Archive for Opinions

23 Apr

Is a Commodities Super Cycle on the Way?

Source: Streetwise Reports (4/19/24)

Are we at the start of a commodities supercycle? We sat down with McAlinden Research to see what they had to say about the current state of commodities.

McAlinden Research Partners is a global provider of original investment strategy insights. The company’s primary goal is to pinpoint profitable investment opportunities in their early stages and promptly inform their clients about these potential avenues for growth. Its founder, Joseph J. McAlinden, has over five decades of experience in the research and investment space.

With this in mind, we at Streetwise thought it would be good to sit down with some of the McAlinden team to get their take on what is currently going on in the commodities market.

First, we discussed current trends in the commodities space.

The McAlinden team told us, “In the stock market, we have a super bull market. That is not showing any signs of letting up.” However, when it comes to commodities, the market is a mixed bag. They pointed out that some commodities, such as cocoa, have soared while others, like lumber, have been struggling.

AI and Y2K

In terms of a parallel, the McAlinden team said, “Market cycles don’t repeat, but they do rhyme,” and this reminded them a bit of the late 90s and early 2000s. People thought the world was going to end with Y2K, which led to high revenue in technology companies. However, once the world realized the sky wasn’t falling, it led to a major correction.

The McAlinden team compared this to the current excitement surrounding AI. Eventually, the market will learn if AI has lived up to the hype.

Was it as scary as everyone predicted?

Maybe it won’t be as advanced as we had previously thought, and when that happens, corrections will be made like with technology during Y2K.

A Geopolitically Influenced Market

Now, the McAlinden team explained that commodities are influenced by similar fears and movements in the world. They said, “Throughout history, you see that commodities are very heavily impacted, more impacted by geopolitics than equities.”

For example, OPEC’s oil embargoes significantly impacted the prices of oil in the 1970s, and this alliance of oil producers continues to have a profound impact on the price of energy commodities today.

“Now, within OPEC, or this OPEC+Syndicate, you have countries like Russia and Saudi Arabia, which are both countries within or right on the edge of war zones,” the McAlinden team explained. “They depend . . .  the free movement of trade that is subject to a lot of risk. And that is definitely pushing up some of the commodity prices, particularly in energy.”

Still, the team made it a point to note that they don’t believe we are at the beginning of a commodities super cycle yet, though “we may get there in the next couple of years.”

Though the team pointed out that there has been a lot of chatter about “worst-case scenarios,” that is not what has happened yet.

“There’s been a lot of chances [where we thought] this could get really bad, this could  spiral out of control, but for the most part, the state actors have been pretty rational in trying to avoid these cataclysmic events that might create something like a supercycle.”

They continued, “I think that that has saved the world. [Still] there’s only so many times you can really go right up to the edge of that risk cliff and not end up falling into it. And that’s what you always have to be looking out for in commodities.”

Still, the team made it a point to note that they don’t believe we are at the beginning of a commodities super cycle yet, though “we may get there in the next couple of years.”

Once this happens, almost all commodities could appreciate in value simultaneously, but right now, they are still mixed and dependent on a myriad of factors, including geopolitics and weather.

Closer and Closer to a Recession

We then went on to discuss the current state of inflation, as commodities are also affected by this.

The McAlinden team said, “The Fed suggested they were going to cut [interest rates] three times, and traders basically ignored that, and we’re talking six or seven cuts . . . the data for the year started to show sticky inflation, and strong employment at the headline level; however, this was a bit misleading . . . there are reasons to expect inflation to improve, but [we] doubt it is going to happen in the next six months.”

When asked about the misleading nature of the employment readings, the McAlinden team turned to current headlines regarding increased job creation in the U.S. Though the most recent reports show that job growth is beating the highest estimates of economists, this does not take into account the impact of part-time / contract work accounting for the entire net increase in payrolls over the past several months. So, while job creation is accelerating, full-time work is not.

The Biden White House has succeeded in bringing down CO2 emissions to their target level, but that has come at the expense of higher oil prices because of a lack of investment.

A small part of this is the emphasis among the young workforce to enter the so-called “gig economy.” More and more working millennials and Gen Z are leaning toward freelance and contract work rather than full-time employment.

A larger aspect, according to McAlinden’s team, is “this wave of immigration that the United States is experiencing right now, which is starting to inflate the supply of labor.” People are coming to the United States to gain work visas. However, many of these workers tend to end up in part-time work. ” The number of part-time workers is exploding, but the number of full-time workers is falling, and it’s falling at a rate we haven’t seen in some time.”

This is leading us closer and closer to a recession.

The Impact of the 2024 Election

Commodities are often influenced by federal policies. With this in mind, we spoke about how commodities may be impacted based on the results of the 2024 election. The current candidates are incumbent Democrat Joseph Biden and Republican nominee Donald Trump.

“The outcome of the election will be important,” the McAlinden team told Streetwise.

Oil is one commodity in particular that may be affected. “Trump is essentially running on this drill, baby drill mantra,” they said. “One of his big campaign points is that [energy companies are]  going to drill more when he’s president . . . despite the fact that we have seen oil kind of go up to record highs, it’s only slightly higher than where we were going back to 2020. Back in 2020, production was at 13.1 million barrels, which was the record . . . Today, we’re [still] only at 13.1 million barrels. We were at 13.3 a couple of months ago.”

“If Trump was to win [that would be] bearish for oil prices because, if production is up, we’re going to see prices come down,” they explained.

This is largely because “The Biden White House’s Interior Department is very hostile to oil companies, and oil companies don’t really feel very comfortable investing a whole lot in North America right now because of the administration. So one president is saying drill, baby drill, the other is very concerned about climate change.

The Biden White House has succeeded in bringing down CO2 emissions to their target level, but that has come at the expense of higher oil prices because of a lack of investment, a lack of . . . leasing federal land to  [energy] companies, and things like that. So, there definitely will be commodity implications from the election. And we think that really is going to be pronounced in energy commodities.”

All in all, the current policies in today’s White House and the policies Trump’s administration will put in place if he is elected may be significantly different.

“If Trump was to win [that would be] bearish for oil prices because, if production is up, we’re going to see prices come down,” they explained.

The Weakening of the US Dollar

Another factor in a possible commodities supercycle is the status of the U.S. dollar.

“We’ve seen the dollar remain very strong over the past couple of years. It’s weakened a little bit since 2022 when the dollar index broke 20-year highs, but when the dollar depreciates versus other currencies, commodities tend to benefit from that since . . . commodities are priced in dollars.”

