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Global equities respond favorably; commodity markets mixedGlobal equities respond favorably; commodity markets mixed
Global equity and commodity markets respond favorably to initial blast of directives from new administration and Congress.
Bobby Coats
February 3, 2017
11 Min Read
Dozens of round modules grace the edge of a cotton field near Portland, Ark., in 2016.
For the most part Global Equity and a number of Commodity Markets shrugged off “Geopolitical and Geo-economic Uncertainties” and responded favorably to presidential, congressional, and Federal Reserve leadership provided by them and their respective global counterparts to ongoing and planned global simulative economic activity.
A week does not make a trend, but presently the global equity and a number of commodity markets” appear to acknowledge the intent of political and central bank leadership to achieve an accelerated move away from:
Chronic low inflation to an aggressive simulative reflation economic setting
S. Central Bank’s monetary accommodation to managing economic activity in a rising interest rate environment
The following is a select list of International and Commodity ETFs which provide insight into the market’s reaction to the first week of presidential, congressional and central bank activities.
International ETFs | ||
Symbol | Name | Weekly % |
Change | ||
EWW | Mexico (iShares) | 5.77% |
EPOL | Poland Investable (iShares) | 5.25% |
RSX | Russia (MV) | 4.74% |
ERUS | Russia Capped (iShares) | 4.64% |
SCIF | Asia India Small Cap Fund (MV) | 4.17% |
BRF | 10_LA Brazil SmallCap (MV) | 3.93% |
FM | EM Frontier Markets (GH) | 3.72% |
INDA | 10_Asia India MSCI Index (iShares) | 3.55% |
EPI | Asia India Earnings Fund (WT) | 3.43% |
ILF | LA Latin America 40 (iShares) | 3.42% |
PIN | Asia India (PS) | 3.33% |
EWT | Asia Taiwan (iShares) | 3.00% |
EWZ | LA Brazil (iShares) | 2.97% |
EEM | Emerging Markets (iShares) | 2.88% |
EIS | Israel (iShares) | 2.86% |
THD | Asia Thailand Investable (iShares) | 2.78% |
ENZL | Asia New Zealand Investable (iShares) | 2.77% |
CQQQ | Asia China Sector Technology (GH) | 2.74% |
EPU | LA Peru (iShares) | 2.73% |
FRN | Frontier Markets 100 MSCI (iShares) | 2.71% |
HEEM | Currency Hedged Emerging Mkts (iShares) | 2.67% |
VWO | Emerging Markets (Vanguard) | 2.67% |
AAXJ | Asia Ex-Japan (iShares) | 2.63% |
IEMG | EM Emerging Markets Core (iShares) | 2.58% |
VNM | Asia Vietnam (MV) | 2.48% |
EGPT | AF Egypt (MV) | 2.43% |
EUFN | EU Europe Financial Sector (iShares) | 2.37% |
KWEB | Asia China Sector Internet (KS) | 2.36% |
EIDO | Asia Indonesia (MV) | 2.22% |
MCHI | Asia China Broad MSCI Index (iShares) | 2.19% |
EDIV | Emerging Dividend (SPDR) | 2.15% |
EPHE | Asia Philippines Investable (iShares) | 2.12% |
EWM | Asia Malaysia (iShares) | 1.91% |
EWY | Asia South Korea (iShares) | 1.85% |
EWO | EU Austria (iShares) | 1.80% |
NORW | EU Norway 30 (GX) | 1.77% |
EWG | EU Germany (iShares) | 1.72% |
HEWG | Currency Hedged Germany (iShares) | 1.69% |
EWP | EU Spain (iShares) | 1.69% |
EWD | EU Sweden (iShares) | 1.68% |
EWC | NA Canada (iShares) | 1.60% |
HAO | Asia China Broad SmallCap (GH) | 1.55% |
EWH | Asia Hong Kong (iShares) | 1.54% |
EWL | Switzerland (iShares) | 1.49% |
DXJ | Currency Hedged Japan (WT) | 1.49% |
TAO | Asia China Sector Real Estate (GH) | 1.46% |
FXI | Asia China Broad LargeCap 50 (iShares) | 1.46% |
NGE | AF Nigeria (GX) | 1.40% |
EWU | EU United Kingdom (iShares) | 1.32% |
IXUS | Global Core MSCI Total (iShares) | 1.29% |
HEWJ | Currency Hedged Japan (iShares) | 1.28% |
CHIQ | Asia China Sector Consumer (GX) | 1.25% |
VEU | All World Ex-US (VG) | 1.25% |
