The Nemenoff Report 07/11/19

Financials: Sept. Bonds are currently 6 lower at 154’15, 10 Yr. Notes 0’00.5 lower at 127’13.5 and 5 Yr. notes 0’00.5 higher at 117.24.25. The long Dec.19/short Dec.20 Eurodollar spread is currently 32.5 points premium the Dec.20 contract, in from 40 points at it’s low last week. Comments by Fed Chair Powell in his bi-annual testimony before Congress has most traders believing there will be an imminent rate cut, albeit 25 basis points, not the 50 points some has been hoping for. He noted the strong labor market but expressed concern that wage growth has not lived up to expectations. He also noted slowing manufacturing and slowing growth in Europe and Asia. I feel that the most prevalent issue is the possibility of a too strong Dollar because of the premium of our rates over that of our trading partners, re the example of Germany’s negative 10 Yr. Notes. That being said, I feel that at least a 25 pt. cut is already in the market and will also note the minor sell signal in the Bonds as they traded below support of 154’14. I continue to hold the aforementioned Eurodollar spread and remain short the 5 Yr. Note.

Grains: Dec. Corn is currently 3’2 lower at 435’6, Nov. Beans 1’0 lower at 911’6, and Dec. Wheat 1’2 lower at 515’4. I have taken the loss on the long Dec./short July Corn spread. Bottom line, I was wrong. There is a grain Report at 11:00 CST this morning that is expected to show a decrease in Corn acreage from the last report which showed an unexpected 90+ million acres, much high than the average estimate of 86 million acres. I will be a buyer of Dec. Corn in the 415’0 area should the market allow.

Cattle: Live and Feeder Cattle have rallied since my last “Report” as demand increased and feed grain prices have eased We have covered the short Aug. 102 put position below 100 points (Wednesday close was 20 Points). Aug. and Oct. LC look poised to test the 110.00 level. Treat as a trading affair, buying Aug.or Oct. below 106 and selling above 110.50.

Silver:  Sept. Silver is currently 2 cent higher at 15.25 establishing minor resistance in the 15.35 area. Stay long and use a protective sell stop at 14.77 to protect addition contracts purchased in the last month or so below 14.60.

S&P’s: Sept. S&P’s are 4.00 higher at 3001.50 reaching new highs on the euphoria of a possible rate hike. Treat as a trading market between 2977 and 3008.

Currencies: As of this writing the Sept. Euro is currently 10 higher at 1.13235, the Yen 10 higher at 0.92795, the Pound 55 higher at 1.2599 and the Dollar Index 0.178 higher at 96.525. We are short from the 96.50 area believing a rate cut will be negative to the Dollar. Use a 150 point stop for protection.

 

Regards,
Marc