 If the Federal Reserve stays tight and keeps the dollar strong, that’s probably not so good for commodities.

This will allow other countries to buy even more commodities as their local currencies will be able to purchase more product in dollar terms.

They continued, “The path of commodities will be heavily influenced by what the United States Federal Reserve does. If the Federal Reserve stays tight and keeps the dollar strong, that’s probably not so good for commodities.

However, if the Fed is as dovish as everyone else or more dovish (it doesn’t look like it’s gonna be the case right now), that would weaken the dollar and would probably be good for commodities, assuming that there’s not some major economic downturn that’s causing those rates to come down like that.”

ETFs

In summation, it looks like we are not yet at the starting line of the commodities super cycle, but we may get there in the next couple of years. With this in our back pocket, we asked the McAlinden team if they had any ETFs they thought might be impacted.

“Unfortunately, things have gotten harder for equity investors trying to acquire commodities exposure,” they said. “Last year, 21 commodity ETNs were actually closed out by Barclays.” These covered most commodities across the board, and some of the pure plays that just focused on one commodity, like cocoa, had been some of the highest returning ones.”

Still, the team had a handful of solid commodity-focused ETFs they were looking at.

 Invesco’s family of funds is one of these that covered a pretty broad allocation of commodities.

Another is  Invesco DB Commodity Index Tracking Fund (DBC:NYSEARCA), though McAlindnen shared more segmented ETFs such as Invesco DB Agriculture Fund (DBA:NYSEARCA) for ags as well.

“These are the kinds of the products that we’re looking at to represent the performance of some kind of ideas that we might highlight as themes at some point,” they said.

Continuing on with their list, they shared mining ETFs such as Global X Copper Miners ETF (COPX:NYSEARCA) and VanEck Gold Miners ETF (GDX:NYSEARCA:).

As for energy, they pointed out Invesco DB Oil Fund (DBO:NYSEARCA), Energy Select Sector SPDR Fund (XLE:NYSEARCA), and Sprott Uranium Miners ETF (URNM:NYSEARCA).

 

Important Disclosures:

  1. Katherine DeGilio wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

McAlinden Research Partners Disclosures
This report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, all information is sourced from public data.
McAlinden Research Partners is a division of Catalpa Capital Advisors, LLC (CCA), a Registered Investment Advisor. References to specific securities, asset classes and financial markets discussed herein are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. CCA, MRP, employees and direct affiliates of the firm may or may not own any of the securities mentioned in the report at the time of publication.

Energy Opinions
23 Apr

Are tomorrow’s engineers ready to face AI’s ethical challenges?

By Elana Goldenkoff, University of Michigan and Erin A. Cech, University of Michigan 

A chatbot turns hostile. A test version of a Roomba vacuum collects images of users in private situations. A Black woman is falsely identified as a suspect on the basis of facial recognition software, which tends to be less accurate at identifying women and people of color.

These incidents are not just glitches, but examples of more fundamental problems. As artificial intelligence and machine learning tools become more integrated into daily life, ethical considerations are growing, from privacy issues and race and gender biases in coding to the spread of misinformation.

The general public depends on software engineers and computer scientists to ensure these technologies are created in a safe and ethical manner. As a sociologist and doctoral candidate interested in science, technology, engineering and math education, we are currently researching how engineers in many different fields learn and understand their responsibilities to the public.

Yet our recent research, as well as that of other scholars, points to a troubling reality: The next generation of engineers often seem unprepared to grapple with the social implications of their work. What’s more, some appear apathetic about the moral dilemmas their careers may bring – just as advances in AI intensify such dilemmas.

Aware, but unprepared

As part of our ongoing research, we interviewed more than 60 electrical engineering and computer science masters students at a top engineering program in the United States. We asked students about their experiences with ethical challenges in engineering, their knowledge of ethical dilemmas in the field and how they would respond to scenarios in the future.

First, the good news: Most students recognized potential dangers of AI and expressed concern about personal privacy and the potential to cause harm – like how race and gender biases can be written into algorithms, intentionally or unintentionally.

One student, for example, expressed dismay at the environmental impact of AI, saying AI companies are using “more and more greenhouse power, [for] minimal benefits.” Others discussed concerns about where and how AIs are being applied, including for military technology and to generate falsified information and images.

When asked, however, “Do you feel equipped to respond in concerning or unethical situations?” students often said no.

“Flat out no. … It is kind of scary,” one student replied. “Do YOU know who I’m supposed to go to?”

Another was troubled by the lack of training: “I [would be] dealing with that with no experience. … Who knows how I’ll react.”

Other researchers have similarly found that many engineering students do not feel satisfied with the ethics training they do receive. Common training usually emphasizes professional codes of conduct, rather than the complex socio-technical factors underlying ethical decision-making. Research suggests that even when presented with particular scenarios or case studies, engineering students often struggle to recognize ethical dilemmas.

‘A box to check off’

Accredited engineering programs are required to “include topics related to professional and ethical responsibilities” in some capacity.

Yet ethics training is rarely emphasized in the formal curricula. A study assessing undergraduate STEM curricula in the U.S. found that coverage of ethical issues varied greatly in terms of content, amount and how seriously it is presented. Additionally, an analysis of academic literature about engineering education found that ethics is often considered nonessential training.

Many engineering faculty express dissatisfaction with students’ understanding, but report feeling pressure from engineering colleagues and students themselves to prioritize technical skills in their limited class time.

Researchers in one 2018 study interviewed over 50 engineering faculty and documented hesitancy – and sometimes even outright resistance – toward incorporating public welfare issues into their engineering classes. More than a quarter of professors they interviewed saw ethics and societal impacts as outside “real” engineering work.

About a third of students we interviewed in our ongoing research project share this seeming apathy toward ethics training, referring to ethics classes as “just a box to check off.”

“If I’m paying money to attend ethics class as an engineer, I’m going to be furious,” one said.

These attitudes sometimes extend to how students view engineers’ role in society. One interviewee in our current study, for example, said that an engineer’s “responsibility is just to create that thing, design that thing and … tell people how to use it. [Misusage] issues are not their concern.”

One of us, Erin Cech, followed a cohort of 326 engineering students from four U.S. colleges. This research, published in 2014, suggested that engineers actually became less concerned over the course of their degree about their ethical responsibilities and understanding the public consequences of technology. Following them after they left college, we found that their concerns regarding ethics did not rebound once these new graduates entered the workforce.

Joining the work world

When engineers do receive ethics training as part of their degree, it seems to work.

