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Archive for Opinions – Page 113

Kenya has lifted its ban on genetically modified crops: the risks and opportunities

By Benard Odhiambo Oloo, Egerton University

Kenya recently lifted a ban on the cultivation and importation of genetically modified crops amid the worst drought in 40 years and soaring food prices. This includes white maize, the country’s main staple. The decision was welcomed by scientists who see GM crops as the answer for food security. But it is opposed by a spirited lobby who are concerned about potential risks to health and the environment. Benard Odhiambo Oloo, who is a food safety and quality expert, provides insights into the debate.

What are GMOs?

Genetically modified organisms (GMOs) refer to plants, microbes or animals that have had their genetic make-up altered through the introduction of a select gene from another unrelated species. For crops this is usually for the purpose of conferring a desired characteristic such as increased yield, insect tolerance or drought resistance among others.

Genetic engineering refers to the science involved in the selection of desired genes responsible for specific traits from a species and transferring them into the genes of another organism, thus modifying the second species’ genetic makeup.

Humans have been improving the quality of domesticated crops for thousands of years. But this has mostly been through conventional breeding, where important traits are encouraged, selected and passed down from one generation to the next.

Conventional breeding would typically take 10-15 years. The turnaround for genetic engineering is usually less than five years. But, due to the strict regulations on commercialisation, most GM crops have been in the pipeline for decades especially in Africa.

How prevalent is their cultivation in Africa?

The approval and cultivation of GMOs in Africa has been slow. Only a few countries have allowed their commercialisation. South Africa has been a leader in adoption of GMO crops in Africa and has had experience spanning over a decade. The number of countries in Africa where GM crops are cultivated has grown from three in 2016 to 10 by 2022. These 10 countries have commercialised different types of GMO crops.

Apart from South Africa, Egypt, Sudan, Ethiopia, Burkina Faso, Malawi, Nigeria, Ghana and eSwatini have allowed the planting of GMO seeds. A number of other countries are at different stages of development and commercialisation of a number of GMOs.

The leading GMO crops under consideration across different countries (Kenya, Malawi, Uganda, Nigeria, Ghana and others) are GM cotton (tolerant to African bollworm), GM cassava (resistant to cassava brown streak disease) and GM maize (resistant to stem borer) among many more.

This year Ghana approved the release of pod borer resistant cowpea, thus joining the growing list of African countries to commercialise GM crops. This is the first genetically modified crop to be approved in the country.

In December 2019 the Kenyan government gave the nod for the commercialisation of GMO cotton. After more than two seasons of growing GM cotton, Kenyan farmers have expressed satisfaction with the good yield from Bt cotton in spite of the drought conditions in the last few seasons.

Elsewhere in Africa, farmers have also reported significant reduction in the cost of production through reduced spraying for control of insect pests and diseases. Controlling African bollworm, for example, was costly and the pest caused losses in cotton farming.

This list is expected to keep growing even though in most African countries the cultivation of GMOs has experienced protracted delays through regulatory, political and social blockades.

Why did Kenya ban GMOs? What has changed?

Kenya banned GM crops in 2012. The ministerial statement on the ban was largely informed by a 2012 a scientific report dubbed the Séralini study that associated GMOs with cancer in rats.

Anti-GMO activists have often referred to that report and in addition presented the unknown impact of the modifications as the main reason for pushing for bans. The other issues range from fears about the effect of GMO, the mixed signals from EU about health and safety of GM foods, and the potential risk of GMOs to the environment and biodiversity.

The activists also cite the fear of possible effects of GMOs on non-target organisms and potential development of resistance to insect-pests by the GM crops. Lastly, food safety fears of GMOs remain pertinent in some parts of the continent.

The Kenyan government’s change of stance was underpinned by a number of developments. First of which was the report by a task force on genetically modified foods that resulted in proper scientific regulation and presence of a strong regulatory framework.

Another factor is the lingering drought in which over 4 million Kenyans currently face food insecurity. This may have led the government to consider more radical solutions despite opposition.

The government has decided to review each application for introduction of GMOs on a case-by-case basis.

What could go wrong? And what mitigation plans are there?

There are three main concerns about what could go wrong with GMOs. These are unintended harmful effects, food safety, environmental safety and social attitudes, including fears that GMOs are a case of “man playing God”.

There is also the concern of unintended harmful effects of GMOs on the environment. In anticipation of these risks, scientists working in the field of GMO have created a raft of regulations. These regulations aim to evaluate whether GMOs are just as safe to humans and the environment as their conventional counterparts before they can be accepted for commercialisation.

Food safety: Food safety studies including tests of allergenicity (the ability of an antigen to induce an abnormal immune response) are a mandatory requirement for commercialisation of GMOs. Countries have also instituted biosafety authorities with a mandate to regulate the development and commercialisation of GMOs.

Environmental safety: An international agreement provides a framework for handling, transport and use of GMOs. It provides a clear road-map for evaluation of the impact of GMOs on the environment. It has instituted the practice of post release monitoring and evaluation for 10 years or more after the release of a GM crop.

The potential development of weeds that can resist one or more specific herbicides – so-called super weeds – is a case in point. Herbicide tolerance has helped farmers to control weeds and significantly reduce cost of GM crop production. This is because crops can be genetically modified to confer resistance to common herbicides, such as glyphosate. There is a chance however that farmers can over-rely on this technique of weed control to the detriment of the weeds developing resistance.

The potential for such resistance must be closely monitored. In Kenya, it would fall upon county governments through the extension officers to report any early cases – and to take action – if there are any potential signs of resistance. The aim should be to use multiple approaches to weeds and pest control also referred to as integrated pest managanent systems.

Socio-cultural aspects: The government must make every effort to address people’s concerns about GMOs. This includes pointing out that humans have modified crops for thousands of years. GM foods have now been grown and consumed for over 20 years in different countries. There is so far no scientific evidence to confirm any of the fears. GM crops have been evaluated to be just as safe for human consumption and to the environment as conventional crops.