GULF | Middle East Dividend (WT) | 1.23% |
CHIX | Asia China Sector Financials (GX) | 1.21% |
EZA | South Africa (iShares) | 1.21% |
ECH | Chile (iShares) | 1.15% |
DWX | International Dividend (SPDR) | 1.08% |
GXG | Columbia 20 (GX) | 1.06% |
SCZ | Europe-Australasia-FarEast SmallCap (VG) | 1.05% |
HEDJ | Currency Hedged Europe (WT) | 0.99% |
ALD | Asia Local Debt (PS) | 0.98% |
EFA | Europe-Australasia-FarEast Index (iShares) | 0.98% |
ASHR | Asia China Broad CSI 300 A-Shares (XT) | 0.97% |
EWS | Asia Singapore (iShares) | 0.94% |
GAF | Emerging Middle East Africa (SPDR) | 0.86% |
IDV | International Select Dividend (iShares) | 0.85% |
IEFA | Europe-Australasia-FarEast Core (iShares) | 0.83% |
HEFA | Currency Hedged EAFE (iShares) | 0.79% |
EWJ | Asia Japan (iShares) | 0.67% |
DBEF | Currency Hedged EAFE (DBX) | 0.63% |
EWK | Belgium (iShares) | 0.62% |
EZU | All Eurozone (iShares) | 0.61% |
HEZU | Currency Hedged EMU (iShares) | 0.56% |
EWA | Asia Australia (iShares) | 0.52% |
SDIV | Global SuperDividend (GX) | 0.52% |
EMLC | Emerging Markets Local Currency Bond Fund (MV) | 0.39% |
EWN | Netherlands (iShares) | 0.32% |
HYEM | Emerging Markets High Yield Bond Fund (MV) | 0.29% |
EMB | Emerging Markets USD Bond Fund (iShares) | 0.24% |
EDD | Emerging Markets Domestic Debt Fund (MS) | 0.14% |
PCY | Emerging Markets Sovereign Debt Fund (PS) | 0.03% |
PCY | Emerging Markets Sovereign Debt Fund (PS) 2 | 0.03% |
GREK | EU Greece (GX) | 0.00% |
EWQ | France (iShares) | -0.16% |
BNDX | Total International Bond Fund (VG) | -0.19% |
TUR | Turkey (iShares) | -1.20% |
EWI | EU Italy (iShares) | -1.30% |
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Commodity ETFs | ||
Symbol | Name | Weekly % |
Change | ||
LD | Lead Bloomberg SubIndex ETN (iPath) | 9.04% |
UNG | Natural Gas Fund (USCF) | 4.84% |
JJC | Copper Bloomberg SubIndex ETN (iPath) | 3.05% |
BAL | Cotton Bloomberg Subindex ETN (iPath) | 2.83% |
LIT | Lithium (GX) | 2.00% |
GAZ | Natural Gas Bloomberg Subindex ETN (iPath) | 1.87% |
JJU | Aluminum Bloomberg SubIndex ETN (iPath) | 1.25% |
PPLT | Physical Platinum Shares (ETFS) | 0.75% |
DBB | Base Metals Fund (PS) | 0.50% |
SGG | Sugar Bloomberg Subindex ETN (iPath) | 0.38% |
SLV | Silver Trust (iShares) | 0.19% |
USO | Oil Fund 03 Month Fund (USCF) | 0.09% |
DJP | Bloomberg Commodity Bloomberg Index ETN (iPath) | -0.37% |
GSP | GSCI Commodity Total Return ETN (iPath) | -0.49% |
BNO | Oil Brent Fund (USCF) | -0.59% |
DBC | Commodity Tracking Fund (PS) | -0.76% |
USL | Oil Fund 12 Month Fund (USCF) | -0.90% |
DBE | Energy Fund (PS) | -0.90% |
DBP | Precious Metals Fund (PS) | -1.09% |
SOYB | Soybeans Fund (TC) | -1.10% |
DBA | Agriculture Fund (PS) | -1.25% |
JO | Coffee Bloomberg Subindex ETN (iPath) 2 | -1.31% |
GLD | Gold Trust (SPDR) | -1.36% |
JJN | Nickel Bloomberg SubIndex ETN (iPath) | -1.40% |
COW | Livestock Bloomberg Subindex ETN (iPath) | -1.62% |
CORN | Corn Fund (TC) | -1.83% |
JJG | Grains Bloomberg Subindex ETN (iPath) | -2.20% |
WEAT | Wheat Fund (TC) | -2.34% |
UGA | Gasoline Fund (USCF) | -2.99% |
NIB | Cocoa Bloomberg Subindex ETN (iPath) | -3.39% |
PALL | Physical Palladium Shares (ETFS) | -6.57% |
President Trump’s First Week of Action
https://www.whitehouse.gov/the-press-office/2017/01/28/president-trumps-first-week-action
Week “ONE” for United States President Donald Trump produced an array of emotions for all watching the unfolding events. The following is how two news outlets described the week:
The Wall Street Journal Editorial Board: “President Trump Is Making Short Work Of Campaign Promises…” “President Trump is making short work of campaign promises, and on Tuesday he signed executive orders reviving the Keystone XL and Dakota Access pipelines.” (Editorial, “No More Keystone Capers,” The Wall Street Journal, 1/24/17)
