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Senior Contributor

OptionEye - Macro Outlook - April 29th

Good morning. 

 

Overnight, grains quiet. Corn up 1, beans unchanged and wheat up 2. Corn currently experiencing its longest slump since July as beans fight for acres. 

 

Stocks are a little lower this morning as Europe hovers near unchanged. The S & P future is off just over 2 points this morning. 

 

Oil is a little lower to $56.72 down .34 cents. Gold is lower as well by $4.63 down to $1207.55. 

 

The 10 year yield finally broke out of that range and only by a little. It currently sits at 2.00% as we await the Fed announcement today. That last time the 10 year was at this level was right before the Fed meeting the last time around in March. 

 

We get GDP today which should be a huge look into what is happening out on main street. We also get Mortgage Apps and Personal Consumption so today will be a big day as far as data. Although the 10 year yield has risen as of late in a defensive move against any Fed action today, the general consensus is that they will not make any changes. Most wil be looking for any clues in the their rhetoric. 

 

 

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GDP growth only ........

.2 % rate for the first quarter. .2 %  !!!

 

Strengthening $$$ is part of the culprit.

 

So much for inflation. For the life of me I can't figure how some are viewing this all as decrease in the value of the $US and inflation. The only explanation must be the demands of a certain ideology. How many years have we been told wild inflation was just around the corner? There appears to be ignorance about current economic conditions necessary for inflation.

 

So, we have a strong $US and many who predicted inflation have a problem with it. The circle has to be squared somehow. Let's hear it!

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Re: OptionEye - Macro Outlook - April 29th

Pal, is the dollar "strong" or the fastest horse at the glue factory? Just because banks are sitting on the printed money and never makes it to main street, I don't think k is something that is either to be celebrated or think is sustainable. One day the politicians (that always take the easy road) will have to pick from extreme austerity or inflation.It already has gone on longer than most rational think it could and will probably go on a lot longer still.
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Re: OptionEye - Macro Outlook - April 29th

There is no evidence in sw ks  that the dollar is stronger.  There is evidence that corn and gasoline are of lesser value, but not that the $ is stronger.  The price of acquiring dollars is nearly the same as the last 7 years.  Very cheap.   And in very few cases does the $ buy more goods and services..

 

Maybe for China, but not for farmers.

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Re: OptionEye - Macro Outlook - April 29th

Currency is relative to other currencies. That's the story of economics.

 

I think funneling money for assets to the financial sector is the least efficient way to help the economy. But, if Congress isn't going to do any work then the lifting is left to the Fed. Simple as that. Congress is ignoring its responsibility in the modern economy.

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Re: OptionEye - Macro Outlook - April 29th

I appreciate ya Palouser, but to say that currency is not related to it's purchasing power in goods or services, but only to other currency is a bad case of tunnel vision.  

Without the comparison to goods or services purhased in a time reference, there is no way to know which currency is changing.

 

The fed is not lifting anything just imposing more transfusions to the blood streem while we continue to bleed.  

 

My point is we need private economic growth.  I think public debt will hinder that process for decades. ------ 

 

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Re: OptionEye - Macro Outlook - April 29th

Public debt is not now a hindrance to growth. But, I'd sure like to hear you make a case for it. I know that argument, and at this time we don't meet the conditions for it.

 

I believe you've already made the case that money is cheap to get ahold of for investing for almost no interest. So, why isn't there a run to borrow and invest ???

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Re: OptionEye - Macro Outlook - April 29th

Well the national debt is like a anchor, sure with "zero %" interest rates it currently isn`t a issue, but anywhere near to a "normal" rate would kill us dead.

 

I know this isn`t popular to bad mouth free trade in a farm forum, however the reality is this 30 year affair we`ve had exporting our factories overseas and importing "pink flamingos", we`re now seeing the chickens home home to roost. We apparently have a list of "jobs that Americans won`t do" so we allow in illegal aliens for those jobs.

 

NAFTA was more of a "SHAFTA" ...oh I know us farmers better shut up, cuz we get a nickel more for our corn, but if you look at the greatly increased "social costs" of an under-employed population without living wage jobs...that`s a pretty expensive extra nickel for our corn, when all the costs are added up.

 

Even with non-existant interest rates, what does one do with the cheap money?  Build a factory only to have China send the same product over at half the cost 12 months later?   Target closes stores, can`t peddle their junk.  McDonalds having it tough..these are all businesses that at one time ran out the "inefficient" Mom and Pop stores years ago.

 

I`m sure there are opportunities out there, always has been but you have to be more nimble than ever before.  I think you look at the stock market Dow, it was 8,000, six years ago and with this zero percent interest now it`s 18,000 ...there`s your inflation. 

 

http://www.usdebtclock.org/index.html 

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Re: OptionEye - Macro Outlook - April 29th

I think the fundamental problem is a lack of confidence the powers that be have the people's interests at heart and will favor policies that will allow the middleclass to participate in a healthy economy. Farmers have had that evidence in the form of favorable policies, mainly subsidies and crop insurance (whether one agrees with them or not). It will take a reform of tax and business policies and some time to get the middle class back on board. Congress is the biggest obstacle.

 

People rightly believe that Congress has become trapped by their ideologies and influential, wealthy persons and businesses. The big boys were bailed out and the middle class paid for it and got nothing in return. Teachers who were charges with cheating in favor of student scores (really another topic) were sentenced to prison while not a single big boy behind the big banks on Wall Street get touched for their role in bringing down the economy. And Congress seems determined to maintain their ties to the wealthy corner cutters. Past members even get hired on as PR flacks for hostile foreign interests like sanctioned energy and banking in Russia. And no shame.

 

The middle class is right to not believe they are at the table. Right now I firmly believe the middle class is going to sit out the game and watch the circus from a distance.

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Re: OptionEye - Macro Outlook - April 29th

People with stagnant paychecks don't have the where with all to support debt. I don't care if you can borrow the money for one percent, if you don't have the means to satisfy the debt it becomes an albatross around your neck.

 

There isn't anything that will stimulate business more than consumers with money in their pocket. Yet wage growth is stagnant and a lot of folks want to keep it that way. So many think that breaking up the unions would good for the economy, but lower pay scales have produced the quandry that we have. Of course in the past we had ample credit card access to stimulate spending but the real estate crisis diminished peoples confidence in the whole economy.

 

Opposition to the minimum wage not only stifles wage growth in mimimunm wage earners but also those that earn a fraction above mimimum wage.

 

As far as farmer exports benefiting from the trade deals, remember that farmers export commodities which are wholesale products and a large majority of imports are retail products. So americans are selling wholesale and buying at retail And lots of it is junk that has little real value.