About the Author:

Benard Odhiambo Oloo, Lecturer of Food Science and Technology, Department of Dairy and Food Science and Technology., Egerton University

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

Opinions Soft Commodities

26 Oct

Mid-Week Technical Outlook: USD

By ForexTime

After dominating the FX space throughout 2022, the dollar’s reign could be coming to an end.

Since the start of Q4, dollar bulls have been missing in action as investors bet the Federal Reserve will slow the pace of rate hikes in the face of slowing economic growth.

This has pushed the Dollar Index (DXY) to its lowest level in five weeks, injecting bears with enough confidence to attack 110.00. Given how the dollar may weaken further on Fed pivot hopes, this could drag the DXY towards 109.00 in the near term.

We can see a similar theme in the equally-weighted USD index. Prices are under pressure on the weekly charts. Sustained weakness below 1.2500 could open the doors towards 1.2184.

EURUSD back above parity

As the dollar struggles across the board, this has offered an opportunity for currencies to fight back. Euro bulls wasted no time in pushing the EURUSD back above parity for the first time in five weeks. With dollar bulls missing in action amid Fed pivot hopes, and the ECB expected to raise rates by 75 basis points on Thursday, this has propelled the EURUSD towards 1.0030. A daily close above parity could encourage a move towards 1.0100 in the short term. If parity proves to be unreliable support, we could see a decline back toward 0.9900.

GBPUSD breaks above 1.1490

Pound bulls blasted above the 1.1490 resistance level this morning thanks to a weaker dollar. Prices have turned bullish on the daily timeframe and could hit the 100 SMA in the short term. A strong break above this level may see prices test the daily bullish channel around 1.1850. Should the upside lose momentum, a move back toward 1140 could be on the cards.

AUDUSD eyes 0.6550

It looks like AUDUSD bulls are back in town. The sharp rebound witnessed today could signal the return of bulls with 0.6550 acting as a key point of interest. A strong break above this level could see the currency pair target the 50-day SMA and higher. Should 0.6550 prove to be a tough resistance to crack, the AUDUSD could return towards 0.6340 and 0.6200, respectively.

USDJPY capped below 149.00?

After creating consistently higher highs and higher lows, USDJPY bulls could be taking a break. Prices are trading back below 149.00 thanks to fundamental forces and may sink lower due to a weaker dollar. Bears may target 145.00 and 143.50 which is where the 50-day SMA resides.

Watch out for the NZDUSD

It looks like the NZDUSD could be gearing for a major breakout above 0.5800. Such a move could open a path toward the 50 day SMA at 0.5880 and 0.5900. A scenario where 0.5800 holds the forte may send prices back towards 0.5720 and 0.5560.

Article by ForexTime

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

Forex and Currency News Opinions

26 Oct

Six Resource Companies You Should Pay Attention To

Source: Adrian Day (10/24/22)

Several resource companies on expert Adrian Day’s list have reported their production numbers for the third quarter, with some positive surprises, though costs are rising.

Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) reported production of just under one million ounces, down 54,000 ounces from the year-ago quarter and below estimates, while costs have risen. Copper production, however, was stronger than forecast. The company believes it will have a strong fourth quarter so that annual production will be within guidance, at the lower end for gold but mid-range for copper.

While production was down, costs rose. Cash costs for gold rose 3-5% last quarter to US$889/oz, partly reflecting the lower production during the quarter. All-in-sustaining costs, estimated at US$1,248, are also up 3-5% on the quarter, 20% from a year ago.

The production shortfall is largely attributable to the Nevada Gold Mines, where anticipated higher grades did not materialize, though are expected this quarter. Pueblo Viejo in the Dominican Republic partly offset the lower Nevada output.

With dynamic management and world-class assets around the globe, Barrick, trading at low valuation multiples, is a Buy.

Osisko Has Another Record, With Growth Ahead

Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) reported another record quarter with deliveries, revenues, and cash margin all at new highs. Production was up 7% quarter-on-quarter, and the company expects this trend to continue into the final quarter of the year, putting it on track to meet its annual guidance, albeit at the low end of the range.

One negative was that the Eagle mine, operated by Victoria Gold, still in ramp-up, had problems with a conveyer, with operations down for two to three weeks. The company bought back 1.3 million shares at a total cost of CA$16.5 million during the quarter.

With conservative management and a built-in pipeline of growth, Osisko is a Buy.

Royal on Track To Meet Guidance

Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) announced it has sold just 56,000 oz of gold equivalent ounces (GEOs) during the quarter, identical to the previous quarter, though below analyst estimates.

The company had 31,000 ounces in inventory at the quarter end, mostly gold but also silver and copper. The company in on track to achieve the upper end of its annual production guidance.

With quality assets, Royal Gold is a Buy.

Another Strong Quarter for Altius

Altius Minerals Corp. (ALS:TSX.V) reported strong quarterly revenue, though slightly down from Q2, which was a record for the company. For the year-to-date, revenue is up 30% on the comparable period in 2021. The outperformance was attributable to higher thermal coal revenue and strong if expected, revenues from potash.

Once again, the results demonstrate the benefits of a diversified portfolio, as some commodities perform better than others.

During the quarter, Altius purchased additional shares in Labrador Iron Ore Royalty, and it remains active on its buy-back program. Separately, the Supreme Court of Canada ruled in an unrelated case on what constitutes a taking by regulatory action.

This has positive implications for Altius’ ongoing case against Alberta for its action against coal mines on which the company holds royalties.

Although Altius is a core holding for us, given that the volatile stock is at the top of the recent range, we will hold and look for pullbacks to add.

Key Drilling Ahead for Lara

Lara Exploration Ltd. (LRA:TSX.V) has resumed drilling at its Planalto Project in Brazil after receipt of a new permit to extend drilling northwards from the new Cupuzeiro discovery at the project. Additional critical drilling to test the gap between Cupuzeira and the original Homestead deposit is planned once a separate permit is received for that.

