With the dollar continuing to hold recent gains, today two legends in the business sent King World News powerful pieces discussing the action in commodity prices, some of which are now trading at levels last seen in 2009.
Today’s note from Art Cashin: The FOMC Minutes – The Fed will release the minutes of the October FOMC meeting at 2:00 today. Many pundits believe they have little to reveal since we’ve seen the statement and heard from a dozen members of the committee. There is another risk and that is that the minutes are a bit “over-laundered” with virtually all the meaningful nuggets erased.
Traders hope, however, that there is enough “meat” left to give them a clue as to what the Fed was worried about. A key could be discussions of the dollar. Are they worried about the impact of a stronger dollar? If so, how concerned are they? What other “concerns” do they discuss? If we can develop a list of concerns, we can monitor them and better gauge what might stay the hand of the Fed or let it go.
Overnight And Overseas – Shanghai and Hong Kong were lower on concerns about looming IPOs and some slightly downbeat remarks from Xi in Manila. Tokyo was unchanged in front of tonight’s BOJ. Australia was up on a rally in financials but the emerging markets really got clocked.
Equity markets are lower, giving back some of Tuesday’s gains but by midday they were off their lows. European yields are falling as sense grows that terrorist threats will force the ECB to get far more aggressive in easing.
In the commodity sector, copper and other base metals are down and trading at prices last seen in 2009. Gold looks unchanged while crude is up a bit on last night’s inventory dip. Dollar paring losses after overnight weakness. U.S. equities come back from overnight losses on a flurry of merger proposals.
Consensus – A saloonful of Fed speakers but think they will be guarded and reveal little. Bulls are looking for Santa rally seasonality to kick in, but technicals not blending quite yet. ISIS drama looks to continue and possibly grow. Stick with the drill – stay wary, alert and very, very nimble.
Also, here is a portion of today’s note from Andrew Adams at Raymond James: I highly encourage you to read the team’s last two “Energy Stat of the Week” reports in their entirety, but, to very briefly summarize their contents, global oil demand growth has surprised to the upside in 2015 and is having its best year since 2010! Moreover, this uptick in consumption has come during a time when Chinese demand growth is lagging the rest of the world, with the rest of Asia and North America picking up much of the slack. In fact, here in the U.S. the growth looks to have been even better than our Energy team expected this year, reflecting “what would be the biggest surge in gasoline demand that the U.S. has seen in over three decades.”
There are still over-supply forces that are keeping oil prices depressed, of course, but the growth in demand at least makes me optimistic that energy companies could potentially surprise next year, especially if we do continue to see some stabilization in the highly volatile price of oil. Jeff and I have been saying for months now that the action in the oil markets looks like a bottoming process, but $40 really needs to hold for me to still feel strongly about that call. Even though crude briefly fell into the high $30s earlier this year, it never closed a week below $40, and that is the level I am closely watching to make sure that it doesn’t happen now. ***ALSO JUST RELEASED: Important Update In The War In Silver And The U.S. Dollar CLICK HERE.
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