Along with engineering professor Cynthia Finelli, we conducted a survey of over 500 employed engineers. Engineers who received formal ethics and public welfare training in school are more likely to understand their responsibility to the public in their professional roles, and recognize the need for collective problem solving. Compared to engineers who did not receive training, they were 30% more likely to have noticed an ethical issue in their workplace and 52% more likely to have taken action.

Over a quarter of these practicing engineers reported encountering a concerning ethical situation at work. Yet approximately one-third said they have never received training in public welfare – not during their education, and not during their career.

This gap in ethics education raises serious questions about how well-prepared the next generation of engineers will be to navigate the complex ethical landscape of their field, especially when it comes to AI.

To be sure, the burden of watching out for public welfare is not shouldered by engineers, designers and programmers alone. Companies and legislators share the responsibility.

But the people who are designing, testing and fine-tuning this technology are the public’s first line of defense. We believe educational programs owe it to them – and the rest of us – to take this training seriously.The Conversation

About the Author:

Elana Goldenkoff, Doctoral Candidate in Movement Science, University of Michigan and Erin A. Cech, Associate Professor of Sociology, University of Michigan

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Programming
23 Apr
coffee_beans

Robusta Coffee: hovers near record highs!

By ForexTime 

  • FXTM launches 10 new commodities
  • Robusta Coffee near all-time high
  • 2nd biggest gainer YTD in FXTM’s commodity universe
  • Prices ↑ over 35% since start of 2024
  • Key levels of interest at $4040, $4130 and $4280

FXTM’s new Robusta Coffee commodity is flirting near all-time highs!

Prices rallied to fresh records last week as fundamentals fuelled concerns over tight global supplies.

Note: Prices are trading roughly 4% away from all-time highs.

Before we take a deep dive into the world of Robusta coffee, here are the basics:

What is Robusta Coffee?

Robusta coffee bean is often used for expresso-based drinks and accounts for roughly 40% of the world’s coffee production.

What does FXTM’s Robusta Coffee track?

FXTM’s Robusta Coffee tracks the ICE US Robusta Coffee futures, the world benchmark for producers of Robusta coffee.

Coffee of this variety is grown mainly in Vietnam, Brazil, Indonesia, Uganda and India.

The lowdown…

Robusta coffee prices have been on a tear!

The commodity has gained over 35% since the start of 2024 thanks to fundamental forces.

Negative factors in the form of severe weather, aging trees and freight disruptions continue to fuel fears about a global shortage of this coffee variety.

This in turn has sparked panic buying by roasters, further fuelling Robusta’s upside gains.

The bigger picture

Vietnam is the world’s largest producer of Robusta, accounting for roughly 35% of global output.

Heatwaves and ageing trees are expected to hit crop yields, with concerns rising over possible water shortages for irrigation hurting output of the next season.

Brazil, the world’s second-largest producer of Robusta is also facing its trials. Adverse weather conditions are also threatening output, for the country that produces around 28% of global output.

Essentially, there are concerns over the amount of Robusta left in Brazil as the 2024 harvest approaches.

What does this mean?

A combination of negative factors continues to impact output from the world’s two largest producers of Robusta coffee.

This development could mean more gains for the commodity which is trading near all-time highs.

And…the technicals

Prices seem to be in a range on the H1 charts with support around $4130 and resistance at $4280.

Although the path of least resistance points north, a move lower could be on the cards before bulls jump back into the scene.

Potential support levels can be found at $4130, $4040 and $3980.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Soft Commodities
22 Apr

Trade Of The Week: Are Ethereum ETF’s coming?

By ForexTime 

  • Bitcoin halving done and dusted
  • Ethereum in focus ahead of SEC decision
  • ETH ↓ 20% from 2024 peak
  • Prices trending higher on D1 chart
  • Key levels at 100 day SMA, $3255 and 50-day SMA

Bitcoin’s halving event is done and dusted! Marking a landmark moment in the world of digital assets.

This shifts our focus towards Ethereum which could be rocked by the Securities and Exchange Commission’s (SEC) looming decision to vote on Ethereum spot ETF applications.

The world’s second-largest cryptocurrency has shed over 20% from the 2024 high, though still up 40% year-to-date.

Fun fact: Ethereum hit an all-time high of $4866.4 in November 2021.

The lowdown 

One of the key forces supporting Ethereum in Q1 was growing anticipation over a green light from the SEC on May 23rd following the spot Bitcoin ETF approval in January.

Fast-forward to today, confidence has significantly declined over the SEC approving the ETF applications.

The bigger picture 

Just like we have seen with Bitcoin ETFs, the approval of an Ethereum ETF would increase exposure to the cryptocurrency.

It will provide easier and greater access to the world’s second-largest digital currency without having to own it – representing potential inflows of new investors.

Where we are now

Much has changed since the start of 2024 with the lack of engagement between the SEC and applicants sapping confidence over the possibility of an approval on May 23rd.

On top of this, recent news about the SEC investigating companies associated with the Ethereum Foundation adds another layer of uncertainty ahead of the decision.

A bright spot 

Hong Kong regulators have recently approved Bitcoin and Ethereum ETFs, marking another positive step towards mainstream acceptance.

Such a development could spark acceptance from other regulators in Asia and across the world.

What does this all mean?

In a nutshell, Ethereum prices could turn volatile over the next few weeks as the SEC decision looms.

Where there is volatility, this presents potential trading opportunities.

How to take advantage of this

There are 2 potential outcomes to the SEC’s spot ETF decision on May 23rd.

    1) SEC rejects all Ethereum ETF applications.

This seems to be the expected outcome for markets with the approval seen later in the year or even 2025. Nevertheless, the initial disappointment could hit Ethereum prices – capping upside gains from other forces.

    2) SEC approves Ethereum ETF applications.

This decision may catch markets by surprise, triggering an aggressive appreciation in Ethereum prices due to the prospects of fresh inflows from retail and institutional investors.

What about the technicals?

The technicals paint a mixed picture on the daily charts. Although Ethereum is respecting a bearish channel, support can be found at $2855 and the 100-day Simple Moving Average.

  • A solid breakout and daily close above $3255 may open a path toward the 50-day SMA at $3475 and $3724.
  • Should prices slip back below the 100-day SMA at $3063.8, this could open a path back towards $2855. A solid bearish move under $2855, could fuel a further selloff towards the 200-day SMA.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Cryptocurrencies Opinions
21 Apr

Speculators strongly boosting US Dollar bets vs Major Currencies

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 16th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Brazilian Real & New Zealand Dollar

The COT currency market speculator bets were lower this week as just three out of the eleven currency markets we cover had higher positioning while the other eight markets had lower speculator contracts.