Capstone Copper can earn up to 70% in the project on certain conditions.

At this price, Lara is a very strong Buy.

New Targets for Midland

Midland Exploration Inc. (MD:TSX.V) said it had discovered several new mineralized areas of high-grade copper and gold in its strategic alliance with SOQUEM in the Labrador Trough in Quebec. The company will evaluate the results and looks to advance exploration, possibly with drilling next year.

With strong management, a solid balance sheet, and multiple active projects, Midland is a Buy.

BEST BUYS this week include, in addition to the above, Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE); Gladstone Investment Corp. (GAIN: NASDAQ); Nestle SA (NESN:VX; NSRGY:OTC); Hutchison Port Holdings Trust (HPHT:Singapore)); Ares Capital Corp. (ARCC:NASDAQ); and Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ).

Adrian Day Disclosures:

Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2022. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

Disclosures:

1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: All. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for 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. Streetwise Reports does not endorse or recommend the business, products, services, or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees, or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in the securities mentioned. Directors, officers, employees, or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company release. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals Corp. and Pan American Silver Corp., companies mentioned in this article.

Opinions Stock Market News

26 Oct

Is This the Vaunted Fed Pivot?

Source: Clive Maund (10/24/22)

Expert Clive Maund believes the Fed may pivot soon. Read to find out why he believes this is true and where he thinks the market is heading.

The stock market was at a critical juncture by late last week, and without Fed intervention, or at least the talk of Fed intervention, it would have plunged, so right on cue, it was put about that the Fed would “pivot” soon, meaning abandon its policy of jacking up interest rates to battle inflation (a battle it cannot win, by the way).

This was, of course, what the oversold market wanted to hear, and the effect was immediate, with early losses being reversed and the Dow closing up almost 750 points on the day as yields started to drop and the dollar took a hit.

It hardly looks like the time has arrived to start cracking open the champagne, for overall, the setup remains incredibly dangerous, so if the Fed doesn’t deliver with a “pivot,” or even if it does and it has little effect, the market could yet turn tail and plunge.

If the Fed (and other central banks) keep creating money at an exponentially faster rate than they are now to stop the debt markets from imploding, the result will be hyperinflation, and we are heading in that direction already.

In the writer’s view (that is to say me), this way of carrying on suits the Globalists or New World Order just fine.

After all, they have already had the effrontery to put up loads of adverts saying, “You will own nothing and be happy,” and a policy of continually expanding the money supply will enable them to buy up everything and, at the same time exterminate the population at large by creating hyperinflation that renders them destitute so that they end up going “cap in hand” for their universal-basic-income subsistence handouts which they will have to qualify for by being fully vaxxed and not visiting websites that their Masters don’t approve of, etc.

Clearly, if this is the approach they adopt, it could have a stabilizing effect on the markets regardless of the economy being in terminal decline.

Thus it was that the mere hint yesterday of the Fed going easy caused a dramatic reversal in markets back to risk-on, and the S&P500 index (and other índices) finished the day with a nice big white candle on their charts, as we can see on the latest 6-month chart for the S&P500 index below.

If the Fed takes the easy way out, which is to keep creating money until it leads to hyperinflation, then the precious metals (and many other commodities) should soar.

Incidentally, this positive candle builds on the impressive “bullish engulfing pattern” reversal that appeared the week before last, which involved an impressive large white candle, so it is looking increasingly like the market has put in an intermediate low for now.

However, that said, it hardly looks like the time has arrived to start cracking open the champagne, for overall, the setup remains incredibly dangerous, so if the Fed doesn’t deliver with a “pivot,” or even if it does and it has little effect, the market could yet turn tail and plunge.

We can see the horribly bearish setup on the latest 5-year chart for the S&P500 index, which would not be changed by a rally in the coming weeks back up to the Dome boundary.

What could be going on now is that the Fed is complicit in massaging sentiment to keep the market propped up until the mid-terms, after which they may permit it to drop like a rock. Therefore a good tactic may be to see if the market can make it up to or near to the Dome boundary, at which point it will be time to thin positions or lay on more hedges, buy tranches of Puts at good prices, etc.

We will be on the lookout for this.

The chart for the 2008 crash is shown below to enable you to see the uncanny similarity between then and now.

The difference is that if the markets do crash soon, they won’t bounce back afterward as in 2008 and 2009.

This is because the bond market will be crashing, too, as there will be no QE card to play, unlike last time, as the entire system flies apart.

On the 6-month chart for the S&P500 index, we can see the large bullish engulfing pattern that appeared the week before last, which marked the turn, and the impressive white candle that occurred yesterday as the Fed leaked out hints that it will “pivot.”

We will be turning our attention to the precious metals sector tomorrow since clearly, if the Fed takes the easy way out, which is to keep creating money until it leads to hyperinflation, then the precious metals (and many other commodities) should soar, so it’s no wonder we saw impressive action in many PM stocks yesterday. Keep in mind the political motivations for keeping the markets propped up until the mid-terms.

CliveMaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.

Disclosures:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.

2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for 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. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Economics & Fundamentals Opinions

24 Oct

Rugby union’s financial crisis: why the sport’s model is ‘broken’

By Christina Philippou, University of Portsmouth

As athletes, rugby union players are notoriously robust. But in England, the finances behind the sport are looking far from healthy. In the space of a few weeks, two of its most famous club teams, Worcester (founded 1871) and Wasps (1866), have gone into administration.

Bill Sweeney, chief-executive of the Rugby Football Union (RFU) which governs the English game, said the financial model of the sport is “broken”. He added: “Two professional clubs facing financial difficulties is a clear barometer of the challenges being felt by the economy, sport and rugby union specifically.”

A parliamentary inquiry has now been launched over “serious concerns about the future of the sport”.

