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8 Min Read
From a “Big Picture Perspective” the week-of Jan. 2, 2017 showed green-shoot signs of building global inflation and thus a continuation of an orderly movement away from dangerous deflationary forces. Globally, governments and Central Bank’s stimulative activities of alleviating chronic slow growth and low to negative interest rates are showing positive results.
Near-term market considerations week beginning Jan. 9, 2017
Near-Term summary considerations:
10-Year US Treasury Yield: Acting a little bullish with a lower yield potential, given market structure financial institutions and borrowers winners at these levels.
US Dollar Index: Correcting upside move underway, 2017 European Union management/mismanagement key factor in dollar strength or weakness in year ahead.
CRB Index: Evolving global macro forces supportive and providing green-shoot inflationary support, presently oil price a key factor in defining index direction, see oil next.
$WTIC Light Crude Oil: Fascinating market, but a market which appears in search of higher highs, some corrective price action should be anticipated.
Soybeans: Neutral, price weakness now dominates.
Corn: Neutral, this market acting more bullish than bearish, patience will be rewarded.
Rice: Neutral, price weakness remains problematic defined by global uncertainties.
Cotton: Bullish, if prices fall below 68-cents corrective price action likely, re-evaluate price expectations.
Wheat: Bullish Acting, this should be an interesting week.
SPY SPDR S&P 500 ETF: Trend remains positive.
QQQ NASDAQ Power Shares: Closed week at record high, corrective price action needed, but not required.
EFA iShares ETF - Global Equities Excluding U.S. and Canada: Range Bound, but appears to be building strength, positive for commodities.
EEM iShares ETF, Emerging Market Equities: Range Bound – Potentially Bullish – Positive for commodities in general.
MCHI iShares ETF - China Equities Available International Investors: Momentum appears to be building.
Bloomberg Article and Video Clip
Prices Are Rising Across the Globe. That's a Good Thing, Right? By Bloomberg’s Enda Curran, Jeff Black, and Jeanna Smialek, Jan. 4, 2017
From goods leaving the factory floor in China’s industrial towns to gasoline at the pump in Europe and America, prices that stayed low for years are finally going up. So that’s a good sign, right?
After a period of central bankers fretting about deflation and resorting to unconventional techniques like negative rates to respond, the easy answer is “yes.” But whether faster price gains mean that the world is finally healing from the Great Recession may be revealed only by what happens next.
In the rosy case, the global economy is now being offered a tonic by resurgent pricing for key commodities such as oil and iron ore, and a buoyant U.S. entering the presidency of Donald Trump will help drive demand, wages and investment everywhere. In another scenario, a litany of political risks from Trump himself to the potential bungling of Britain’s exit from the European Union await the unwary, and reflation could end up crimping consumer spending while failing to propel wages and investment.
“Some of the financial market optimism is justified but political and policy risks remain, and the rise in global inflation is likely to prove short-lived,” said Janet Henry, global chief economist at HSBC Bank Plc in London.
Continue reading at following link
Market-by-Market: Near Term Market Considerations Week Beginning January 9, 2017
Charts 1 - 3. $UST10Y - 10-Year US Treasury Yield
Primary Consideration:
Neutral Near-Term: the 10-Year Treasury Yield acting a little bullish with lower yield potential, given market structure financial institutions and borrowers winners at these levels, next 2 weeks likely critical to directional movement
Washington Leadership expected to be friendly to business, which favors investing in equities, the dollar and commodities over bonds – entry and exit always the trick
The Bond market topped (low yield) back in July anticipating domestic and global fiscal policy (infrastructure, etc.) stimulus activities would be elevated to a level to compliment ongoing monetary policy.
Charts 4 - 6. Power Shares US Dollar Index
Primary Considerations:
Neutral Near Term - Correcting upside move underway
2017 European Union management/mismanagement key factor in dollar strength or weakness in the year ahead
Global interventionist government and Central Bank activities will define dollar strength or weakness over the next 3 to 12 months
Charts 7 - 9. CRB Index
Primary consideration:
Evolving global macro forces supportive and providing green-shoot inflationary support, presently oil price key factor in defining index direction
The CRB Commodity Index appears to be building a base to move higher, which near term would be a primary function of oil price strength leadership, reasonably stable dollar, and belief and confidence in the near term future.