Leading the gains for the currency markets was the Brazilian Real (3,517 contracts) with the New Zealand Dollar (1,821 contracts) and the US Dollar Index (213 contracts) also showing positive weeks.

The currencies seeing declines in speculator bets on the week were the Canadian Dollar (-29,430 contracts), the EuroFX (-20,499 contracts), the British Pound (-19,633 contracts), the Mexican Peso (-11,960 contracts), the Australian Dollar (-8,742 contracts), the Swiss Franc (-4,448 contracts), the Japanese Yen (-3,468 contracts) and with Bitcoin (-210 contracts) also registering lower bets on the week.

Speculators strongly boosting US Dollar bets vs Major Currencies

Highlighting the COT currency’s data this week is the overall strength being shown in the speculator’s positioning for the US dollar.

The way the futures markets work for currencies is that every bet for or against a currency is also a bet for against the US dollar. Right now, most of the major currencies are strongly on the defensive in their exchange rates and, especially, in their speculator positions versus the US dollar, underlining the strength of the sentiment for the US currency.

Here are current highlights of the major currencies weakness (US dollar strength):

First up, the Australian dollar (AUD) speculator position is currently over -100,000 contracts for the fourth time out of the last 5 weeks. The all-time record low was reached just last month on March 19th at a total of -107,538 contracts.

The British pound sterling (GBP) contracts have now fallen for four out of the last 5 weeks with the contract level currently at its lowest point since November.

The euro (EUR) currency contracts have decreased in four of the last five weeks as well. The current level is barely positive (+12,224 contracts), falling rapidly (started the year over +100,000 contracts) and now at the lowest level since 2022.

The Japanese yen (JPY) contracts continued to fall this week and have dropped in 13 out of the last 14 weeks. At a total of -165,619 contracts, the current position is at a new lowest standing since 2007.

The Swiss franc (CHF) position has been falling sharply as well. The speculative position for the franc has now declined for 11 consecutive weeks and is at the lowest level since 2019 at -36,212 contracts.

Finally, the Canadian dollar (CAD) has fallen for eight consecutive weeks with a drop this week of -29,430 contracts. The total decrease over just the last 8 weeks has amounted to approximately -82,000 contracts and has brought the current speculative level to the lowest point since 2017.

Helping to keep the US dollar strong is the fading expectations of multiple rate cuts from the Federal Reserve. Inflation levels continue to persist in a growing US economy, putting a dent into this year’s rate cut narrative and giving the USD an interest-rate differential boost against it’s major currency counterparts.

The exchange rates of the major currencies are also in a current short-term downtrend vs the USD. The AUD, NZD, GBP, EUR and CHF exchange rates all have dipped this week to the lowest levels since October or November in the latest spot trading data. The JPY, meanwhile, is currently trading at the lowest levels in 34-years.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Mexican Peso & Bitcoin

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Mexican Peso (94 percent) and the Bitcoin (61 percent) lead the currency markets this week. The British Pound (59 percent) comes in as the next highest in the weekly strength scores.

On the downside, the Canadian Dollar (0 percent), the Swiss Franc (0 percent), the Japanese Yen (0 percent), the US Dollar Index (3 percent) and the Australian Dollar (6 percent) come in at the lowest strength levels currently and are all in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
US Dollar Index (2.9 percent) vs US Dollar Index previous week (2.5 percent)
EuroFX (25.5 percent) vs EuroFX previous week (34.2 percent)
British Pound Sterling (59.0 percent) vs British Pound Sterling previous week (72.0 percent)
Japanese Yen (0.0 percent) vs Japanese Yen previous week (2.4 percent)
Swiss Franc (0.0 percent) vs Swiss Franc previous week (8.9 percent)
Canadian Dollar (0.0 percent) vs Canadian Dollar previous week (22.4 percent)
Australian Dollar (5.8 percent) vs Australian Dollar previous week (13.7 percent)
New Zealand Dollar (27.1 percent) vs New Zealand Dollar previous week (21.9 percent)
Mexican Peso (94.1 percent) vs Mexican Peso previous week (100.0 percent)
Brazilian Real (35.4 percent) vs Brazilian Real previous week (30.8 percent)
Bitcoin (60.9 percent) vs Bitcoin previous week (64.1 percent)

Bitcoin & Mexican Peso top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that Bitcoin (15 percent) and the Mexican Peso (10 percent) lead the past six weeks trends for the currencies and are the only markets with positive trends at the moment.

The New Zealand Dollar (-54 percent) leads the downside trend scores currently with the Canadian Dollar (-48 percent), Swiss Franc (-37 percent) and the British Pound (-33 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (-8.5 percent) vs US Dollar Index previous week (-6.8 percent)
EuroFX (-23.0 percent) vs EuroFX previous week (-12.8 percent)
British Pound Sterling (-33.0 percent) vs British Pound Sterling previous week (-12.0 percent)
Japanese Yen (-32.1 percent) vs Japanese Yen previous week (-20.2 percent)
Swiss Franc (-37.5 percent) vs Swiss Franc previous week (-39.8 percent)
Canadian Dollar (-47.9 percent) vs Canadian Dollar previous week (-39.5 percent)
Australian Dollar (-14.8 percent) vs Australian Dollar previous week (-11.9 percent)
New Zealand Dollar (-53.8 percent) vs New Zealand Dollar previous week (-67.0 percent)
Mexican Peso (10.4 percent) vs Mexican Peso previous week (22.5 percent)
Brazilian Real (-9.6 percent) vs Brazilian Real previous week (-26.2 percent)
Bitcoin (14.9 percent) vs Bitcoin previous week (27.3 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week resulted in a net position of -929 contracts in the data reported through Tuesday. This was a weekly gain of 213 contracts from the previous week which had a total of -1,142 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 2.9 percent. The commercials are Bullish-Extreme with a score of 97.9 percent and the small traders (not shown in chart) are Bearish with a score of 37.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: New Buy – Long Position.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:67.918.210.4
– Percent of Open Interest Shorts:70.021.25.4
– Net Position:-929-1,3092,238
– Gross Longs:29,9118,0404,596
– Gross Shorts:30,8409,3492,358
– Long to Short Ratio:1.0 to 10.9 to 11.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):2.997.937.2
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-8.55.615.9