For Wasps and Worcester, those concerns are immediate. Both clubs will be relegated from the top tier of English rugby, and hundreds of staff have lost their jobs. Fans of the clubs will miss out too of course, as will local businesses who rely on match-day spending by large numbers of supporters.

In the case of Wasps, there is a knock-on effect on its affiliated netball team, whose players and staff have also been made redundant, and its close relationship with Coventry City, the football club which shares use of its stadium.

That said, going into administration need not be fatal, and is a way of trying to save a business from disappearing completely (liquidation).

The running of the business is passed on to an external team of specialists who try to negotiate with creditors and typically attempt to find new investors while also cutting costs. Administration has been commonly used in sport, particularly football, to keep clubs in existence, and has touched rugby union’s top tier of clubs before.

Two years after the top professional league (Premiership) was established in 1997, two long-standing clubs (London Scottish and Richmond) went into administration. Both now play in the league’s second tier, the RFU Championship.

But a broader fear remains over the financial sustainability of the sport. Former Wasps and England player Rob Andrew said recently that governance of the game was due an overhaul, adding: “The game has not been on a solid footing for quite some time.”

He’s right. Rugby union was the last of all the main team sports in the UK to turn professional when the Premiership was established. This put it at a significant financial disadvantage right from the start, as the likes of football, cricket and rugby league had already negotiated commercial deals with sponsors and broadcasters.

Rugby union had to try to muscle in and make up for the delay, facing what the business world calls “last mover disadvantage” in the market – arriving late to a limited pot of cash.

As a sport, it is heavily dependent on ticket sales for revenue. Part of Wasps’ decision to move to Coventry from London (for a time the club had been known as London Wasps) was an attempt to drive up attendances in a less saturated market than the capital.

But, as with so many decisions associated with sport, that was a gamble. Investors being repaid for helping finance the move to Coventry is part of the reason money is needed so desperately now.

COVID didn’t help either. In common with other sports (and industries), the closure of stadiums during the pandemic drastically affected income. Such reduced capacity in the stands meant match-day income was zero (or extremely low) for most of the 2020-21 season.

Must try harder

But perhaps the key issue comes from the wider difficulty of governing and regulating what are essentially private businesses. The agility and strength demanded from players on the pitch is not always matched by those responsible for running these business behind the scenes.

And as with other sports (like football) that are struggling with financial sustainability, keeping control of expenses is a major problem.

To that end, the Premiership introduced a salary cap in 1999. This was designed to put a limit on how much clubs are allowed to spend on wages, the largest costs they face (although there have been instances of breaches by teams such as Leicester Tigers and Saracens).

The salary cap is a “hard” cap, which means it is a set value for all clubs, rather than a percentage of revenue. The trouble with this system is that clubs can still try to spend as much as the salary limit allows, even if their income cannot cover it.

As a result, research into Premiership rugby clubs found imbalances in their financial status had increased between 2006 and 2015, and that there were issues around wage costs and how these compared with turnover.

Wasps, for example, spent 103% of its income on wages in 2014. Three years later, the club’s 2017 accounts were already highlighting a “material uncertainty to continue as a going concern” – that is, a risk that the club wouldn’t be able to pay its debts.

It seems, then, that the warning signs were there some time ago. Perhaps the time has finally come for the sport to submit itself to a serious financial health check.

About the Author:

Christina Philippou, Principal Lecturer, Accounting and Financial Management, University of Portsmouth

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

Economics & Fundamentals Opinions

24 Oct

Trade of the Week: Will ECB help EURUSD end its monthly losing streak?

By ForexTime

Euro bulls are desperate for any form of solace from the rampant US dollar.

The world’s most-popular FX pair, EURUSD, has endured 5 consecutive months of declines. In fact, EURUSD has only managed one monthly gain so far in 2022, which was back in May.

To be fair, at the time of writing, EURUSD is holding on to a 0.5% gain so far in October.

Whether EURUSD can officially claim a gain for the entirety of October and break this monthly losing streak could all boil down to the European Central Bank policy meeting this Thursday, October 27th.

What to look out for?

Size of the rate hike: Markets are forecasting a 89% chance that the ECB will hike its benchmark rates by yet another 75-basis points (bps), as they did back in September.
Lagarde’s press conference: Traders and investors worldwide will be closely monitoring the words used by ECB President Christine Lagarde during her press conference at 2:45PM GMT, just half an hour after the ECB’s Governing Council publishes its policy decision.
Given the forward-looking nature of markets, traders and investors worldwide will be ready to react to what ECB President Christine Lagarde’s latest clues on the central bank’s next policy moves.

How might EURUSD react?

If the ECB disappoints markets and triggers a smaller-than-75bps hike, that could see EURUSD faltering once more.
If the ECB shocks markets with a gargantuan 100-bps hike, that could see EURUSD breaking substantially above its 50-day SMA.
If a 75bps hike materialises, that may offer little reaction in the euro, given that such a move is already the primary outcome that markets are expecting.
If Lagarde suggests that we’ve not seen the last of these 75bps hikes, perhaps leaving the door open for another such supersized move at subsequent meetings, that may help the euro recover.
However, if Lagarde’s press conference or the ECB Governing Council’s policy statement unveils greater concern over incurring too much economic damage with the ongoing inflation-fighting rate hikes, that may unwind the euro’s month-to-date gains.

Expect a combination of the scenarios stated above.

Key levels to look out for:

RESISTANCE: 50-day simple moving average (SMA)
Since March, EURUSD has struggled to sustain consecutive daily closes above its 50-day SMA. This FX pair has been guided lower by this widely-known technical indicator, with this key resistance level yet again holding its ground so far today (Monday, Oct 24).
STRONGER RESISTANCE: 1.000 a.k.a. parity
If EURUSD has enough reason to see a substantial upside break, then stronger resistance is set to arrive at the parity mark, which had already repelled EURUSD bulls earlier this month.
SUPPORT: Recent cycle lows

0.97049
0.96313
0.95357
These support levels may be called into action once more this week, especially if the ECB fails to assure markets that the central bank’s fight against inflation will not cause too much damage to the Eurozone economy.

