Morning 11-23

Friendly for Stocks/Risk

 For the 3rd consecutive Monday positive vaccine news, this time from AstraZeneca, maybe not as hopeful as the prior two from Moderna and Pfizer, but still it prevented a majority of people from getting the disease.  BBG

U.S. government debt just experienced its best week since August, with expectations growing that the Fed may boost Treasury purchases and/or extend maturities of the securities it buys through its main QE program because of the dispute with US Treasury Secy Steven Mnuchin. Another record set last week for the Fed’s balance sheet, which has now reached $7.24 trillion -Mizuho ………..FOMC meeting 12-16

Dollar index, DXY trading below Support at roughly 10-week lows watch 91.746 2020 lows. A broader measure of the Dollar Is the Bloomberg Dollar index that is trading at 2.5-year lows

Markets:

Surprisingly, Copper down on day .8%, a month’s long strike in Chile ended possibly weighing a bit on prices Silver -.9% gold -.4%. Gold trading below the 8 day, 50 d and 100 d MA less stimulus talk =lower Gold regardless of what dollar is doing Golds skew continues to trade in Favor of puts not to many bullish factors for gold. What is Bullish IS Soybeans up another 60 ticks, with today’s highs smack on $12. Bonds a bit lower besides the risk on move $197 B of paper will be sold this week, probably won’t cause too much of a fuss. Bonds -15 ticks, Bunds -18. One of the biggest moving assets today GBP

 Fridays Cattle on Feed report leans bullish For Feeder cattle, take note that prices closed lower for three consecutive days into Friday Settle. From pro Farmer “Chinese Pork imports still running well ahead of year -ago”

News:

  • A fresh risk to be monitored – the expiration of the Fed’s 13(3) lending programs on December 31 – underscores our view that monetary and fiscal support for the economy shifts from largely proactive in 2020 to largely reactive in 2021 Morgan Stanley
  • “The American Consumer Is Flush with Cash After Paying Down Debt.” (Bloomberg).
  • Brexit: Rumors of a “temporary deal” in the works to be agreed this week
  • UK November flash services PMI 45.8 vs 42.8 expected
  • BREAKING: WHITE HOUSE WEIGHS NEW ACTION AGAINST BEIJING -SOURCES.
  • United airlines today will issue a new share offering

Morning 11-20

  Yesterday treasury Secretary Mnuchin decided to end some of the Fed emergency lending programs at the end of the year, it appears to be  political .Yes some of these facilities have been rarely used but  just having them available, knowing the Fed is there if things get out of control is enough to stabilize markets. Per WSJ “Treasury Secretary Steven Mnuchin said he would allow several emergency Federal Reserve lending programs to expire, opening a divide with the central bank, which had pressed for an extension. As a result, on Dec. 31 several novel Fed programs that have backed corporate credit and municipal-borrowing markets and that have provided loans to small and midsize businesses and nonprofits during the coronavirus pandemic will end.”  Further from IFR news “Tresses’ Mnuchin’s decision to extend some of the Fed’s emergency programs (mainly money market supportive and serving Wall Street) and not extend others (Muni/credit related and serving Main Street) narrows the policy options for the Fed. The pendulum it would seem has swung in favor of the Fed extending the maturity of existing Treasury purchases or increasing monthly purchase size to beyond $80bn per month to $120bn in December.  Powell and the Fed none too happy

 Markets so far today sideways  NKY closed down .4% after touching multi-year highs, it has closed lower for 3 consecutive days China’s CSi 300 higher for second  consecutive day, Closing higher for the week by 1.78% European  trading shows all bourses higher led by Italy’s MIB +.77%.Currencies sideways.   30-year yields touched a 2-week low the Hope? Or possibility of more Fed QE responsible for some of the Bid

 Copper ~2-year highs +1.75% today and index of LME base metals has closed higher 6-7 days trading at 2-year highs as well. Somebody optimistic about growth. Optimism also high in Soy Complex another new contract high trading 60 tick higher closing in on $12. yesterdays Rumor mill in full swing in Livestock pits  per pro farmer :” Rumors of processing disruptions spark long liquidation in hog futures,” but it appears just rumors for Now “Rumors of plant closures sparked a selloff yesterday, though slaughter numbers did not reflect any pullback.