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week resulted in a net position of 12,224 contracts in the data reported through Tuesday. This was a weekly decrease of -20,499 contracts from the previous week which had a total of 32,723 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.5 percent. The commercials are Bullish with a score of 78.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 5.2 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.260.111.2
– Percent of Open Interest Shorts:25.364.48.7
– Net Position:12,224-28,65416,430
– Gross Longs:178,912395,97973,794
– Gross Shorts:166,688424,63357,364
– Long to Short Ratio:1.1 to 10.9 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):25.578.55.2
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-23.025.5-22.4

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week resulted in a net position of 8,619 contracts in the data reported through Tuesday. This was a weekly decline of -19,633 contracts from the previous week which had a total of 28,252 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.0 percent. The commercials are Bearish with a score of 47.3 percent and the small traders (not shown in chart) are Bearish with a score of 35.3 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:31.356.69.5
– Percent of Open Interest Shorts:27.555.414.5
– Net Position:8,6192,972-11,591
– Gross Longs:71,800129,95721,721
– Gross Shorts:63,181126,98533,312
– Long to Short Ratio:1.1 to 11.0 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):59.047.335.3
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-33.037.6-34.0

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week resulted in a net position of -165,619 contracts in the data reported through Tuesday. This was a weekly reduction of -3,468 contracts from the previous week which had a total of -162,151 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bullish with a score of 75.9 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:14.969.713.7
– Percent of Open Interest Shorts:65.019.014.3
– Net Position:-165,619167,742-2,123
– Gross Longs:49,463230,64245,373
– Gross Shorts:215,08262,90047,496
– Long to Short Ratio:0.2 to 13.7 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.075.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-32.136.0-23.4

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week resulted in a net position of -36,212 contracts in the data reported through Tuesday. This was a weekly decline of -4,448 contracts from the previous week which had a total of -31,764 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 1.1 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:15.774.310.0
– Percent of Open Interest Shorts:54.417.627.9
– Net Position:-36,21252,956-16,744
– Gross Longs:14,65069,4129,349
– Gross Shorts:50,86216,45626,093
– Long to Short Ratio:0.3 to 14.2 to 10.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.01.1
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-37.538.8-23.3

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week resulted in a net position of -82,815 contracts in the data reported through Tuesday. This was a weekly fall of -29,430 contracts from the previous week which had a total of -53,385 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 3.4 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:15.670.211.6
– Percent of Open Interest Shorts:50.531.715.3
– Net Position:-82,81591,572-8,757
– Gross Longs:37,067166,83427,645
– Gross Shorts:119,88275,26236,402
– Long to Short Ratio:0.3 to 12.2 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.03.4
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-47.939.1-11.2

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week resulted in a net position of -101,083 contracts in the data reported through Tuesday. This was a weekly lowering of -8,742 contracts from the previous week which had a total of -92,341 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 5.8 percent. The commercials are Bullish-Extreme with a score of 99.1 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.7 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:18.072.17.7
– Percent of Open Interest Shorts:61.122.614.2
– Net Position:-101,083116,344-15,261
– Gross Longs:42,365169,33418,142
– Gross Shorts:143,44852,99033,403
– Long to Short Ratio:0.3 to 13.2 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):5.899.115.7
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-14.814.9-10.7

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week resulted in a net position of -11,726 contracts in the data reported through Tuesday. This was a weekly lift of 1,821 contracts from the previous week which had a total of -13,547 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 27.1 percent. The commercials are Bullish with a score of 76.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.5 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:28.765.55.2
– Percent of Open Interest Shorts:47.342.49.7
– Net Position:-11,72614,570-2,844
– Gross Longs:18,01941,1953,272
– Gross Shorts:29,74526,6256,116
– Long to Short Ratio:0.6 to 11.5 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):27.176.217.5
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-53.854.6-43.9

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week resulted in a net position of 127,731 contracts in the data reported through Tuesday. This was a weekly decline of -11,960 contracts from the previous week which had a total of 139,691 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 94.1 percent. The commercials are Bearish-Extreme with a score of 5.9 percent and the small traders (not shown in chart) are Bearish with a score of 39.2 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:60.336.72.6
– Percent of Open Interest Shorts:15.782.81.0
– Net Position:127,731-132,1194,388
– Gross Longs:172,573105,0287,388
– Gross Shorts:44,842237,1473,000
– Long to Short Ratio:3.8 to 10.4 to 12.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):94.15.939.2
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:10.4-9.3-11.1

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week resulted in a net position of 901 contracts in the data reported through Tuesday. This was a weekly increase of 3,517 contracts from the previous week which had a total of -2,616 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 35.4 percent. The commercials are Bullish with a score of 65.3 percent and the small traders (not shown in chart) are Bearish with a score of 41.0 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:60.730.94.7
– Percent of Open Interest Shorts:59.233.63.5
– Net Position:901-1,605704
– Gross Longs:35,81218,2032,752
– Gross Shorts:34,91119,8082,048
– Long to Short Ratio:1.0 to 10.9 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):35.465.341.0
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-9.612.2-20.3

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week resulted in a net position of -363 contracts in the data reported through Tuesday. This was a weekly fall of -210 contracts from the previous week which had a total of -153 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 60.9 percent. The commercials are Bullish with a score of 56.7 percent and the small traders (not shown in chart) are Bearish with a score of 28.3 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:75.75.15.2
– Percent of Open Interest Shorts:76.96.22.9
– Net Position:-363-313676
– Gross Longs:22,3391,5131,532
– Gross Shorts:22,7021,826856
– Long to Short Ratio:1.0 to 10.8 to 11.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):60.956.728.3
– Strength Index Reading (3 Year Range):BullishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:14.9-19.7-4.9

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
20 Apr

Speculator Extremes: Silver, Coffee & Mexican Peso lead COT Positions

By InvestMacro 

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on April 16th 2024.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Silver


The Silver speculator position comes in as the most bullish extreme standing this week. The Silver speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 37.9 this week. The overall net speculator position was a total of 53,359 net contracts this week with a small gain of 147 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Coffee


The Coffee speculator position comes next in the extreme standings this week. The Coffee speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 22.0 this week. The speculator position registered 76,071 net contracts this week with a weekly rise of 2,508 contracts in speculator bets.

Mexican Peso


The Mexican Peso speculator position comes in third this week in the extreme standings. The Mexican Peso speculator level resides at a 94.1 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 10.4 this week. The overall speculator position was 127,731 net contracts this week with a decrease by -11,960 contracts in the weekly speculator bets.