At the time of writing, markets are forecasting greater odds of 69.3% that EURUSD would touch the 0.990 mark over the next one week period, versus the less-than-even chance (45.5%) that EURUSD would touch 0.970.

Sustained EURUSD gains this week may require a hawkish ECB that can convince markets of its ability to keep hiking rates aggressively.

Article by ForexTime

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

Forex and Currency News Opinions

23 Oct

Large Currency Speculators boost Euro bullish bets to 19-week high

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 October 18th 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.

Euro & Mexican Peso lead Weekly Speculator Changes

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

Leading the gains for the currency markets were the Mexican peso (11,360 contracts) and the Euro (10,651 contracts) with the Canadian dollar (5,099 contracts), the New Zealand dollar (597 contracts) and the Brazilian real (423 contracts) also showing a positive week.

The currencies leading the declines in speculator bets this week were the Japanese yen (-16,943 contracts) and the British pound sterling (-12,041 contracts) with the Australian dollar (-4,088 contracts), the Swiss franc (-1,196 contracts), Bitcoin (-835 contracts) and the US Dollar Index (-96 contracts) also registering lower bets on the week.

Highlighting the COT currency data this week was the Euro. The large speculator positioning this week saw Euro bets rise by over +10,000 contracts and go higher for the sixth time out of the past seven weeks. Euro bets have gained by over +95,000 net contracts in just the past seven weeks, going from -47,676 contracts on August 30th to over +48,000 contracts this week. This bullishness has brought the overall net speculator standing to its highest level in nineteen weeks, dating back to June 7th.

Euro speculators have been raising their bets into a market that is close to 20-year lows in the EURUSD exchange rate. Speculators are clearly betting that the exchange rate is close to a low point and looking to profit on a turnaround. The European Central Bank is expected to raise their interest rates this week by potentially 75-basis points and with the possibility of further rate rises before the end of the year.

The EURUSD exchange rate closed the week over 1.25 percent higher and ended the week around the 0.9855 exchange level.

Data Snapshot of Forex Market Traders | Columns Legend

Oct-18-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
USD Index	55,234	78	32,690	79	-37,014	17	4,324	64
EUR	640,469	50	48,150	50	-70,577	56	22,427	15
GBP	258,826	73	-51,211	25	76,309	86	-25,098	9
JPY	264,265	89	-94,336	11	110,841	90	-16,505	20
CHF	44,911	31	-7,086	39	19,098	74	-12,012	17
CAD	146,425	28	-20,573	16	25,103	90	-4,530	21
AUD	150,496	45	-35,359	52	48,971	55	-13,612	19
NZD	50,448	44	-18,445	38	22,359	67	-3,914	7
MXN	215,836	57	-22,294	18	16,273	80	6,021	69
RUB	20,930	4	7,543	31	-7,150	69	-393	24
BRL	41,954	29	26,498	76	-28,581	23	2,083	89
Bitcoin	14,228	82	22	77	-665	0	643	28

Strength Scores led by US Dollar Index, Bitcoin & Brazilian Real

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) show that the US Dollar Index (79.5 percent), Bitcoin and the Brazilian Real (76.4 percent) lead the currency markets this week. The Australian Dollar (52.1 percent) comes in as the next highest in the currency markets in strength scores.

On the downside, the Japanese Yen (10.8 percent), Canadian Dollar (16.3 percent) and the Mexican Peso (17.8 percent) come in at the lowest strength level currently and all three are in bearish extreme levels (below 20 percent).

Strength Statistics:
US Dollar Index (79.5 percent) vs US Dollar Index previous week (79.6 percent)
EuroFX (49.8 percent) vs EuroFX previous week (46.5 percent)
British Pound Sterling (25.0 percent) vs British Pound Sterling previous week (35.4 percent)
Japanese Yen (10.8 percent) vs Japanese Yen previous week (21.2 percent)
Swiss Franc (38.5 percent) vs Swiss Franc previous week (41.6 percent)
Canadian Dollar (16.3 percent) vs Canadian Dollar previous week (10.5 percent)
Australian Dollar (52.1 percent) vs Australian Dollar previous week (55.8 percent)
New Zealand Dollar (38.2 percent) vs New Zealand Dollar previous week (37.1 percent)
Mexican Peso (17.8 percent) vs Mexican Peso previous week (13.0 percent)
Brazilian Real (76.4 percent) vs Brazilian Real previous week (76.0 percent)
Bitcoin (77.3 percent) vs Bitcoin previous week (91.9 percent)

EuroFX leads the Strength Trends

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that the EuroFX (25.9 percent) leads the past six weeks trends for the currency markets this week. The Australian Dollar (19.6 percent) and the Mexican Peso (3.1 percent) fill out the only other positive movers in the latest trends data.

The Canadian Dollar (-43.2 percent) leads the downside trend scores currently while the next market with lower trend scores were the New Zealand Dollar (-27.3 percent), Bitcoin (-22.7 percent) and the Japanese Yen (-22.3 percent).

