Below is an excerpt from The Hightower Report’s most recent Newsletter. To receive access to this story, with trade strategies, and our daily coverage of 16 markets, visit futures-research.com for your free 2 week trial!
As of this writing the Dow Jones Industrial Average was clawing its way up to its highest levels since 2008. In addition to much better than expected US non-farm payroll figures for the month of January, the trade has continued to see consistent declines in weekly initial unemployment claims figures, and that in turn has added to the hope that job growth will continue. Progress in the US economy has at times become significant enough to temper expectations for additional quantitative measures. However, some Fed members (Evans in particular) have indicated that more easing is needed even if employment shows some signs of improvement. At times over the last month the Fed has seemingly alluded to the need for ongoing easing because of the potential knock-on slowing threat from Europe. We expect the direction of events in the Euro zone to continue to be very important to US Treasuries, US equities and a host of other commodity markets.
Unfortunately for the bull camp, many markets had already purchased a large portion of the expectations of a Greek debt deal, and now it could be time for the markets to turn their focus to the next biggest threat to the EU. However, we continue to think the ECB, IMF and other interested parties have already moved to significantly shore up the financial backstop and that an ongoing flow of growth from the US could serve to deflate negative speculation in the Euro zone. As we have indicated before, we think the Euro zone debt crisis will drift out of the spotlight instead of ending dramatically with a disorderly default or under some grand plan.
Over the last five weeks a number of physical commodities seem to have outperformed their fundamentals, and many of these markets are giving off the impression that they are rallying without clear evidence of renewed growth in China and the Euro zone. We do think that many markets have become short term overbought off the combination of a declining dollar and speculation that Greece is going to get a deal in place. Therefore, traders need to be on the lookout for corrective action. However, traders and investors should not discount the importance of consumer confidence and sentiment. Last year saw more than its share of adversity, and we could be entering a period when relative calm on the political and economic fronts could allow for continued gains in equities, precious metals and livestock.
In looking at the chart of Consumer Confidence since the beginning of 2009, it is clear that sentiment is climbing back from the very low levels registered in the wake of the sub-prime debacle. Without a repeat of a Fukushima-like natural disaster, the US deficit disaster and incendiary breakdowns in the Middle East in the weeks ahead, one should see economic prospects continue to improve. The magnitude of the decline in consumer confidence in 2011 probably served to hold back the economy more than anyone realized, and yet the US economy still clawed through with forward motion! In this day and age it is a tough call to predict social and economic calm, but recent gains in stocks would seem to confirm that clouds are dissipating.
If the markets manage to avoid a buy-the-rumor/sell-the-fact reaction off a Greek debt deal, we suspect that many physical commodity prices might be poised to run up into and peak shortly after an anticipated much-improved Consumer Confidence reading, due to be released on February 28th.
Commodity Outlook – 2012.02.13
by Dave Hightower on February 13, 2012
Below is an excerpt from The Hightower Report’s most recent Newsletter. To receive access to this story, with trade strategies, and our daily coverage of 16 markets, visit futures-research.com for your free 2 week trial!
As of this writing the Dow Jones Industrial Average was clawing its way up to its highest levels since 2008. In addition to much better than expected US non-farm payroll figures for the month of January, the trade has continued to see consistent declines in weekly initial unemployment claims figures, and that in turn has added to the hope that job growth will continue. Progress in the US economy has at times become significant enough to temper expectations for additional quantitative measures. However, some Fed members (Evans in particular) have indicated that more easing is needed even if employment shows some signs of improvement. At times over the last month the Fed has seemingly alluded to the need for ongoing easing because of the potential knock-on slowing threat from Europe. We expect the direction of events in the Euro zone to continue to be very important to US Treasuries, US equities and a host of other commodity markets.
Over the last five weeks a number of physical commodities seem to have outperformed their fundamentals, and many of these markets are giving off the impression that they are rallying without clear evidence of renewed growth in China and the Euro zone. We do think that many markets have become short term overbought off the combination of a declining dollar and speculation that Greece is going to get a deal in place. Therefore, traders need to be on the lookout for corrective action. However, traders and investors should not discount the importance of consumer confidence and sentiment. Last year saw more than its share of adversity, and we could be entering a period when relative calm on the political and economic fronts could allow for continued gains in equities, precious metals and livestock.
If the markets manage to avoid a buy-the-rumor/sell-the-fact reaction off a Greek debt deal, we suspect that many physical commodity prices might be poised to run up into and peak shortly after an anticipated much-improved Consumer Confidence reading, due to be released on February 28th.
Tags: Bonds, Debt, Featured, Stocks
About Dave Hightower