Copper


The Copper speculator position comes up number four in the extreme standings this week. The Copper speculator level is at a 93.1 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 59.1 this week. The overall speculator position was 47,569 net contracts this week with an increase by 4,875 contracts in the speculator bets.

Bloomberg Commodity Index


The Bloomberg Commodity Index speculator position rounds out the top five in this week’s bullish extreme standings. The Bloomberg Commodity Index speculator level sits at a 91.2 percent score of its 3-year range. The six-week trend for the speculator strength score was 20.3 this week.

The speculator position was -3,413 net contracts this week with a rise by 277 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Japanese Yen


The Japanese Yen speculator position comes in as the most bearish extreme standing this week. The Japanese Yen speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -32.1 this week. The overall speculator position was -165,619 net contracts this week with a shortfall of -3,468 contracts in the speculator bets.

Canadian Dollar


The Canadian Dollar speculator position comes in next for the most bearish extreme standing on the week. The Canadian Dollar speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -47.9 this week. The speculator position was -82,815 net contracts this week with a sharp drop by -29,430 contracts in the weekly speculator bets.

Swiss Franc


The Swiss Franc speculator position comes in as third most bearish extreme standing of the week. The Swiss Franc speculator level resides at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -37.5 this week. The overall speculator position was -36,212 net contracts this week with a decline by -4,448 contracts in the speculator bets.

US Dollar Index


The US Dollar Index speculator position comes in as this week’s fourth most bearish extreme standing. The US Dollar Index speculator level is at a 2.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -8.5 this week. The speculator position was -929 net contracts this week with a small gain of 213 contracts in the weekly speculator bets.

Soybeans


Finally, the Soybeans speculator position comes in as the fifth most bearish extreme standing for this week. The Soybeans speculator level is at a 5.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was 5.7 this week. The speculator position was -171,893 net contracts this week with a drop by -13,416 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Opinions
19 Apr

Week Ahead: NAS100 braced for more pain?

By ForexTime 

  • NAS100 ↓ over 4% this week
  • Index set to be rocked by various forces
  • Big tech earnings & key US data in focus
  • Watch out for geopolitical tensions
  • Key level of interest at 17,000

The week ahead may present fresh trading opportunities due to top-tier data and big tech earnings:

Monday, 22nd April

  • CN50: China loan prime rates
  • TWN: Taiwan export orders, jobless rate
  • EU50: Eurozone consumer confidence
  • EUR: ECB President Christine Lagarde speech

Tuesday, 23rd April

  • EU50: Eurozone S&P Global PMI’s
  • GER40: Germany S&P Manufacturing PMI
  • JP225: Japan Jibun Bank Manufacturing PMI
  • SG20: Singapore CPI
  • TWN: Taiwan industrial production
  • UK100: UK S&P Global/CIPS Manufacturing PMI
  • SEK: Riksbank Governor Erik Thedeen speech
  • NAS100: Tesla, PepsiCo earnings

Wednesday, 24th April  

  • AU200: Australia CPI
  • CAD: Canada retail sales
  • EUR: Germany IFO business climate
  • NZD: New Zealand trade
  • CAD: BoC policy meeting minutes
  • US30: IBM, Boeing earnings
  • NAS100: Meta Platforms earnings

Thursday, 25th April

  • US500: US Q1 GDP, initial jobless claims
  • EU50: Airbus earnings
  • CHF: SNB issues first quarter results
  • NAS100: Microsoft, Alphabet earnings

Friday, 26th April

  • JPY: BoJ rate decision, Tokyo CPI, inflation & GDP forecasts
  • SG20: Singapore industrial production, home prices
  • USD: US March PCE report, University of Michigan consumer sentiment
  • US500: Exxon Mobil earnings
  • US30: Chevron earnings
  • CHF: SNB President Thomas Jordan speech

FXTM’s NAS100 which tracks the underlying benchmark Nasdaq 100 index is under the spotlight after shedding over 4% this week.

A combination of geopolitical risk and concerns about higher-for-longer US rates have rocked the index, with bears back in the picture.

More volatility could be on the horizon, and here are 4 reasons why:

     1) Geopolitical Risk

On top of the list is the developments in the Middle East.

Geopolitical jitters are likely to keep markets edgy in the week ahead. In the latest news, there have been reports of Israel launching a strike on Iran early Friday in retaliation for last weekend’s drone and missile attack.

  • Should tensions escalate further, risk aversion could drag the NAS100 lower.
  • Signs of easing tensions may lift sentiment, potentially lending support to the NAS100.

 

    2) Big Tech earnings

4 of the so-called “Magnificent 7” tech titans are due to report their latest quarterly results.

Given how the combined weightings of Tesla, Meta Platforms, Microsoft and Alphabet represent over 20% of the Nasdaq 100, their result could spark volatility. Artificial intelligence will remain focus with investors looking for solid earnings to justify the AI-driven gains in recent months.

  • A set of positive earnings may trigger a rebound on the NAS100
  • Earnings that fall short of expectations may deal another blow to the index.

 

    3) Heavy hitting US data

The incoming US Q1 GDP report and PCE data are likely to influence bets around when the Fed will start cutting rates in 2024.

Considering how tech stocks remain sensitive to interest rate expectations, this could mean more volatility for the NAS100. Earlier this week, Fed Chair Jerome Powell dropped hawkish remarks which further dampened Fed cut expectations.

Traders are currently pricing in a 50% probability of a 25-basis point Fed cut by July with this jumping to 93% by September.

  • The NAS100 may extend losses if US data reinforces the case for “ higher-for-longer” rates.
  • Signs of cooling price pressure and disappointing GDP could boost Fed cut bets, supporting the NAS100 as a result.

 

    4) Technical forces 

NAS100 is under pressure on the daily charts with the index respecting a bearish channel.  Prices are trading below the 50, 100 and 200-day SMA while the MACD trades below zero.

  • A solid breakdown and daily close below the 17,000 level may trigger a selloff towards 16,600 and the 200-day SMA at 16,330.
  • Should 17,000 prove to be reliable support, this may open a path back towards the 100-day SMA at 17,400 and 17,800.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Stock Market News
18 Apr

Renewable energy innovation isn’t just good for the climate — it’s also good for the economy

By Deborah de Lange, Toronto Metropolitan University 

As the climate crisis escalates, there are urgent and difficult choices that need to be made to drastically reduce our carbon emissions before more irreparable damage is done.

Many have argued the energy industry needs to change to reduce carbon emissions, but one concern that remains is the consequence this will have on economic prosperity.

