OptionEye - Macro Outlook - Jan 15th

[ShelladyOptions]

Good morning. 

A face ripping rally in oil to end the day really caught a lot of the market wrong footed. 

Oil is up again this morning at $48.79 up .31 cents. 

Corn is up 4, beans are up 6 and wheat is up 4 as well here in early trade this morning. Decent fund selling in corn this week had it on the defensive but that looks to have dried up by now. Some talk of beans being vulnerable but we will need more volume for them to trade lower. 

Gold is up big this morning to $1252.89 up $24.20

The Swiss gave up their cap on the Franc in a move that was largely unexpected overnight. That has thrown a lot of currency markets into a frenzy. Their stock market is down 10% this morning. 

Stocks are off by 4 points in the S & P future this morning and the 10 year yield is below those Oct. 15th lows at 1.82%. 

It will be another volatile day with risk flooding in with the Swiss move overnight. We now have 12 countries with negative interest rates. What is this world coming to?

[Shaggy98]

What exactly is a negative interest rate, does that mean they pay me to borrow their money?

If so, where do I find the paperwork?

[BA Deere]

Negative rates is a magician that`s running out of tricks in front of a increasingly restless audience.  I think if you have a large amount of money in the bank, they actually charge you "rent" to keep it there.  And if you buy a bond, it is LESS than face value when you cash it, with "negative rates".   It`s a gimick to get people to buy equities.

[Wind]

That "negative interest rate" caught my eye too. 

http://www.bloombergview.com/quicktake/negative-interest-rates

Maybe we had better get our milk cans polished up Saggy, we may have to use them if we have to start paying the bank to park money.

[glenlivet18]

**** me, I just looked at the chart of Swiss Franc futures!  Over $30,000 per contract moved up overnight.  Holy crap!  I bet some shorts are puking this morning. 

[Palouser]

Negative interest is actually a tactic to try and get the banks to release liquidity into the economy through loans to stimulate business and consumer activity.

The edge of deflation after all this time is proof that Fed activity is too little to help the economy and goes to the wrong people - and that the Congress has been wrong to not stimulate jobs and wages. The longer we wait the harder it will be. And the more danger that any ripple in financials could tip everything over the edge. You can't stay on the edge forever w/o something happening.

I do suspect a bubble in equities. A strong reversal could be the trip wire. What little skin in the game the middle class has would quickly get jerked if things start south.