Strength Trend Statistics:
US Dollar Index (-5.7 percent) vs US Dollar Index previous week (-4.6 percent)
EuroFX (25.9 percent) vs EuroFX previous week (26.1 percent)
British Pound Sterling (-0.7 percent) vs British Pound Sterling previous week (-8.6 percent)
Japanese Yen (-22.3 percent) vs Japanese Yen previous week (-22.1 percent)
Swiss Franc (-7.7 percent) vs Swiss Franc previous week (-9.2 percent)
Canadian Dollar (-43.2 percent) vs Canadian Dollar previous week (-56.0 percent)
Australian Dollar (19.6 percent) vs Australian Dollar previous week (24.2 percent)
New Zealand Dollar (-27.3 percent) vs New Zealand Dollar previous week (-27.7 percent)
Mexican Peso (3.1 percent) vs Mexican Peso previous week (-2.0 percent)
Brazilian Real (-4.3 percent) vs Brazilian Real previous week (16.9 percent)
Bitcoin (-22.7 percent) vs Bitcoin previous week (-7.7 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

The US Dollar Index large speculator standing this week resulted in a net position of 32,690 contracts in the data reported through Tuesday. This was a weekly decrease of -96 contracts from the previous week which had a total of 32,786 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 79.5 percent. The commercials are Bearish-Extreme with a score of 17.0 percent and the small traders (not shown in chart) are Bullish with a score of 63.8 percent.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	81.4	3.5	12.6
– Percent of Open Interest Shorts:	22.2	70.6	4.8
– Net Position:	32,690	-37,014	4,324
– Gross Longs:	44,956	1,955	6,954
– Gross Shorts:	12,266	38,969	2,630
– Long to Short Ratio:	3.7 to 1	0.1 to 1	2.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	79.5	17.0	63.8
– Strength Index Reading (3 Year Range):	Bullish	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-5.7	2.3	21.6

Euro Currency Futures:

The Euro Currency large speculator standing this week resulted in a net position of 48,150 contracts in the data reported through Tuesday. This was a weekly lift of 10,651 contracts from the previous week which had a total of 37,499 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 49.8 percent. The commercials are Bullish with a score of 56.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 14.8 percent.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	31.6	54.2	11.9
– Percent of Open Interest Shorts:	24.1	65.2	8.4
– Net Position:	48,150	-70,577	22,427
– Gross Longs:	202,703	347,078	76,183
– Gross Shorts:	154,553	417,655	53,756
– Long to Short Ratio:	1.3 to 1	0.8 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	49.8	56.0	14.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	25.9	-25.6	9.1

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week resulted in a net position of -51,211 contracts in the data reported through Tuesday. This was a weekly fall of -12,041 contracts from the previous week which had a total of -39,170 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 25.0 percent. The commercials are Bullish-Extreme with a score of 85.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 8.8 percent.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	15.6	75.1	7.2
– Percent of Open Interest Shorts:	35.4	45.6	16.9
– Net Position:	-51,211	76,309	-25,098
– Gross Longs:	40,328	194,385	18,668
– Gross Shorts:	91,539	118,076	43,766
– Long to Short Ratio:	0.4 to 1	1.6 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	25.0	85.9	8.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-0.7	4.3	-10.9

Japanese Yen Futures:

The Japanese Yen large speculator standing this week resulted in a net position of -94,336 contracts in the data reported through Tuesday. This was a weekly fall of -16,943 contracts from the previous week which had a total of -77,393 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 10.8 percent. The commercials are Bullish-Extreme with a score of 89.7 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 19.9 percent.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	11.6	77.0	10.0
– Percent of Open Interest Shorts:	47.3	35.1	16.3
– Net Position:	-94,336	110,841	-16,505
– Gross Longs:	30,583	203,508	26,491
– Gross Shorts:	124,919	92,667	42,996
– Long to Short Ratio:	0.2 to 1	2.2 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	10.8	89.7	19.9
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-22.3	16.2	6.0

Swiss Franc Futures:

The Swiss Franc large speculator standing this week resulted in a net position of -7,086 contracts in the data reported through Tuesday. This was a weekly decrease of -1,196 contracts from the previous week which had a total of -5,890 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 38.5 percent. The commercials are Bullish with a score of 73.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 16.9 percent.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	15.7	63.9	20.3
– Percent of Open Interest Shorts:	31.5	21.4	47.1
– Net Position:	-7,086	19,098	-12,012
– Gross Longs:	7,052	28,702	9,122
– Gross Shorts:	14,138	9,604	21,134
– Long to Short Ratio:	0.5 to 1	3.0 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	38.5	73.9	16.9
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-7.7	3.6	2.8

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week resulted in a net position of -20,573 contracts in the data reported through Tuesday. This was a weekly gain of 5,099 contracts from the previous week which had a total of -25,672 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 16.3 percent. The commercials are Bullish-Extreme with a score of 89.6 percent and the small traders (not shown in chart) are Bearish with a score of 21.0 percent.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	24.2	53.9	20.2
– Percent of Open Interest Shorts:	38.2	36.7	23.2
– Net Position:	-20,573	25,103	-4,530
– Gross Longs:	35,384	78,895	29,508
– Gross Shorts:	55,957	53,792	34,038
– Long to Short Ratio:	0.6 to 1	1.5 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	16.3	89.6	21.0
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-43.2	36.7	-11.1

Australian Dollar Futures:

The Australian Dollar large speculator standing this week resulted in a net position of -35,359 contracts in the data reported through Tuesday. This was a weekly lowering of -4,088 contracts from the previous week which had a total of -31,271 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 52.1 percent. The commercials are Bullish with a score of 55.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 19.2 percent.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	22.0	63.4	11.5
– Percent of Open Interest Shorts:	45.5	30.9	20.5
– Net Position:	-35,359	48,971	-13,612
– Gross Longs:	33,046	95,474	17,233
– Gross Shorts:	68,405	46,503	30,845
– Long to Short Ratio:	0.5 to 1	2.1 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	52.1	55.4	19.2
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	19.6	-11.1	-15.4

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week resulted in a net position of -18,445 contracts in the data reported through Tuesday. This was a weekly increase of 597 contracts from the previous week which had a total of -19,042 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 38.2 percent. The commercials are Bullish with a score of 67.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 6.6 percent.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	20.5	73.4	5.5
– Percent of Open Interest Shorts:	57.0	29.1	13.3
– Net Position:	-18,445	22,359	-3,914
– Gross Longs:	10,328	37,048	2,787
– Gross Shorts:	28,773	14,689	6,701
– Long to Short Ratio:	0.4 to 1	2.5 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	38.2	67.0	6.6
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-27.3	25.3	-1.8