Discussions vary across interest groups. Do we need to outright replace the fossil fuel industry with the renewable energy industry as soon as possible? Should we slowly phase out fossil fuels while making clean renewable replacements? Or, should we continue with a powerful fossil fuel industry while separately growing a renewable industry in parallel?

How these different choices could impact our economies seems unclear, and it is this lack of clarity that opens up the field for frustrating discussions. At the recent COP28 climate summit in the United Arab Emirates, the conference president shockingly said that there is “no science” behind any decision to phase-out fossil fuels from our energy systems — a statement which he later claimed was “misinterpreted.”

My recent research examines energy industry restructuring options for a green transition to renewable energy from an economic perspective.

Although economic analysis is helpful, it is not sufficient on its own for making these important decisions. So, my research also draws on sustainability which involves considering the conditions faced by future generations, and a concept known as equifinality reminding us to keep our minds open to many possible approaches that may satisfy the same objectives.

Renewable energy innovation and GDP

My research indicates that renewable energy innovation contributes to higher GDP. Contrary to some commonly held beliefs, a clean transition is, and has been for at least a decade, good for the economy — even in earlier stages of its development.

My findings also suggest that government and industry support for the fossil fuel industry negatively affects a country’s renewable energy innovation. The two industries are not compatible.

When the fossil fuel industry invests in itself, it also appears to improve GDP, which creates confusion about the best way to ensure economic prosperity while transitioning to clean energy.

But this investment, often made through lobbying, only prolongs the existence of the fossil fuel industry by keeping renewable energy competition out. This creates a false dichotomy between reducing emissions and improving GDP when, in fact, clean innovation can achieve both simultaneously.

My research indicates that clean innovation makes a stronger economy and reduces emissions. If we want to reinforce that dual progress, rather than accepting trade-offs, then we have to stop supporting the fossil fuel industry which aims to slow it down.

Helping renewable energy thrive

Economically speaking, the fossil fuel industry is negatively impacting consumer welfare by maintaining higher-than-necessary prices due to limited competition. This, in turn, bumps up GDP through inflated profits, having subsidised an already dominant polluting industry, reducing clean innovation and delaying cleaner progress — obviously not the way to grow a healthy economy.

In fact, GDP is not a standard of living measure or a measure of innovative competitiveness. To address inflation and the cost of living crisis, we should be promoting more competition across industries. This is a more productive type of capitalism that brings wider benefits to all of us, including more innovation, lower prices, and better products for domestic and export markets.

Government subsidies that boost the fossil fuel industry hinder consumer welfare and the transition to clean energy. Some examples include subsidies to fund more carbon capture and storage technology and the use of fossil energy in hydrogen storage systems.

Instead of funding these backward subsidies, governments should implement pollution taxes while also supporting renewable energy innovation.

My research demonstrates that pollution taxes work well with clean innovation capabilities. Supporting research and innovation in renewable energy and using a carbon tax as a tool can boost the economic benefits of transitioning to clean energy.

The findings of my work suggest that a robust economy is related to industry restructuring so that renewable energy innovation can thrive. Fostering novel scientific discoveries in clean energy innovation should be prioritized while reducing non-competitive industry formations and organizations, such as fossil fuel oligopolies and industry associations.

Making decisions with the future in mind

Increasing public awareness and understanding of fossil fuel industry games is a way to accelerate change. It’s important to recognize that industries at different life cycle stages contribute to the economy in different ways.

A newer rising industry with determined entrepreneurs, like that of renewable energy, invests in innovation to create value. On the other hand, a declining industry plays end-game strategies, like engaging in self-promotional activities, to maintain their existing position and create barriers to new industry entries.

However, consumer welfare increases with competition, not collusion. Economic analysis is not sufficient on its own for decision-making in this area because positive economic outcomes can be generated by different kinds of strategies supporting an industry’s life cycle goals.

Government policy decisions should be made based on economic analyses alongside broader sustainability criteria. Ignoring the equifinality argument and reverting to discussions about replacing coal with gas as a bridge only ensures fossil fuels remain in use for at least another generation of infrastructure.

Communities should apply sustainability and equifinality lenses to decision-making, understanding that there are many possible means to an end. For example, if a community has specific concerns about one type of renewable energy system, they should explore other alternative clean energy options instead of defaulting to fossil fuels.

An educated public should reject simplistic and single-sided arguments and understand there are usually more nuanced solutions to problems supported by evidence-based analysis. By embracing a more holistic approach, we can develop more sustainable societies by opening up renewable energy possibilities.The Conversation

About the Author:

Deborah de Lange, Associate Professor, Global Management Studies, Toronto Metropolitan University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Energy Opinions
16 Apr

Stock markets signal a growing gap between Canadian and American clean tech firms

By Yrjo Koskinen, University of Calgary; J. Ari Pandes, University of Calgary, and Nga Nguyen, Université du Québec à Montréal (UQAM) 

Canada is one of the largest oil and gas producing nations in the world, and the oil and gas sector is its most important export industry.

With the rapid increase of green energy investments globally, stock markets have begun viewing oil and gas firms in Canada and the United States as mature with an uncertain future — despite recent record profits and increases in stock prices.

A prudent and economically viable energy transition to a low carbon economy is of the utmost importance for the future prosperity of the country. As part of the transition, Canada must become a lucrative destination for clean tech investments.

The International Energy Association reports clean energy investments (including nuclear) are continuing to grow over fossil fuel investments, with US$1.7 trillion invested in clean energy in 2023, compared to US$1.1 trillion in fossil fuels. This trend will only continue in the coming decades.

Our recent analysis of stock market data from 2018 through 2022 provides important information about how capital markets view the risk and return for oil and gas companies and clean tech firms in both countries.

U.S. clean tech firms are valued more

In our study, we examined how stock markets in Canada and the U.S. value traditional energy companies, clean tech companies, and the prospects for both.

Our study suggests there are large differences between the clean tech industries in Canada and the U.S. Clean tech has much better prospects in the U.S., while oil and gas firms in Canada may outlast their American counterparts.

Our report indicates that markets view clean tech firms as growth firms in both Canada and the U.S., despite disappointing stock returns for these companies since 2021. Growth firms are companies that reinvest their current earnings into operations to further expand rapidly and then aim to deliver profits later on.

The valuations are significantly higher in the U.S., suggesting the market sees better long-term prospects for the sector south of the border. Canadian clean tech firms could have problems scaling up and taking advantage of opportunities.

