Daily Close | Forex, Metals, Oil, Agriculture July 21, 2020



If it is ethanol based which uses grains and sugar as opposed to the deadly concoctions that methanol is derived from, it would be safe to use. General Comments: Cotton closed was higher on bad growing conditions continued in West Texas. Corn silking progress in Iowa and Indiana are above the five-year average at 9% and 10% respectively. The weather in Florida is currently good for the crops. In the overnight electronic session, the December corn is currently trading at 332 ½ which is 3 ¼ cents lower. NOAA is calling for hot weather to persist which will lead to additional electric power demand. The US weather situation is mixed, with good rains noted in the Southeast and good conditions in the Midsouth. Mr. Scoville is a futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar.


The US dollar on the other hand traded lower against all of the major currencies. The tight correlation makes sense given the euro accounts for more than 57% of DXY’s exposure. Micro and macro issues constantly act as a reality check for Coca-Cola, including the continuous onslaught on sugary drinks and a strong US Dollar. Denbury’s second-lien notes are trading at around 40 to 45 cents on the dollar. Instead, the U.S. dollar, actually, looks more likely to rebound from both a monetary policy and sentiment perspective. The debt would need to be assumed by the acquirer, resulting in upside (trading at pennies on the dollar) that is far greater than the stock. Diagnostics was the biggest dollar contributor to the beat, with 7% growth and a better than 10% beat relative to expectations. Developing… European Union leaders finally reached a $2 trillion deal to rebuild their economy, sending the euro to a 6 month high above 1.15. One place to look to see if the investment community feels this way is to check out the movement in the Dollar/Euro exchange rate.

If eprenetapopt eventually becomes a standard of care for cancers with p53 mutations, Aprea will become a multi-billion dollar market capitalization company. The Australian dollar will remain in focus as Treasury is scheduled to deliver an economic and fiscal update on Thursday. Denbury’s 2023 subordinated bonds are currently trading at around 3 cents on the dollar. With the US economic outlook growing more uncertain, these steps to insure a stronger recovery has and should continue to drive euro higher. During the four days these meetings have gone on and as the news of a deal leaked out, the Euro grew stronger relative to the dollar. All in all, potential unwind in crowded long euro and yen positions will likely fuel a short covering rally in the U.S. dollar. Although the macro environment is supportive, reflecting in the decline in the dollar and US real rates, speculators are cautious toward platinum.

The Dollar dumped.


But this is different if we look at the last 5 year period, where the GDX would have yielded a neat 193% return, compared to gold’s 63%. With gold prices near all-time highs, you might be thinking that this could be a good moment to invest in DUST, but nothing could be further from the truth. What I would like to do on this report is look at the price of gold over the long term, intermediate- and short-term environment, and some possible harmonic alignments. There is however a scenario where we will see gold and, especially miners, go down, and that would be another market crash. High inflation is accompanied by higher gold prices, while subdued inflation/deflation sees lower prices. We saw a very rare event in the gold future market known as backwardation, where the spot price is higher than the futures price. There are three main ways you can gain exposure to gold; A gold-linked index, miners stocks, or physical gold. Changes in the gold price can occur due to short-term demand/supply changes, but the bottom line is that gold is a pretty useless yellow metal sitting in bank vaults.

The Direxion Daily Gold Miners Index Bear 2x Shares ETF (DUST) tracks the inverse performance of the NYSE Arca Gold Miners Index. Below, I discuss the macroeconomic factors coming into play and what some of the best available options are to get exposure to the gold price in a “safe” way. If we look at the period leading up to 2008, we can see that inflation, gold price, and interest rates are all steadily climbing, as is the stock market. Gold looks superb, silver looks better, and the miners look best of all. Even mainstream analysts have come out to say that they expect higher gold prices. However, as you may know, gold miners don’t always outperform gold. During the closedowns, we saw spot gold prices shoot up, as suppliers were having trouble delivering gold. While at certain points in time DUST could have provided some good trading opportunities, the overall trend of the gold and mining markets has been upward.

As I’ve mentioned before, inflation is a catalyst for gold prices, and it is also a catalyst for higher interest rates and leads to deleveraging. If gold closes below the VC PMI nine-year price momentum indicator of $1497, it would negate the bullish signal to neutral. In essence, investing in the DUST means that you expect shares of gold miners to go down, which probably means you also think gold prices will come down. If you are thinking about investing in gold, I’d recommend allocating some funds to physical gold and select mining stocks.


One vessel each came from Brazil, Oman, Portugal, Russian Federation, Spain and Trinidad & Tobago.The gasoline imports to West Coast were aboard one small and two medium range tankers. This basically methodology has KOLD shorting the front natural gas futures contract until a few weeks before expiry, at which point it rolls exposure into the next contract. As we would expect, the rapid rise in gasoline prices in 2008 was accompanied by a significant drop in sales volume. It trades at 7x last 12 months (“LTM”) EBITDA, which I deem appropriate given headwinds in the oil patch. The problem with this simple approach to natural gas futures is the high degree of roll yield associated with this trade. That said, oil prices fell to as low as $10 after the pandemic, but rebounded to over $40 after supply cuts from OPEC and Russia. At $50 WTI oil instead, Denbury would be worth around $1.398 billion instead and the second-lien notes would have a roughly 60% estimated recovery.