News:

  • Pfizer to seek Emergency use Authority for its Covid vaccine
  • Huge spike in cocoa Futures yesterday as Hershey decided to go to futures markets to Source beans A rare occurrence (BBG)
  • Despite reports to the contrary, there were no specific talks on a new Covid aid package… A meeting Thursday with congressional leaders was about the end-of-year government funding bill.  Pro farmer
  • 3-month libor benchmark for all sorts of loans new all-time lows
  • Cushing Oil Storage starting to increase again, no panic yet but something to monitor with Increased Demand destruction
  • Pres Elect Biden: Fed’s approach to the $ has been in +ve direction; ; he will reveal pick for Tsy Sec after Thanksgiving; has no plans for a national lockdown for the virus outbreak ITC markets

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 One chart to rule them all top 4 central Banks balance sheets:

H/T Mizuho

Fed speak…

…Not sounding too confident for US economy near term, but i guess market starting to figure this out already.

  • BN 11/19 17:34 *KAPLAN: WE COULD HAVE NEGATIVE GROWTH IN 4Q AS VIRUS SURGES
  • BN 11/19 17:33 *FED’S KAPLAN: CHALLENGE IS GETTING THROUGH THE NEXT SIX MONTHS
  • BN 11/19 17:33 *FED’S KAPLAN SPEAKS IN INTERVIEW ON BLOOMBERG TELEVISION
  • BN 11/19 17:33 *FED’S KAPLAN SEES 2021 BEING VERY STRONG FOR U.S. ECONOMY

Kaplan also said he is not in favor of an increase in Bond buying, it would help Joe Q public but maybe stocks.

lean Hogs

Weak Export data,WSj article talking about how China’s Domestic pork prices continue to fall,Not good For Hog futures,oh technicals look sour as well

February Hogs

April Hogs

Futures structure not looking Bullish until mid next year

Existing home sales..

Wow All I can Say Via Bloomberg

U.S. Existing-Home Sales Unexpectedly Rise to Highest Since 2005
Median selling prices jumped 15.5% in October from year ago Purchases increase in all four major U.S. regions during month


By Henry Ren


Sales of previously owned U.S. homes unexpectedly rose in October to the highest level in almost 15 years, extending a housing market boom fueled by record-low mortgage rates and buyers’ desire for properties in the suburbs.


Contract closings increased 4.3% from the prior month to an annualized 6.85 million, the strongest pace since November 2005, according to National Association of Realtors data released Thursday. The October rate exceeded all economists’ forecasts in a Bloomberg survey, which had a median estimate of 6.47 million rate in October.
The median selling price jumped 15.5% from a year earlier on unadjusted basis to a record-high of $313,000, reflecting more sales of upper-end properties.
The report offers offers more evidence that the housing sector is providing a bigger push for an economic recovery at risk of a bigger slowdown as coronavirus cases surge and lawmakers remain at a stalemate over additional fiscal stimulus. However, housing momentum, driven in part by preferences for larger homes that double as office space during the pandemic, has led to a lack of available properties and higher prices.
Combined with lean new-housing inventory, selling prices of existing homes grew in the third quarter at its fastest pace in seven years, restraining affordability, a separate report by the NAR showed last week.
“It’s quite amazing, and certainly surprising me,” Lawrence Yun, NAR’s chief economist, said on a call with reporters. “It’s quite remarkable given that we’re still int he midst of the pandemic and the high unemployment rate.”
Available inventory declined 19.8% in October from a year earlier to 1.42 million units. The inventory of houses would last a record-low 2.5 months at the current sales pace. Realtors see anything below five months of supply as a sign of a tight market.
Properties remained on the market for an average of 21 days in October, compared with 36 days a year ago, the NAR said. Some 72% of homes sold were on the market for less than a month.


Sales of previously owned one-family homes climbed 4.1% to a 6.12 million pace, while purchases of condominiums increased 5.8%.
The NAR’s report showed purchases of existing homes increased in all four U.S. regions.


For their part, builders are stepping up construction amid elevated backlogs. Starts of one-family homes in October hit the fastest pace since April 2007, and a measure of homebuilder sentiment is at a record high.

Morning 11-19

Vaccine positive sentiment continues to Fade as a short-lived rally in risk due to positive AstraZeneca comments overnight., Now Bonds Up Dollar up, Stocks, Gold, oil, Copper lower. Nat gas traders believe winter is not coming, NG -4.8%. Front month 6-week low H-J spread new contract lows trading positive 57, no fear of cold weather.

