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April 14, 2019 | Trading Desk Notes – April 13th

Victor Adair, author of The Trading Desk Notes, began trading penny mining shares while attending the University of Victoria in 1970. He worked in the mining business in Canada and the Western United States for the next several years and also founded a precious metals trading company in 1974. He became a commodity broker in 1977 and a stock broker in 1978. Between 1977 and his retirement from the brokerage business in 2020 Victor held a number of trading, analytical and senior management roles in Canada and the USA. Victor started writing market analysis in the late 1970’s and became a widely followed currency analyst in 1983. He started doing frequent media interviews in the early 1980’s and started speaking at financial conferences in the 1990’s. He actively trades his own accounts from The Trading Desk on Vancouver Island. His personal website is

Is it the middle of April or the middle of August? The weekly trading volume of shares on the US indices and the number of futures contracts that traded this week was the lowest since last summer and among the lowest weekly levels of the past several years. This low volume has reduced price volatility with the VIX index trading back to down to levels not seen since the beginning of October last year before the equity price decline started. Even the volatility in the G7 currencies is the lowest it has been since the middle of 2014!

So its quiet out there….what does that mean? Equity markets are only a couple percentage points from all-time highs, things must be good! The central banks have done their job, they have all gone back to accommodative policy stances, and China easing more aggressively. We have gone from worries of a global slowdown to not a worrying at all because the central banks have our back, and in that environment taking more risk pays. The central banks must know what is best right?

However, when we see broad markets get this quiet, it usually means we are about to get a rude surprise. When things coil up, it is common to see some explosive moves. Given the very low level of volatility, it may be an opportune time to buy some protection.

Equities had a quiet week of trading, but got a final boost higher on Friday as China posted much better than expected export numbers. The recent few weeks of data out of China has shown the additional stimulus this year has started to help as it works to offset global slowing and trade issues.

Bond Markets had a key move lower (higher rates) this week as we got firmer messaging out of the Fed on the future path of rates. The market had been pricing in an 80% chance of rate cuts by the end of this year, but that has been reduced to 40%. Given the Fed minutes this week only mentioned be patient (on pause) or possibly raising rates again this year, they seem to be at odds with market pricing. If economic data points stay positive for another few weeks we could see a further move higher in rates.


Canadian Dollar has epitomized low volatility trading of late. We still see short term interest rate spreads weighing on CAD, but stronger oil prices have helped it stay firmer. However given the strong oil and equity markets, I would have expected that CAD could have traded a little better. A market that won’t rally on good news could be in for more trouble.


Gold prices took a sharp break lower at the end of this week. My biggest drivers of gold prices are USD strength or weakness and real interest rates. As rates started moving higher after the fed this week I think it was the interest rate side of things that pushed gold lower. Gold prices have held the $1280-5 level the past several months but could be vulnerable to break lower.


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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April 14th, 2019

Posted In: Victor Adair Blog

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