Natural gas fundamentals have been very bearish this year as poor winter demand was followed by weakening economic conditions. Clearly, gasoline prices were falling beginning in 2018 and the global pandemic facilitated a further and rapid drop. Oil services firms will need ample liquidity to survive current recessionary pressures. The last downturn in the oil patch caused some of the lesser-capitalized firms to go belly up. KOLD is a relatively straightforward ETF which is shorting the Bloomberg Natural Gas Subindex at 2 times leverage. Deep water E&P may not be economical at today’s oil prices.BKR’s ample liquidity and low trading multiple make the stock a hold into earnings. To set the stage for this section, let’s start out with a quantitative relationship which helps call changes in the price of natural gas. Orbcomm has an industrial user base in transport, maritime and oil & gas, which were some of the hardest hit due to oil prices and slowing trade. Gasoline prices and increases in fuel efficiency are important factors, but there are also some significant demographic and cultural dynamics in this data series.

I am quite bullish natural gas. It is instructive to go back and study the history of natural gas prices as it relates to production levels. If one valued Denbury at approximately 4.0x EBITDA, it would be worth a total of $1.068 billion using $45 WTI oil as a long-term price. Specifically, it is my view that over the coming months, we will see natural gas fundamentals strongly shift to the bullish side resulting in losses for long KOLD traders.

United States

Mr Trump claimed Mr Wallace was misrepresenting the test and said the questions got harder as the test went on. The management mentioned in the conference call that it could take several quarters to redeploy the excess liquidity into assets providing yields greater than the Fed’s current offering. President Trump can’t pick and choose,” said ACLU Voting Rights Project director Dale Ho, who knocked the Trump administration. The Nasdaq 100 edged lower after closing at an all-time high on Monday, up 25% YTD, with investors awaiting a barrage of megacap tech earnings later this week. However, economic improvement in the US was thrown into doubt as Coronavirus cases surged higher in states that had reopened. The federal law enforcement officers were comprised by units with the Department of Homeland Security, Customs and Border Protection and the US Marshals Service. Mr Trump has threatened to send the federal officers to Chicago, Philadelphia, Detroit, New York City, Baltimore and Oakland after he celebrated the scenes out of Portland this week.

While President Donald Trump said daily White House pandemic briefings would resume in the face of out-of-control U.S. infections, he has also been focusing attention on anti-police brutality demonstrations. Sadly, they are told that using the Fed’s giant electronic fiat photocopier to buy zombie government and corporate bonds with printed fiat is their “ticket to ride”. But the same analytical tools that led me to predict a Trump win last time are showing me his chances are poorer this time. The ACLU has vowed to take the Trump administration to court over the new census memo. Donald Trump’s former lawyer Michael Cohen claims the president made racist remarks about Barack Obama and former South African president Nelson Mandela. This industry group has been leading the tech heavy Nasdaq Composite higher recently, but it is now having it’s second distribution day since July 9th, 2020.

Mr Trump has threatened school systems that do not reopen in the fall with federal funding, saying he will withhold it if kids are back in classrooms. The “unflattering details” include Mr Trump’s alleged “pointedly anti-Semitic remarks and virulently racist remarks against such Black leaders as President Barack Obama and Nelson Mandela.” Should the Nasdaq Composite experience a few more distribution days it could be signaling something more serious for most of the leading technology stocks. The activities discussed in the memo flow directly from Donald Trump’s executive order aiming to dole out substantial punishments on anyone who destroys a federal monument or statue. I know it well since I was one of very few analysts who predicted a Trump victory in 2016, even though he was behind in the polls. Trump said he would deploy hundreds of armed federal agents to cities run by Democratic mayors, as he has done in Portland, Oregon. There was no US data and stocks rallied but investors are less interested in buying dollars given ongoing concerns about the US economic outlook.


Now, Ms. Merkel has to deliver. The statement followed “candid” talks with PM Boris Johnson focused on China. Which raises the question…has the EU just kicked the can down the rod a little bit more? Chancellor Merkel hailed the agreement as setting the financial foundations for the EU for the next seven years. The European Union has a reputation of just postponing things. This time around, Ms. Merkel came into the meetings promoting this current approach. As details emerge from the EU’s spending stimulus, it’s clear the marathon COVID stimulus summit was a complete failure. Ms. Merkel is in her last year at the helm of the German state and is also taking her final bow at the EU meetings. This is the first time that the European Union has acted as a real fiscal union might act. German Chancellor Angela Merkel and French President Emmanuel Macron were forced to compromise on what would be spent and how much would be handed out in grants. Data from the EU supports these observations.

German leader, Angela Merkel, has usually sided with the more conservative states and opposed moving to a position of greater fiscal union. The deal was not €1.8 trillion although that is what the EU would like everyone to believe. Not only have European leaders agreed on a huge bailout, but also a mechanism for joint debt-pooling at the European Union level. On Monday, the EU leaders reached a deal amounting to €750 billion to reconstruct the region’s pandemic-stricken economies. The EU rounded up €1.75 trillion to €1.8 trillion.