 European stocks a bit worse than US, Stoxx 50 -.7% Spoos -.18%   Gold doesn’t like the QE themed trade it appears more Fiscal stimulus trade yes Gold responds. Covid worries /Shutdown worries demand destruction front and center again from IFR news” … New York City announced that it will cease in-class teaching as well as slashing subway and bus services by 40%. Many major cities are cutting way back on commuter services as lockdowns increase. Covid cases are also exploding in Asia. Minnesota hospitals are near capacity. Tokyo ramped up its alert to the highest level following a record in daily cases. South Korea said it will increase the social distancing level to 2 from the current 1.5 if Covid cases continue to exceed 200 per week. South Australia announced a full six-day lockdown.  Member of the Who “”Europe is once again the epicenter of the pandemic, together with the United States. There is light at the end of the tunnel but it will be six tough months,” Kluge told a news conference Reuters…..Short term trend is lower for Yields …..Any hopes for increased Bond Volatility deceases with every down tick in Futures. UBS out with a recommendation cutting its outlook to neutral for commodities and says to take profits due to Virus risks BBG   Silver -2%

Soybeans trading lower today something wrong with the matrix. Corn also lower, option expiration for Dec grains tomorrow Cattle on feed report tomorrow as well. All eyes on weekly Export data from USDA 

News

  • Turkish Central bank raised rates 475 Bps today 
  • Trump lawyers to hold new conference at 11:00 at RNC headquarters
  • Jobless claims A bit worse philly Fed better
  • Weekly Soy and Corn Exports better than expected

Flows into Gold ETF’s continue to drop, some 52 tons since last Monday All Gold funds has seen flows drop 8-9 trading days

+/-1 % SPX Move

Market awaiting the next catalyst. Is that Catalyst the official certification of the election,agreement on a New omnibus Government spending bill, More lock down news or vaccine news? Vix still elevated a bit but at lowest spot levels since late August everyone hates the waiting game.Below Chart daily percentage changes,with Horizontal lines indicating +/-1% change.Also I notice many more 1% gains then looses lately

Bloomberg flagging up this chart which they say indicates a broad stock rally due to the amount of SPX Stocks trading above their 200 D MA(white line) which is at highest in 6 + years

Soybeans

1 year Soy Curve today vs last week,some strong backwardation there. Weaker Dollar ,Weather concerns in South America and simply More demand.

Soy H1-X1 daily chart

Soy N1-X1

Brazil planting Forecast from Bloomberg,less supply

lastly from Bloomberg as well Soy bean Exports with Horz line=5 year average

Morning 11-18

Consensus Growing of when, not if Fed adds to QE program  

News:

  • Pfizer said in a final analysis that its Covid vaccine is 95% effective vs 90 % Reported just last week. It appears markets have priced in all the good vaccine news for now.
  • FDA also cleared the first test at home kit with results in 30 minutes
  • Iowa Senator Grassley tested positive for virus
  • Boeing’s 737 max are cleared by FAA to fly again (BBG)
  • Target reported earnings of $2.79 a share vs $1.60 Same store sales rose 20.7% vs 11.2% Consensus, Stock ~+2%
  • Unilever reported that it expects plant-based meat and dairy products to reach   $1.2B in annual sales within the next 5 years.
  • President trump Fired the head of Cybersecurity, in charge of overseeing the integrity of the election
  • Apple cutting fees for App Developers by 15%
  • Bitcoin +2.6% trading >18k + 2000 since Monday settle

Virus

 Tokyo is planning to raise its virus alert level to the highest of four stages and is considering re-imposing its request for early closure of stores, Nikkei reports.

  Markets trading with a QE theme, higher stocks, & bonds and lower dollar. Gold not participating similar to yesterday morning when the same occurred. Copper little changed to higher, Weekly API numbers lean bearish oh look Soy and Corn higher again today The Bullish Euphoria continues. From IFR “One increasing certainty amidst a world of uncertainty. The so hoped V-recovery in Europe and the US will likely be a bust. Yesterday the San Fran Fed said jobless benefits and forbearance efforts are ending exactly at the wrong time.  “Thus the pricing  in of more Fed QE