*Commodities, Commodities, Commodities – The commodity rally is broadening vs the equity rally.  Agriculture joins the mix with Corn and Soybeans +3.00% and Soybeans +0.73% and +3.2% on the week.  Metals caught a strong bid yesterday, consolidating gains this morning. 

*Key events today include US Jobless Claims and Q2 GDP (2nd estimate) due out at 7:30am CST

*The highlight of today with Fed Chairman Jerome Powell’s speech at the Jackson Hole Economic Symposium at 8:00am CST        

-Powell largely expected to move the goal posts on the Fed’s 2% inflation target, allowing inflation to run a little above expectations

-Largely expected to have a “lower for longer” outlook on interest rates

*Commodities broaden their rally as Agriculture prices begin to climb

Global Equities
*US is largely in a holding pattern this morning, following another record day in the SP500 and NASDAQ

*Europe traded lower across the board in the overnight led by the IBEX in Spain -0.84%

*China’s Shanghai Index is up +0.64%

Top Market Movers Overnight

*Soybeans continue their climb to 931’0 bushel – remain bullish of US Farm Products. 950-960 remains and upside target for beans in coming weeks – well done

* Lean Hogs are in a developing “bearish to bullish” transition.  Oct Hogs are trading at 55.575 with immediate upside potential to 60-62.50

*Agriculture markets begin to price in the prospect for Chinese demand as the key driving force behind the rally

*Gold and Silver staged strong rallies yesterday – consolidating those gains this morning ahead of Fed Chair Powell’s speech

*Gold has potential to re-test 2000-2020 in coming weeks

*We still largely contend that both Gold and Silver remain largely “range bound”, and that traders should continue to hold a bullish bias

*Laura makes landfall, but has been downgraded to a Cat 2 vs yesterday’s Cat 4. 

*Crude Oil and RBOB trade lower as its being reported western Texas Oil operations are likely to continue

*Energy is likely to fall into a “buy pocket” before another test of higher levels.  Long side trade still

*Natural Gas, similar to Energy – looking for a 2-3 day correction before a window opens for a Long side trade

You must have Commodities as a part of your portfolio as Powell looks to run the economy and inflation “Hot” in coming quarters.  A weaker Dollar and a “lower for longer” outlook on interest are contributing factors to our commodity outlook, along with an improved economic backdrop over the next 12 months, specifically in China (The World’s largest consumer of commodities). 

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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