Charts 10 - 12. $WTIC Light Crude Oil
Primary Consideration:
Fascinating market, but a market which appears in search of higher highs, some corrective price action should be anticipated
Likely primary range $40 to $60 with possible high in $72 area in 2017
A challenging market for a number of economic and geopolitical reasons
Washington Leadership likely bullish U.S. production
OPEC and other oil producers, or events may define top
Global uncertainties supportive of prices
Charts 13 - 15. Soybeans
Primary Consideration:
Neutral - I remain more concerned about additional price weakness and the culmination of a bottoming process near term. Presently, downside price considerations to 9.23. This market is coiling for a major price move
Alternative Consideration:
Considering global risks and uncertainties and building aggressive fiscal and monetary policy intervention activities argue a price bottom is in place or near
Additional Thought:
Market participants appear to be building a risk appetite. Being short means at least having close mental stops
Charts 16 – 18. Corn
Primary consideration:
Neutral – Assume a retest of the previous low at $3.15 per bushel, but also consider this market continues to act more bullish than bearish, which maybe exactly why this market may revisit the previous low
Alternative consideration: (Looking more like the primary consideration)
Bottom in place and upside consideration to $4.15 per bushel
Charts 19 - 20. Rice
Primary consideration:
Neutral – Price weakness remains defined in part by global economic, political and social uncertainties
Charts 21 - 23. Cotton
Primary Consideration:
Bullish prices likely into the 84-cent area. Near term if prices fall below 68-cents, then likely corrective price activity underway
Charts 24 - 26. Wheat
Primary consideration:
Bullish acting, this should be an interesting week
Charts 27 – 29. SPDR S&P 500 ETF
Primary Consideration:
Trend remains positive
Prices may need to correct some of their gains
Charts 30 - 32. QQQ NASDAQ Power Shares
Primary Consideration:
Closed week at record high, likely corrective price action needed
Charts 33 - 35. EFA iShares ETF, Global Equities Excluding U.S. & Canada
Primary Consideration:
Range Bound, but appears to be building strength
The week of Jan. 2, 2017 was not a bad week, so we watch the price action and see if we can duplicate the effort the week of January 9, 2017
Charts 36 - 38. EEM iShares ETF, Emerging Market Equities
Primary Consideration:
Range Bound – Potentially Bullish – Positive for commodities in general
Charts 39 - 41. MCHI iShares ETF, China Equities available international investors
Primary Consideration:
Potentially Bullish
Momentum appears to be building
Charts Book Index – Link
Chart 1. $UST10Y - 10-Year US Treasury Yield, Weekly Chart, 2012 – Jan. 6, 2016
Chart 2. $UST10Y - 10-Year US Treasury Yield, Daily Chart, May 2016 – Jan. 6, 2016
Chart 3. $UST10Y - 10-Year US Treasury Yield, Monthly Chart, 1997 – Jan. 6, 2016
Chart 4. Power Shares US Dollar Index, Weekly Chart, Dec. 2013 – Jan. 6, 2016
Chart 5. Power Shares US Dollar Index, Daily Chart, July 2016 – Jan. 6, 2016
Chart 6. Power Shares US Dollar Index, Monthly Chart, July 2016 – Jan. 6, 2016
Chart 7. $CRB Reuters/Jefferies CRB Index, Weekly Chart, September 2013 – Jan. 6, 2016
Chart 8. $CRB Reuters/Jefferies CRB Index, Daily Chart, May 2016 – Jan. 6, 2016
Chart 9. $CRB Reuters/Jefferies CRB Index, Monthly Chart, 2007 – Jan. 6, 2016
Chart 10. $WTIC, Weekly Chart, Dec. 2013 – Jan. 6, 2016
Chart 11. $WTIC, Daily Chart, May 2016 – Jan. 6, 2016
Chart 12. $WTIC, Monthly Chart, July 2005 – Jan. 6, 2016
Chart 13. Soybeans, Weekly Chart, September 2013 – Jan. 6, 2016
Chart 14. Soybeans, Daily Chart, May 2016 – Jan. 6, 2016
Chart 15. Soybeans, Monthly Chart, 15 Year Chart – Jan. 6, 2016
Chart 16. Corn, Weekly Chart, September 2013 – Jan. 6, 2016
Chart 17. Corn, Daily Chart, May 2016 – Jan. 6 2016
Chart 18. Corn, Monthly Chart, 2005 – Jan. 6, 2016
Chart 19. Rough Rice Jan '17 (ZRF17) CBOT, Quarterly, Continuation Chart, 1987 – Jan. 6, 2016
Chart 20. Rough Rice Jan '17 (ZRF17) CBOT, Daily Continuation Chart, August 2016 – Jan. 6, 2016
Chart 21. Cotton, Weekly Chart, September 2013 – Jan. 6, 2016
Chart 22. Cotton, Daily Chart, May 2016 – Jan. 6, 2016
Chart 23. Cotton, Monthly Chart, 2007 – Dec. 23, 2016
Chart 24. Wheat, Weekly Chart, September 2013 – Jan. 6, 2016
Chart 25. Wheat, Daily Chart, May 2016 – Jan. 6, 2016
Chart 26. Wheat, Monthly Chart, July 2016 – Jan. 6, 2016
Chart 27. SPDR S&P 500 ETF, Weekly Chart, September 2013 – Jan. 6, 2016
Chart 28. SPDR S&P 500 ETF, Daily Chart, May 2016 – Jan. 6, 2016
Chart 29. SPDR S&P 500 ETF, Monthly Chart, May 2016 – Jan. 6, 2016
Chart 30. QQQ NASDAQ Power Shares, Weekly Chart, September 2013 – Nov 18, 2016
Chart 31. QQQ NASDAQ Power Shares, Daily Chart, June 2016 – Jan. 6, 2016
Chart 32. QQQ NASDAQ Power Shares, Monthly Chart, 2007 – Jan. 6, 2016
Chart 33. EFA iShares ETF, Global Equities Excluding U.S. & Canada, Weekly Chart, May 2014 – Jan. 6, 2016
Chart 34. EFA iShares ETF, Global Excluding U.S. & Canada, Daily Chart, 2016 – Jan. 6, 2016
Chart 35. EFA iShares ETF, Global Excluding U.S. & Canada, Monthly Chart, 2007 – Dec. 23, 2016
Chart 36. EEM iShares ETF, Emerging Market Equities, Weekly Chart, 2014 – Jan. 6, 2016
Chart 37. EEM iShares ETF, Emerging Market Equities, Daily Chart, 2016 – Jan. 6, 2016
Chart 38. EEM iShares ETF, Emerging Market Equities, Monthly Chart, 2007 – Jan. 6, 2016
Chart 39. MCHI iShares ETF, China Equities available international investors, Weekly Chart, 2014 – Jan. 6, 2016
Chart 40. MCHI iShares ETF, China Equities available international investors, Daily Chart, 2016 – Jan. 6, 2016
Chart 41. MCHI iShares ETF, China Equities available international investors, Monthly Chart, 2011 – Jan. 6, 2016
Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected].
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