Financials: Dec. Bonds are currently 1’03 higher at 141’14 and the Dec. 10 Yr. Note 6 higher at 130’18. The yield is now under 2.0% for the 10 Yr. and under 3.5% for the 30 Yr. Bond. Given the debacle in the Swiss Franc (see currency comment) U.S. treasuries remain one of the only safe havens at this moment in time. I remain on the sidelines expecting a break sometime down the road but not willing to “stand in front of a freight train” at present. An old adage: Don’t fade the Fed.
Grains: On Friday Beans closed 12 cents higher, Corn 21 higher and Wheat 14 higher. Over night Beans were 17 lower, Corn 5 lower and Wheat 9 lower. A strong Dollar and slowing export demand could pressure the Grains for a few sessions but I feel ultimately supply will trump weaker demand. Yields per acre in Corn by some private sources is now well below 150 bushels per acre, possibly as low as 147. I am looking to reinstate long positions with either futures or calls if Dec. Corn trades below the 735’0 level.
Cattle: On Friday Oct. Live Cattle closed 120 higher at 114.80 and Oct. Feeder Cattle about 20 higher as the market reacted to higher feed grain prices with the Live gaining on the Feeders. Both of these markets have reached my downside objectives putting me on the sidelines.
Silver: Dec. Silver is currently 81 cents lower at 42.25. No question that Silver has had a good run to the upside over the last 2 years but it hasn’t kept up with Gold and appears to now being traded in part for it’s worth as an industrial metal with traders now scratching their heads wondering if it has another leg up as a store of value. I am still recommending small long positions on setbacks below the 39.00 level and caution those who remain long to use a close stop. Dec. Gold is currently 18.00 higher at 1895.00 after making another all time high over night at 1923.70 in spite of a strong dollar. I feel Gold is overbought.
S&P’s: Sept. S&P’s are currently 30.00 lower at 1139.00. European worries over banks and soveriegn debt continue to pressure this market. Longer term support of the 1145-1153.00 level was handily penetrated over the Holiday weekend. Levels to watch are the following: The 1132.75 low made Aug. 26th and the 1111.25 low made Aug. 22nd.
Currencies: As of this writing the Sept. Euro is 127 lower at 1.4058, the Swiss 995 lower (yes, that is not a missprint) at 1.1695, the Yen 132 lower at 1.2900 and the Pound 168 lower at 1.6037. Over night the Swiss National Bank supposedly indicated it would set a minimu exchange rate against the Euro of 1.20 Francs to the Euro and would enforce this by buying currency in unlimited quantities. So much for “safe havens”. Will the Yen be next? We remain long the Oct. Yen 1.2400 put.
Regards,
Marc
Questions? Ask Marc Nemenoff today at 312-264-4310
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