USA Today Editorial Board: Trump “Came Down On The Right Side Of The Debate… By Advancing Construction Of The Keystone XL And Dakota Access Pipelines.” “President Trump, following through on a campaign promise, came down on the right side of the debate Tuesday by advancing construction of the Keystone XL and Dakota Access pipelines, both of which had been blocked by the Obama administration.” (Editorial, “Trump Revives Pipeline Projects,” USA Today, 1/24/17)
Select White House Happenings for January 20-28, 2017 are as follows:
President Trump and Prime Minister May's Opening Remarks, January 27, 2017
Joint Statement on U.S.-Mexico Relations, January 27, 2017
President Trump Announces Manufacturing Jobs Initiative, January 27, 2017
Presidential Memorandum Regarding Construction of American Pipelines, January 24, 2017
Presidential Memorandum Regarding the Hiring Freeze, January 23, 2017
Readout of the President’s Call with Prime Minister Netanyahu of Israel, January 22, 2017
Remarks by President Trump and Vice President Pence at CIA Headquarters, January 21, 2017
Statement By The President On Cabinet Nominee Confirmations, January 20, 2017
Near Term Market Considerations Week Beginning January 30, 2017
Near Term Summary Considerations:
10-Year US Treasury Yield: Neutral, acting a little bullish with a lower yield potential
US Dollar Index: Correcting upside move underway or possible sideways consolidation for a period
CRB Index: Global macro forces supportive and providing green-shoot inflationary support
$WTIC Light Crude Oil: A market which appears in search of higher highs, fundamentals suggest some corrective price action should be anticipated
Soybeans: Near term price strength remains, which makes one revisit 2016 price action in March, April and May of 2016; fundamentals remain bearish
Corn: Consolidating, this market continues to act more bullish than bearish, closing and holding above $3.69 likely implies a move into the $4.15-plus area
Rice: Price weakness remains defined in part by global economic, political, and social uncertainties. Overplanting in 2017 given present fundamentals would provide added market challenges
Cotton: Bullish, if prices fall below 68-cents corrective price action likely, revaluate price expectations
Wheat: Consolidating, needs to close and hold above $4.40 to maintain any upward momentum
SPY SPDR S&P 500 ETF: Trend remains positive, prices may need to correct some of their gains
QQQ NASDAQ Power Shares: Another strong week, corrective price action needed, but not required
EFA iShares ETF - Global Equities Excluding U.S. and Canada: Building momentum
EEM iShares ETF, Emerging Market Equities: Range bound –Potentially bullish – Positive for commodities in general
MCHI iShares ETF - China Equities Available International Investors: Potentially bullish, momentum appears to be building
Market-by-Market: Near Term Market Considerations Week Beginning January 30, 2017
Charts 1 - 3. $UST10Y - 10-Year US Treasury Yield
Primary Consideration:
Neutral: the 10-Year Treasury Yield acting a little bullish with a lower yield potential
This is a market that likely builds a trading range for the next one to two years maybe between 2.0 and 4.0, but too early to tell
We simply need to allow chart activity to provide guidance
Present market structure suggests financial institutions and borrowers are winners at these levels
Some suggest the 35 year bull bond market will be over with a yield that holds above 2.6, others at 3.0; Actually, global fiscal and policy intervention may make picking these points premature