Clean tech firms in the U.S. are also attracting more equity capital, particularly since that country passed the Inflation Reduction Act (IRA) in 2022. The IRA has significantly accelerated investments in clean tech in the U.S.

While Canadian tax credits for clean tech are substantial, they don’t seem to have the same impact on investments as the IRA, perhaps because rules for Canadian tax credits and other incentives are deemed more complex.

The real issue is not Canadian policy for energy transition per se, but rather the complex implementation, uncertainty and lack of clarity of these policies.

Political uncertainty

Opportunities in clean tech exist in Canada, but there is no room for increased regulatory risks. Disagreements between the federal and some provincial governments create uncertainty that hurts investments.

Alberta’s sudden moratorium on renewable energy was not helpful, especially given the province has quickly become a Canadian renewables hotbed. While the province has since lifted the moratorium, its new regulations for the clean tech sector have been criticized as too strict.

Political uncertainty, coupled with more risk-averse business attitudes than in the U.S., is creating unnecessary hurdles for the commercialization of clean tech innovations in Canada.

This should be concerning to many, as Canadian clean tech firms might be tempted to locate their operations south of the border. Consequently, Canadian taxpayer-supported startups may end up creating more wealth in the U.S. than at home.

Meanwhile, Canadian oil and gas companies have recently experienced strong operating performance, and their valuations and stock return performance support this. Interestingly, Canadian energy firms are valued higher relative to profits than their U.S. counterparts, which is counter to popular opinion among Canadian energy sector pundits.

One reason for the more optimistic valuations is the impending completion of the Trans Mountain pipeline and the resulting increase in the capacity to export heavy oil from the oil sands. There is no doubt that the energy sector will continue to contribute to the Canadian economy, at least in the medium run. The key question is: for how long?

Reducing greenhouse gas emissions

The oil and gas sector must reinvest more of its profits into emissions-reducing technologies. However, if Canadian policies and incentives do not support enough investment return prospects, the sector will continue to under-invest in energy transition. In particular, the tax incentives should be made easier for small- and medium-sized companies to access.

Reducing greenhouse gas (GHG) emissions will be critical in continuing to attract financing and generating profits beyond 2030. The oil and gas sector has been criticized for slow progress in this regard, but the recent announcement of a regulatory application for a carbon capture project by oilsands producers with the Alberta Energy Regulator is certainly encouraging.

While competing with the U.S. for clean tech investments and reducing GHG emissions in the oil and gas sector are challenging, Canadian firms should continue to embrace opportunities. Both industries require predictable, stable and clear regulatory environments to provide the certainty investors and companies need to continue to invest in Canada.

Our success as a nation depends on it.The Conversation

About the Author:

Yrjo Koskinen, BMO Professor of Sustainable and Transition Finance, University of Calgary; J. Ari Pandes, Associate Professor of Finance, University of Calgary, and Nga Nguyen, Assistant Professor, Department of Finance, Université du Québec à Montréal (UQAM)

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Energy Opinions
15 Apr

Trade Of The Week: Bitcoin Halving vs. Geopolitical Fears

By ForexTime 

  • Big week for “OG” crypto
  • Halving event looms large
  • Watch out for geopolitical tensions
  • Prices under pressure on D1 chart
  • Key levels at $61500, $65000 and $68000

In case you missed the memo, Bitcoin’s halving is almost here!

This is a significant event that reduces the mining rewards for the “OG” crypto by half.

But before we cover what, when, why and how to prepare for this event…

Watch out for geopolitical tensions.

Bitcoin along with other cryptocurrencies may be influenced by escalating geopolitical tensions in the Middle East.

On Saturday, Bitcoin prices tumbled over 8% as risk aversion soured appetite for riskier assets. The “OG” crypto along with other altcoins may be in store for more pain despite the upcoming halving if tensions escalate further between Israel and Iran.

With the above said, here is a quick lowdown:

In our 2024 market outlook, bitcoin was one of the assets we picked that could see monster moves.

The approval of Bitcoin ETFs back in January has boosted its mainstream acceptance with fresh inflows propelling the cryptocurrency to all-time highs. In fact, at one point in Q1 prices were up over 70%.

Note: Bitcoin is currently trading 10% away from its all-time high.

    1) What is the Bitcoin halving?

This event reduces the rewards for mining new blocks in the Bitcoin blockchain by half.

It happens approximately every four years with the first halving taking place in 2012.

Fast forward, we a less than a few days away from the fourth halving which will reduce the block reward from 6.25 BTC to 3.125 BTC.

Note: At launch in 2009, the reward was 50 BTC per block.

    2) When is it expected?

While the exact date of the halving is unknown, it is expected to happen when the total number of bitcoin blocks hit 740,000. Market expectations range between April 19th and April 20th.

    3) Why does it happen?

To put things into context, imagine if you are in the business of mining a precious resource, and suddenly, the rewards received from extracting the resources are halved. Will it still be worth all the effort?

It is the same concept with Bitcoin mining which is designed to slow down supply and increase scarcity – potentially leading to higher prices if demand remains strong.

    4) How can you take advantage of this?

Historically, post-halving periods have seen significant price increases with the one back in May 2020 no exception. Prices appreciated a whopping 230% over a 7-month period, reaching an all-time high just below $29,000 by year end.

Should history repeat itself once again, this could propel Bitcoin to fresh all-time highs over the next few months.

It does not end here…

Given the hype this major event may create and increased attention towards the crypto space, it could indirectly impact altcoins.

So, watch out for Ethereum, Dogecoin, Solana and Avalanche which have shown a positive correlation above 90% to Bitcoin’s move at any given 5-day rolling period over the past 5 years!

On the flip side…

The market reaction to the upcoming Bitcoin halving could be different.

Bitcoin has come a long way since the first halving back in 2012 with much more media coverage and awareness compared to the past. Essentially, the expected bullish reaction to the upcoming halving may already be priced in.

Meaning, traders may end up adopting a ‘buy the rumour, sell the fact’ response to the event with the expected rally delayed or even disappointing expectations.

    5) Technical forces

Prices seem to be under pressure following the sharp selloff witnessed on Saturday. Although the broken symmetrical triangle may support bears, prices are trading within a wide range on the daily charts. Support can be found around $61500 and resistance at $73850.

  • A solid breakout and daily close back above $65000 may open a path towards $68000 and $71000 before bulls challenge $73850.
  • Should $65000 prove to be reliable resistance, this could trigger a selloff towards $61500 and $60000.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

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