Agriculture
Source: Bloomberg Gold remains increasingly range bound… And a big reversal in WTI (back above $41)… Ags had a huge week as Corn, Soybeans soared on China chatter… General Comments Cotton closed lower on ideas of weak demand and ideas of little damage from Hurricane Sally.
Currencies
, as the divergence between the monetary policies in the U.S. and the eurozone will increase, supporting the U.S. dollar against the euro and gold. As a result, the slice of the CMBS originally rated AAA was last quoted around 69 cents on the dollar. So, the first-step every American should take to protect themselves against a falling U.S. dollar is to buy some gold. The Dollar was choppy and weak but managed to close almost unchanged. As the U.S. dollar weakens, the dividend for American investors holding ENB shares on the NYSE goes up.
Source: Bloomberg The Dollar Index fell this week, after two weeks of gains… Note also that the funds have a 66.6% exposure to the Canadian dollar versus a 19.4% weighting in the US$. Right now, the euro attracts buyers because the ECB’s policy is less dovish than the Fed and BoE.
Source: Bloomberg The Dollar Index fell this week, after two weeks of gains… Note also that the funds have a 66.6% exposure to the Canadian dollar versus a 19.4% weighting in the US$. Right now, the euro attracts buyers because the ECB’s policy is less dovish than the Fed and BoE.
Metals
FSAGX has significantly outperformed GLD this year because gold miners are more highly levered to a rise in gold prices than gold itself. IAU removes roll yield concerns through holding physical gold, making it a strong alternative for trading the rally in gold. The recent elevated VIX and momentum of gold suggests that we’ll see gold rally by around 20% over the next year. Not only is this the case, but the data also suggests that positive changes in gold are liable to see additional upside to the price of gold.
In addition to gold bullion, investors can invest in what I call “paper gold”, the (GLD). Other options are gold funds and every “gold bug” has their favorite. FSAGX owns shares in top gold producers like (NEM) and (GOLD). Investors in gold this year have been strongly rewarded with the market selloff earlier this year, leading to a rally in price by nearly 30%. Recent weeks have seen price pull back somewhat; however, I believe a few key economic indicators are strongly suggestive of price gains for gold holders.
IAU is holding physical gold bars which means that it is not exposed to the roll yield losses and commissions associated with trading futures. Gold is almost always in what is called contango, which means that futures are priced above spot most of the time. Not only is this the case, but I also believe IAU is a strong ETF for trading the rally in gold based on its methodology. This places it as a strong option for trading gold and holding for lengthy periods of time.
When it comes to actually trading gold, investors have a plethora of options – and each of these options has a key benefit or detriment associated with it. The math basically works out such that gold futures are almost always priced above the spot market. This said, now is a strong time to buy gold to capture the coming uptrend. For instance, an investor with a net worth of $2-5 million might have a 15-20% exposure to gold; $10 million, perhaps a 30-40% exposure.
Yet, that 1 ounce of gold, currently worth $1,560, can still buy you a very nice suit, shirt, belt, tie, and pair of shoes. Specifically, over the past 27 years, when we have seen the VIX hit 35-40, then on average gold has rallied by 20% over the next year. Up until mid-July, gold’s mean-reversion upleg remained in the strong uptrend that was established by this secular bull’s previous upleg leading into mid-March’s stock panic.
In addition to gold bullion, investors can invest in what I call “paper gold”, the (GLD). Other options are gold funds and every “gold bug” has their favorite. FSAGX owns shares in top gold producers like (NEM) and (GOLD). Investors in gold this year have been strongly rewarded with the market selloff earlier this year, leading to a rally in price by nearly 30%. Recent weeks have seen price pull back somewhat; however, I believe a few key economic indicators are strongly suggestive of price gains for gold holders.
IAU is holding physical gold bars which means that it is not exposed to the roll yield losses and commissions associated with trading futures. Gold is almost always in what is called contango, which means that futures are priced above spot most of the time. Not only is this the case, but I also believe IAU is a strong ETF for trading the rally in gold based on its methodology. This places it as a strong option for trading gold and holding for lengthy periods of time.
When it comes to actually trading gold, investors have a plethora of options – and each of these options has a key benefit or detriment associated with it. The math basically works out such that gold futures are almost always priced above the spot market. This said, now is a strong time to buy gold to capture the coming uptrend. For instance, an investor with a net worth of $2-5 million might have a 15-20% exposure to gold; $10 million, perhaps a 30-40% exposure.
Yet, that 1 ounce of gold, currently worth $1,560, can still buy you a very nice suit, shirt, belt, tie, and pair of shoes. Specifically, over the past 27 years, when we have seen the VIX hit 35-40, then on average gold has rallied by 20% over the next year. Up until mid-July, gold’s mean-reversion upleg remained in the strong uptrend that was established by this secular bull’s previous upleg leading into mid-March’s stock panic.
Oil
This tier-1 liquids and natural gas pipeline company also runs a Canadian gas utility. Since futures are priced above spot on average, this means that roll yield is negative for long natural gas traders. I believe this means that the next 1-2 weeks will see natural gas trade higher as bullish traders buy in once again. Natural gas remains technically bullish with the recent down weeks in price best seen as a pullback setting up for additional upside. That’s because the company has a number of high-quality, large-scale liquids and natural gas pipelines that are supported by long-term cost-of-service or take-or-pay contracts.
However, since early September, the short-term trend has turned down as natural gas has corrected and reversed some of the gains seen in recent weeks.
