MACRO MOVES
STOCKS (futures) – The S & P, and the Dow are up approx 10% from the recent lows. This is optimism based on the moderation in inflation. The moderation again is coming at 40 year highs in inflation. The pundits are predicting that the interest rates will be lowered next year. The probability is that the Fed will raise in September. This may cap the raises for a bit. The reality is the stock market has the worst back drop in years. In addition the EU, the Chinese are all in a slow down. I call that a recession. The US as well. The jobs and numbers are lagging reports. The costs are eating into any recent growth. It is my personal belief the lows are not in the stock market. This could be a very protracted scenario.
BONDS – The bond market has had a significant rally off the low. The reasoning in my opinion is the same as stocks. The interest rates may moderate for now. However it is my long term belief the markets have shifted. The global landscape has shifted. This means that the inflation will be here for some time. The cheap Chinese supply chain is broken. The Chinese economy, as well as the era of good economic trading, is changing a bit. This creates a demand base that may not be satisfied easily. The point. Rallies in bonds present opportunities to sell.
SOY
The beans had a reasonable rally after the recent weakness. The export sales were viewed as a positive and offered support. The long term market still has to deal with an increasing US crop size. Recent rains in South America, aiding early planting. Also a very large global supply. I have little else to offer. I am macro bearish and look at rallies as opportunities. As always quantify the risk.
CORN
The corn traded two sides today. The market was able to rally based on positive new crop sales. The domestic market has some reason to be a bit supported in my opinion. The weather has improved but could help the soy more than the corn. The global numbers are ample, however, the EU crop in general has suffered from heat and dry. The point. The corn may set up a trading range where it is supported on breaks but can’t rally too much either. This could change with a major weather shift in South America. At present that is not the case.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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