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January 26, 2019 | Trading Desk Notes – January 26th

Senior Vice President and Derivatives Portfolio Manager. Victor began trading financial markets over 45 years ago and has held a number of senior executive positions during his career as a commodity and stockbroker. Over the years he has provided considerable market analysis via radio and television and at financial conferences. His primary brokerage business is providing corporate accounts with risk management services using exchange traded derivatives. He actively trades currencies, interest rates, precious metals, stock indices and commodities for his own accounts.

The major global stock indices closed on their highs last week…but sentiment soured over the long weekend on a deluge of “economic-growth-is-slowing-everywhere” stories that took the markets down Tuesday and Wednesday with the defining moment the mid-week WSJ headline, “China Risks A Very Hard Landing.”  Markets steadied Thursday (indications of more stimulus in China and maybe even in Europe) and then rallied hard Friday as 1) The WSJ reported that the Fed was considering an early end to their balance sheet runoff, 2) reports that China was injecting more liquidity into their financial system, 3) China/USA trade talk sentiment turned for the better, and 4) Negotiations were underway to end the US Gov’t shutdown (they bought time with a 3 week deal.)

The DJIA rallied to its best levels in 7 weeks, the TSE Index rallied to its best levels in 13 weeks.

 

The US Dollar Index rallied to 3 week highs on Thursday as the Euro fell hard following the ECB warning of “downside risks” to the Eurozone economies…but USDX tumbled Friday on the Fed/balance sheet news…and as market sentiment went “risk on.”

 

The British Pound rallied to a 3 month high Vs. the USD this week…to nearly a 2 year high Vs the Euro.

The Canadian Dollar fell early in the week but steadied with WTI mid-week (see below) then rallied hard Friday as the USD fell hard. The main “drivers” of CAD values lately have been 1) commodities, especially crude oil and, 2) strength/weakness of the Big Dollar. Interest rate spreads favor the USD but have not had much impact on CAD pricing. I wonder if the prospect of less heavy oil coming to the USA from Venezuela means that the Texas Gulf refineries will “pay up” for heavy Canadian oil. Canadian crude exports the week ending Jan 18 were over 4 mbd.

 

WTI ended this week ~$54…near a 2 month high…despite the “economic-growth-is-slowing-everywhere” stories and despite strong American inventory builds.  The reason for the steady prices may be the possibility of less oil coming to the USA from Venezuela as a result of either American sanctions or a politically inspired breakdown in Venezuela’s ability to export.

The gold market fell to nearly 1 month lows Thursday…a direct reflection of a very strong USD…and then surged to a 7 month high Friday as the USD fell like a stone.

 

PI Financial Corp. is a Member of the Canadian Investor Protection Fund. The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or the authorize someone else to trade for you, you should be aware of the following. If you purchase a commodity option you may sustain a total loss of the premium and of all transaction costs. If you purchase or sell a commodity futures contract or sell a commodity option or engage in off-exchange foreign currency trading you may sustain a total loss of the initial margin funds or security deposit and any additional fund that you deposit with your broker to establish or maintain your position. You may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the requested funds within the prescribe time, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult to impossible to liquidate a position. This is intended for distribution in those jurisdictions where PI Financial Corp. is registered as an advisor or a dealer in securities and/or futures and options. Any distribution or dissemination of this in any other jurisdiction is strictly prohibited. Past performance is not necessarily indicative of future results

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January 26th, 2019

Posted In: Victor Adair Blog

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