Mexican Peso Futures:

The Mexican Peso large speculator standing this week resulted in a net position of -22,294 contracts in the data reported through Tuesday. This was a weekly gain of 11,360 contracts from the previous week which had a total of -33,654 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 17.8 percent. The commercials are Bullish with a score of 79.6 percent and the small traders (not shown in chart) are Bullish with a score of 68.5 percent.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	61.8	34.2	3.8
– Percent of Open Interest Shorts:	72.2	26.6	1.0
– Net Position:	-22,294	16,273	6,021
– Gross Longs:	133,432	73,758	8,139
– Gross Shorts:	155,726	57,485	2,118
– Long to Short Ratio:	0.9 to 1	1.3 to 1	3.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	17.8	79.6	68.5
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	3.1	-3.8	7.9

Brazilian Real Futures:

The Brazilian Real large speculator standing this week resulted in a net position of 26,498 contracts in the data reported through Tuesday. This was a weekly advance of 423 contracts from the previous week which had a total of 26,075 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 76.4 percent. The commercials are Bearish with a score of 23.4 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 89.2 percent.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	72.3	19.6	8.1
– Percent of Open Interest Shorts:	9.1	87.7	3.1
– Net Position:	26,498	-28,581	2,083
– Gross Longs:	30,326	8,229	3,398
– Gross Shorts:	3,828	36,810	1,315
– Long to Short Ratio:	7.9 to 1	0.2 to 1	2.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	76.4	23.4	89.2
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-4.3	3.8	5.4

Bitcoin Futures:

The Bitcoin large speculator standing this week resulted in a net position of 22 contracts in the data reported through Tuesday. This was a weekly fall of -835 contracts from the previous week which had a total of 857 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 77.3 percent. The commercials are Bearish with a score of 32.2 percent and the small traders (not shown in chart) are Bearish with a score of 27.6 percent.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	75.3	0.8	9.9
– Percent of Open Interest Shorts:	75.1	5.5	5.3
– Net Position:	22	-665	643
– Gross Longs:	10,710	120	1,404
– Gross Shorts:	10,688	785	761
– Long to Short Ratio:	1.0 to 1	0.2 to 1	1.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	77.3	32.2	27.6
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-22.7	30.9	15.1

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

23 Oct

Speculator Extremes: Bloomberg Commodity Index, MSCI EAFE lead Bullish & Bearish 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 October 18th.

This weekly Extreme Positions report highlights the Top Most Bullish and Top 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.

* We use Tuesday to Tuesday weekly price closes to match up with the COT data (data through Tuesdays) and this accounts for large gaps in the price chart candles.

Here Are This Week’s Most Bullish Speculator Positions:

Bloomberg Commodity Index

The Bloomberg Commodity Index speculator position comes in as the most bullish extreme standing this week. The Bloomberg Commodity Index speculator level is currently at a 88.3 percent score of its 3-year range.

The overall net speculator position is in bearish territory but has has been steadily improving with speculators at the most bullish point in over a year.

Nikkei 225

The Nikkei 225 speculator position comes next in the extreme standings this week. The strength level is now at a 84.97 percent score of its 3-year range.

The Nikkei 225 speculator position is in positive or bullish territory for a fourth straight week this week. The net position has been mostly bearish over the past three years so a positive standing currently puts the strength scores in extreme bullish levels.

Soybean Meal

The Soybean Meal speculator position comes in third this week in the extreme standings. The Soybean Meal strength score resides at a 82.6 percent score of its 3-year range.

The Soybean Meal speculator position has been very bullish since the middle of 2021 with speculator net positions reaching over +100,000 net contracts at their peaks.

US Dollar Index

The US Dollar Index speculator position comes up number four in the extreme standings this week but is just a touch under the 80 percent threshold. The US Dollar Index strength level is at a 79.45 percent score of its 3-year range.

The Dollar has been very strong for a long time now and is near 20-year highs against the Euro, Yen and the British Pound Sterling. Speculator strength scores for the US Dollar Index have been near or above extreme bullish levels for almost a year.

This Week’s Most Bearish Speculator Positions:

MSCI EAFE MINI

The MSCI EAFE MINI speculator position comes in as the most bearish extreme standing this week. The EAFE strength level is at a 6.3 percent score of its 3-year range.

Gold

The Gold speculator position comes in next for the most bearish extreme standing on the week. The Gold strength score is at a 8.2 percent score of its 3-year range as the metals markets have been under pressure in the rising interest rate environment.

Ultra 10-Year U.S. T-Note

Last this week is the Ultra 10-Year U.S. T-Note speculator position which comes in as third most bearish extreme standing of the week. The Ultra 10-Year strength level resides at a 8.9 percent score of its 3-year range.

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Opinions

23 Oct

COT Metals Speculators push Platinum bullish bets to 28-week high

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 October 18th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Platinum tops Weekly Speculator Changes

The COT precious metals speculator bets were lower this week as just one out of the five metals markets we cover had higher positioning this week while four markets had lower contracts.

Leading the precious metals markets was just Platinum (2,566 contracts) showing a positive week.

The metals markets leading the declines in speculator bets this week were Gold (-17,464 contracts) with Silver (-6,122 contracts), Copper (-4,403 contracts) and Palladium (-455 contracts) also registering lower bets on the week.

Highlighting the COT Metals data this week was the speculator positions in Platinum. The large speculative positions rose this week for a third straight week and for the fifth time in the past six weeks. Over the past six weeks, speculative bets have improved by a total of +15,245 contracts. This recent bullishness has brought the overall net standing to its highest level in the past twenty-eight weeks, dating back to April 5th of this year.