This is a market that could simply move sideways for a few years and even revisit the previous low or make a new low
Charts 4 - 6. Power Shares US Dollar Index
Primary Considerations:
Neutral - The following determines sideways consolidation for a period or a resumption of the Dollar’s move to the upside:
2017 European Union management/mismanagement a key factor in dollar strength or weakness in year ahead
Bigger Picture: Global interventionist government and Central Bank activities will define dollar strength or weakness over the next 3 to 12 months, including President Trump’s currency policy objectives
Chart 7. EURO
Potentially bullish near term
Chart 8. Australian Dollar
Near term building momentum
Chart 9. Canadian Dollar
Potential near term strength
Chart 10. Japanese Yen
Potential near term strength
Chart 11. British Pound
Possible corrective price action before heading lower
Chart 12. Dow Jones
Trend remains up
Chart 13. Dow Transports
Trend remains up
Chart 14. S&P 500 Large
Trend remains up
Chart 15. NASDAQ Composite
Trend remains up
Chart 16. World less U.S. & Canada
Positive momentum appears to be building
Chart 17. Emerging Markets
Positive momentum appears to be building
Chart 18. Australia
Positive momentum appears to be building
Chart 19. Brazil
Positive momentum appears to be building
Chart 20. Canada
Positive momentum appears to be building
Chart 21. China
This China equity remains neutral
Chart 22. Mexico
Possible bottom being formed
Chart 23. Japan
Positive momentum appears to be building
Chart 24. Russia
Price direction likely dependent on oil price firmness
Chart 25. India
India is presently dealing with a number of internal issues
Charts 26 - 28. CRB Index
Primary consideration:
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 and/or broad commodity support, reasonably stable dollar, and belief and confidence in the near term future.
Charts 29 - 31. $WTIC Light Crude Oil
Primary Consideration:
A market which appears in search of higher highs, some corrective price action should be anticipated
2017 – Likely primary range $40 to $60 with possible high in $72 area
A challenging market being influenced by economic and geopolitical issues
Washington Leadership likely bullish U.S. production
OPEC and other oil producers have major role in defining 2017 price structure
Global uncertainties supportive of prices
Charts 32 - 34. Soybeans
Primary Consideration:
Near term price strength remains, which makes one revisit 2016 price action in March, April and May. Given fundamentals I remain concerned about additional price weakness and the culmination of a bottoming process
2017 – Pricing opportunities likely emerge as the year progresses
Additional Thought:
Market participants appear to be building a risk appetite. Being short means at least having close mental stops
Charts 35 – 37. Corn
Primary consideration:
Consolidating, but this market continues to act more bullish than bearish, closing and holding above $3.69 likely implies a move into the $4.15-plus
2017 – Pricing opportunities emerge as the year progresses in corn, soybeans, and wheat
Charts 38 - 39. Rice
Primary consideration:
Neutral – Price weakness remains defined in part by global economic, political and social uncertainties
Overplanting in 2017 without additional demand source could be highly problematic for 2017 marketing year prices
Charts 40 - 42. 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 43 - 45. Wheat
Primary consideration:
Consolidating, needs to close and hold above $4.40 to maintain any upward momentum
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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