Above is a chart of the 50 stocks with highest short interest,the most shorted index.It has been Down for 7 straight sessions,but bouncing today.this is a quick graph to look at to help explain a “feel” of the market.It is higher today so one can believe Short covering a big part of today’s action.Index put together by Goldman
Wheat: real nice bounce into close.Spring production numbers were released alongside Quarterly stock Numbers and it showed a surprise drop. Minneapolis(+24 ticks, 1.15%) ,Kansas City(28 ticks,+1.4%) and CBOT(36 ticks +1.8%) all moved higher.Plenty of Bearish Chatter about upcoming Soy Crop but yet it pressed higher into close.Strength in Brazil Real over last 2 days is a plus for US soybeans,+roughly 3% last 2 days
- Russia may have carried out air strikes in an area not controlled By ISIS-rtrs.
- White house says that Russia will not succeed in imposing a military solution in Syria.
- U.S. seeing Russia ramp up support for Syrian president
This can’t be good for Stocks
The past 2 days,the high print for the day in Spoos came in right around 9:30 ish. not a trend yet but something to monitor
Quarterly Grain Stocks,Compared to consensus Showed soy and Wheat Lower Corn right in line.But when we compare them to year go levels they are quite bountiful.All eyes turn towards harvest progress
| USDA: 2015 SOYBEANS STOCKS 191.4M BSHLS SEPT 1 V 92.0M YR-AGO
|12:00 09/30 USDA: 2015 WHEAT STOCKS 2.089B BSHLS ON SEPT 1 V 1.907B YR-AGO
|12:00 09/30 USDA: 2015 CORN STOCKS 1.731B BUSHELS ON SEPT 1 V 1.232B YR-AGO
Buy Stocks,Sell bonds due to Month end /quarter end is play so far.Biotech has a bid today,supposedly been a hedge fund killer these last few days.We will watch.Chicago Pmi was bad but no one seems to care about this Number for some time.
Euro Weaker due to negative inflation Out of Euro Zone.Strong dollar has been good for risk,should continue.
Oil number weaker in aggregate but production and Cushing are bullish,need to see move higher in CL/CO and CL cal spreads to validate an up move in Outright.Strong stock also should help move higher In front month.
Russian supposedly bombing ISIS targets but rumors they are bombing anti bashard targets. FRENCH DIPLOMATIC SOURCE SAYS RUSSIAN STRIKES IN SYRIA APPEAR TO TARGET SYRIAN OPPOSITION, NOT ISLAMIC STATE – RTRS
Quarterly stock Number at 11:00 Usually a mover but talk of a muted response for today’s release
revisiting Oil chart Upper TL in Play now. Watching to see if it is resistance.If not downside will be limited
Quarter End and Fiscal year end for US Government are a theme running through today’s markets. The latter important because Congress has till Midnight to Vote on a Continuing resolution or an extension of current Spending bill. Senate leader McConnell said “I’m optimistic it will pass” So are markets. Quarter end stats, per Bloomberg Most volatile Quarter in 4 years, 11 trillion erased from global stocks and bonds. Investors pulled $40b from emerging market stocks and bonds largest withdrawal since 2008.Oil set for worse quarter since 2009 as price dropped 24%, Gold set for 5th quarterly loss and commodities tracked by Bloomberg Commodity index have dropped 15 % worse quarter since 2008. So you can see why many want this quarter to end and end fast. Plenty of talk Of Buying stocks, All EM and DM stock indices are higher and selling bonds( treasuries and European Bonds are all lower).
Economic releases saw Euro Zone headline CPI dipped into negative territory for first time in 6 months, Expectations were for unchanged at Zero. Stocks did rally and euro sold off on the Pavlovian response of Low inflation=more QE, but bonds aren’t playing that game. Very well could be Month End/Quarter end flows dominate action. Out of UK, wages and a metric of household wealth were very strong, a positive for her currency and Rate hike expectations. Dollar and Pound up, Euro down but ranges tight.
Glencore not going into bankruptcy , defaulting on loans and not dragging commodity producers/Hedge funds with her at least for now. Stock bouncing again today. Macquarie bank said Credit concerns about company are overblown, and company unlikely to lose access to loans. As commodities weakened company’s profits weakened and concerns about her existence drove stock lower .All is well I guess. Volkswagen bouncing as it is possible that 1970’s law may exclude VOW from EPA lawsuit, Nice. Also China Is cutting by ½ tax on new small cars, which is putting bid into auto sector. China also cutting the down payment amount by 5% for first time home buyers. China closed for 1 week starting tomorrow
• Yellen speaks today(2:00) but should be a non-even as her topic is Community banking
• Russia has bombed ISIL targets in Syria
• Crop report at 11:00 slightly above average importance
• Weekly oil numbers from API showed Build but offset by Cushing draw
Nat Gas looking to test contract lows of 2591 as no threats of cold weather on horizon. Reuters also upped their forecast for Thursdays storage number which doesn’t help the bulls.
Crude Oil : expectations for draw at cushing( 5th in a row) and hope for another dip in production which has dropped 7-8 weeks.Crude inventories are also expected to show a small draw. All bullish for price of CL.
Tomorrow last day to trade October HO and RBOB.
Here is chart of the Bid to cover from latest 4 week Auction it stands at 10.72. So for every offer there is 10.7 bids,Think about that for a second.
Yield is Zero has been for last few auctions.This is all to do with worries about breaching the debt ceiling,treasury is selling less short term notes until a resolution or extension is found before December.In time of financial panic we have seen moves like this
Biotech Stocks. Drove action Lower on open then pulled indices higher with a rebound. IBB $16 range ,+$8 now. valeant pharmaceutical $25 range +$2 now.Until further notice Moves in Biotech will drive the Action in Spooz. 1869 area in Spooz also held before rebound.Consumer confidence released at 9:00, was highest since January and showed improved job picture and a hint of Inflation.Just what Doctor ordered for “risk”
Rebound in stocks weighs on Bonds,Put a bid into oil which just took out yesterday pit high.Dollar also moving higher on Strong Consumer confidence.We also see Yen sitting near session lows and again this is good for “risk on”.Consumer Confidence is watched by FOMC,Strong Payroll on Friday very well could put October in play.
Cattle markets; fundamentals haven’t changed markets still haven’t found a clearing price between supply and demand.Limit down front live and back month feeder.Live cattle for October goes first notice on October 5th,Looks like people trying to get out of longs before end of month.open interest dropping with prices is evidence of this.
November CL pattern of Lower highs and steady lows makes one believe that upside is limited and just a matter of time before these lows are tested.First test will be 44.43 then 43.71.With Speculators having largest net longs since July 6th, i think these lows will be defended,but if we can get some bearish Storage and production numbers tonight/tomorrow we could see support break. Correlation with Dollar looks good
here is chart of Live cattle 60-80% choice,One of the Spot metric’s I watch.It jumped 3% yesterday afternoon,One of biggest jumps in a year.lets see if that provides any stability to Live Cattle.