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Senior Contributor

OptionEye Macro Outlook - Jan. 5th

Good morning.


Overnight corn up 2, beans up 6 and wheat up 2.


Things are trying to look to be a bit better this morning even though the geopolitical tensions in the Middle East haven't changed and the stock markets in Asia were lower again today but nowhere near the damage of yesterday. Bargain hunters lifted our stocks late yesterday and now look to be lower again in sympathy with Asia. The  S&P future is lower by more than 13 points and the Dow future is lower by 112 points.


The Atlanta Fed downgraded our 4th Quarter GDP which is obviously not good news and the US Census has admitted to overstating our construction spening numbers for the last 10 years. They fixed the error yesterday for reporting purposes and disappointed the market with much weaker than expected numbers. Ugh.


The oil market turned lower yesterday amid the news of tensions in Asia after a much better start. The market is coming to terms with fact that the supply issue is real and unless we hype the demand side, things will continue to be sluggish when it comes to price rises. Oil is basically unchanged at $36.74 down .02 cents.


Gold had a better day yesterday benefitting from the turmoil. Today gold is a bit higher to $1080.15 up $5.58.


The dollar is higher this morning and stands at 99.23 up .37.


Today we don't get a lot of economic info. ISM New York is about it.




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Re: OptionEye Macro Outlook - Jan. 5th

It is in fact mostly a macro deal.


Probably a lot less about the Fed than China. A nice stick save last night as "somebody" rallied Chinese stocks sharply off the lows.As to whether a new crop of short sellers will be lined up in front of a firing squad and asked to reconsider, I can't know.


Things always being a lot more clear in retrospect, an historic spending blitz in China drove the world economy and commodity prices specifically 2009-14.


The world is heavy with capacity and debt, short on demand and new borrowing capacity. There's a school of thought that says that China is picking up and an upturn in Chinese and other money supplies indicates the expansion can be extended a bit longer.I'll


I'd be foolish to rule that out but am nervous. "These things" typically occur after people have been predicting them forever and all the "very smart people" who say they can't happen feel vindicated.


I guess I'll move to DefCon 3 if we get closes in the SP under yesterdays lows.

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