Throughout this year, we have seen natural gas consumption be reported as very weak as the virus and recession have impacted industrial demand for the commodity. All this said, ultimately the main problem with holding KOLD at this time is that it is shorting natural gas futures. At present, I believe we can say a few key things about natural gas at this point.
Most traders aren’t in this position, so they are stuck trading natural gas futures. To start this piece off, let’s technically examine the trend in natural gas. Specifically, at one point, natural gas had rallied by around 50%. First off, natural gas has been in a fairly strong uptrend since late July. Under the Straits of Mackinac, Line-5 consists of two twin 20″ pipes that transport 540,000 bpd of oil and NGLs from Superior, Wisconsin, to Sarnia, Ontario.
However, since early September, the short-term trend has turned down as natural gas has corrected and reversed some of the gains seen in recent weeks.
Throughout this year, we have seen natural gas consumption be reported as very weak as the virus and recession have impacted industrial demand for the commodity. All this said, ultimately the main problem with holding KOLD at this time is that it is shorting natural gas futures. At present, I believe we can say a few key things about natural gas at this point.
Most traders aren’t in this position, so they are stuck trading natural gas futures. To start this piece off, let’s technically examine the trend in natural gas. Specifically, at one point, natural gas had rallied by around 50%. First off, natural gas has been in a fairly strong uptrend since late July. Under the Straits of Mackinac, Line-5 consists of two twin 20″ pipes that transport 540,000 bpd of oil and NGLs from Superior, Wisconsin, to Sarnia, Ontario.
United States
Blog The lack of market reaction suggests that many investors are not convinced that the Fed’s new guidance represents any material shift in policy. However, the lack of market reaction suggests that many investors are not convinced that the Fed’s new guidance represents any material shift in policy. Once again, the leading areas of the market (mainly the Nasdaq and Nasdaq 100 type tech stocks) dragged the broader market lower. Fed Chair Jerome Powell has repeatedly noted the considerable uncertainty around NAIRU and r* (the non-accelerating inflation rate of unemployment and the natural interest rate, respectively).
Unlike the Fed, they haven’t made any major changes to their inflation strategy and unlike the BoE, they are not at the cusp of lowering interest rates. According to Fed President Kashkari, the central bank should hold off raising interest rates until core inflation is 2% for approximately a year. First, Fed officials had strongly signaled in speeches and interviews over the past several weeks that September would be too early to provide interest rate guidance.
Second, the forward guidance is forecast-based, with inflation only needing to be “on track” to exceed target in order for the Fed to start to tighten policy. Historically, the effect of low Fed rates on the US middle market rates has been soft. Unfortunately, this means that the carnage in the economy – not the fake one represented by the Fed manipulated stock market – is only just starting.
Since the framework review was released, some regional Fed bank presidents have offered diverging interpretations of flexible average inflation targeting. In response to the pandemic-induced market collapse, the Fed promised to buy corporate bonds and exchange-traded funds that invest in collections of corporate debt. While this cash will help the company grow its portfolio, the company faces competition from other lenders in the US middle market. We suspect the Fed’s back-to-back surprise announcements may have been aimed at guiding investors’ interpretation of the policy shifts as major changes.
In response to the COVID pandemic, the Fed ventured on a wide scale monetary stimulus that lowered interest rates.
We found two things surprising about the guidance around the Fed’s inflation target. Last week, the Fed chairman signaled that interest rates will remain close to the zero bound until 2023. With interest rates unlikely to rise anytime soon, the Fed has time before it needs to address these uncertainties. As expected, Fed officials forecast that the policy rate is likely to be on hold through 2023 (see the Fed’s September 2020 Summary of Economic Projections).
Is the Fed aiming for a larger paradigm shift, under which it would allow inflation to overshoot and average 2%?
Unlike the Fed, they haven’t made any major changes to their inflation strategy and unlike the BoE, they are not at the cusp of lowering interest rates. According to Fed President Kashkari, the central bank should hold off raising interest rates until core inflation is 2% for approximately a year. First, Fed officials had strongly signaled in speeches and interviews over the past several weeks that September would be too early to provide interest rate guidance.
Second, the forward guidance is forecast-based, with inflation only needing to be “on track” to exceed target in order for the Fed to start to tighten policy. Historically, the effect of low Fed rates on the US middle market rates has been soft. Unfortunately, this means that the carnage in the economy – not the fake one represented by the Fed manipulated stock market – is only just starting.
Since the framework review was released, some regional Fed bank presidents have offered diverging interpretations of flexible average inflation targeting. In response to the pandemic-induced market collapse, the Fed promised to buy corporate bonds and exchange-traded funds that invest in collections of corporate debt. While this cash will help the company grow its portfolio, the company faces competition from other lenders in the US middle market. We suspect the Fed’s back-to-back surprise announcements may have been aimed at guiding investors’ interpretation of the policy shifts as major changes.
In response to the COVID pandemic, the Fed ventured on a wide scale monetary stimulus that lowered interest rates.
We found two things surprising about the guidance around the Fed’s inflation target. Last week, the Fed chairman signaled that interest rates will remain close to the zero bound until 2023. With interest rates unlikely to rise anytime soon, the Fed has time before it needs to address these uncertainties. As expected, Fed officials forecast that the policy rate is likely to be on hold through 2023 (see the Fed’s September 2020 Summary of Economic Projections).
Is the Fed aiming for a larger paradigm shift, under which it would allow inflation to overshoot and average 2%?
Europe
The ECB is not worried about the level of the currency but if new restrictions lead to a further slowdown, the central bank may have to alter its stance. In such circumstances, it is more than certain than [European Central Bank President Christine] Lagarde will ease her stance.
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