
Now will there be a final spurt in Q4 2012?

We had the privilege to visit with some of Germany’s top corporate managements last week in Munich, plus get a glimpse at the Oktoberfest, where we were on a fact-finding mission with clients to assess the state of mind of the German corporate executives and that of the overall German consumer.

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24Sep/12

Morning Market Commentary & Weekly Charts – No Inflation?

Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

Inflation adjusted gasoline prices in the US have soared in the past four months. The inflation-adjusted price for a gallon of unleaded is up over $0.50 since the end of June and has rarely been higher than current levels.

  • Middle East crises are often associated with major swings in the price of gasoline.
  • Gasoline price spikes also have often occurred prior to an economic downturn.

Middle East instability (e.g. Arab spring) and Middle East tensions (e.g. Iran) are ongoing. Continue reading →

17Sep/12

Morning Market Commentary & Weekly Charts

Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

The Federal Reserve’s decision on Thursday to proceed with QE3 + was not a surprise to us, albeit for most of the market participants, and equity markets responded accordingly. Volume gains on Thursday and Friday were impressive. Additional follow through early this week is likely. However, news from the Fed came at a time when equity markets already were significantly overbought based on short and intermediate technical indicators. Technical action on Friday was an interesting “tell”. Equity markets moved higher at the open, dropped close to break-even just before the close and closed strong on end-of-day buy orders. Not an impressive follow through!

The weakest three week period of the year starts this week. The period is related to pre-third quarter earnings report news. The next three-week period historically is when negative guidance is most frequently released by corporations and when analysts reduce estimates and recommendations. The frequency of negative guidance since release of second quarter results has been unusually high this year. We see evidence of history to repeat during the next three weeks.

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10Sep/12

Morning Market Commentary & Weekly Charts – Russia’s “Nukes of Hazard”

Automotive, Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Peugeot, Technology, Weekly Market Commentary & Charts

Weekly Investment Conclusion:

Downside risk exceeds upside potential in equity markets during the next six weeks.The breakout by the S&P 500 Index last week implies that depth of the downside risk is less than previous. Selected seasonal trades continue on the upside (gold, energy, software) and downside (transportation). However, many of these seasonal trades reach the end of their period of seasonal strength this month. September is a month of transition.

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04Sep/12

Morning Market Commentary & Weekly Charts

Commodities, Currencies, Gold & Precious Metals, Metals, Oil, Gas & Energy, Weekly Market Commentary & Charts

So Mr. Bernanke, Ready for a run down Corbett’s Couloir?

Following on from last week’s peak of the Federal Reserve Chairman Ben Bernanke’s closely watched speech at the Jackson Hole symposium, markets widely believe that further quantitative easing (QE) is now on the cards for the central bank’s next meeting on September 13th and 14th.

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01Mar/10

Global Markets Technical Outlook

Commodities, Gold & Precious Metals, Industrial Manufacturing, Oil, Gas & Energy, Technical

We see the current EURO weakness, and implicit US$ strength as a tremendous opportunity to add towards EU quality assets, and inversely, to reducing US assets, as we expect the US$ weakness to resume later in 2010. Please read our in-depth report on the US Economy , Chinese Economy,  Japan’s Economy, European Economies, Emerging Economies, Currencies, Global Equity Markets and Commodities.

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