Platinum prices have been on the rise as well with a monthly gain above 8 percent so far in October. Platinum could also benefit going forward from an interesting tax loophole in India that has pushed Platinum imports to a record high to approximately 27 tonnes this September compared to a little over 1 tonnes last September, according to Reuters. Indian gold refiners are importing Platinum mixed with Gold to offset new higher taxes on Gold. A Gold/Platinum mix allows importers to classify the import as a Platinum alloy and pay a lower tax rate on it.

Platinum futures closed this week over 4 percent higher near the $933 level but below the $940 level which has acted as a resistance barrier over the past five weeks.

Data Snapshot of Commodity Market Traders | Columns Legend

Oct-18-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
WTI Crude	1,454,431	0	251,545	11	-273,757	90	22,212	37
Gold	434,701	1	76,956	8	-90,030	91	13,074	12
Silver	136,055	9	1,267	15	-9,085	87	7,818	8
Copper	178,730	17	-20,302	20	19,696	82	606	29
Palladium	6,805	4	-1,209	16	1,444	82	-235	30
Platinum	53,728	11	8,494	21	-11,632	81	3,138	10
Natural Gas	963,792	3	-154,734	32	126,760	71	27,974	46
Brent	163,296	11	-41,847	41	38,681	58	3,166	52
Heating Oil	283,702	29	24,555	79	-44,031	24	19,476	66
Soybeans	714,532	30	54,683	30	-30,595	77	-24,088	30
Corn	1,419,087	22	312,419	70	-249,255	36	-63,164	7
Coffee	196,729	9	19,223	53	-21,605	52	2,382	24
Sugar	711,664	4	126,412	63	-164,671	37	38,259	55
Wheat	309,429	10	-3,541	14	10,534	75	-6,993	74

Strength Scores led by Platinum and Copper

Strength scores (a measure of the 3-Year range of Speculator positions, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that Platinum (20.5 percent) and Copper (20.2 percent) lead the metals this week just above the bearish extreme level.

On the downside, Gold (8.2 percent) continues to be at the lowest strength level currently and is followed by Silver (15.5 percent) and Palladium (16.4 percent). All three markets in extreme bearish levels below 20 percent.

Strength Statistics:
Gold (8.2 percent) vs Gold previous week (14.0 percent)
Silver (15.5 percent) vs Silver previous week (22.3 percent)
Copper (20.2 percent) vs Copper previous week (23.7 percent)
Platinum (20.5 percent) vs Platinum previous week (17.1 percent)
Palladium (16.4 percent) vs Palladium previous week (19.1 percent)

Platinum leads the Strength Trend Scores

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that Platinum (20.5 percent) leads the past six weeks trends for metals this week. Silver (15.5 percent), Copper (2.9 percent) and Palladium (2.3 percent) fill out the other positive movers in the latest trends data.

Gold (-8.9 percent) leads the downside trend scores currently as the only negative mover in the latest data.

Move Statistics:
Gold (-8.9 percent) vs Gold previous week (-7.7 percent)
Silver (15.5 percent) vs Silver previous week (17.3 percent)
Copper (2.9 percent) vs Copper previous week (5.9 percent)
Platinum (20.5 percent) vs Platinum previous week (15.2 percent)
Palladium (2.3 percent) vs Palladium previous week (2.2 percent)

Individual Markets:

Gold Comex Futures:

The Gold Comex Futures large speculator standing this week came in at a net position of 76,956 contracts in the data reported through Tuesday. This was a weekly reduction of -17,464 contracts from the previous week which had a total of 94,420 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 8.2 percent. The commercials are Bullish-Extreme with a score of 91.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.4 percent.

Gold Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	48.5	26.5	9.0
– Percent of Open Interest Shorts:	30.8	47.2	6.0
– Net Position:	76,956	-90,030	13,074
– Gross Longs:	210,890	115,073	39,286
– Gross Shorts:	133,934	205,103	26,212
– Long to Short Ratio:	1.6 to 1	0.6 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	8.2	91.4	12.4
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-8.9	7.4	7.2

Silver Comex Futures:

The Silver Comex Futures large speculator standing this week came in at a net position of 1,267 contracts in the data reported through Tuesday. This was a weekly decline of -6,122 contracts from the previous week which had a total of 7,389 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 15.5 percent. The commercials are Bullish-Extreme with a score of 86.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 8.2 percent.

Silver Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	37.9	37.5	16.2
– Percent of Open Interest Shorts:	37.0	44.1	10.4
– Net Position:	1,267	-9,085	7,818
– Gross Longs:	51,541	50,956	22,014
– Gross Shorts:	50,274	60,041	14,196
– Long to Short Ratio:	1.0 to 1	0.8 to 1	1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	15.5	86.6	8.2
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	15.5	-13.4	0.4

Copper Grade #1 Futures:

The Copper Grade #1 Futures large speculator standing this week came in at a net position of -20,302 contracts in the data reported through Tuesday. This was a weekly decline of -4,403 contracts from the previous week which had a total of -15,899 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 20.2 percent. The commercials are Bullish-Extreme with a score of 82.3 percent and the small traders (not shown in chart) are Bearish with a score of 28.8 percent.

Copper Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	27.6	46.4	8.5
– Percent of Open Interest Shorts:	39.0	35.4	8.1
– Net Position:	-20,302	19,696	606
– Gross Longs:	49,335	82,890	15,118
– Gross Shorts:	69,637	63,194	14,512
– Long to Short Ratio:	0.7 to 1	1.3 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	20.2	82.3	28.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	2.9	-5.5	19.9

Platinum Futures:

The Platinum Futures large speculator standing this week came in at a net position of 8,494 contracts in the data reported through Tuesday. This was a weekly gain of 2,566 contracts from the previous week which had a total of 5,928 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 20.5 percent. The commercials are Bullish-Extreme with a score of 81.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 10.3 percent.

Platinum Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	49.1	36.1	12.0
– Percent of Open Interest Shorts:	33.3	57.8	6.1
– Net Position:	8,494	-11,632	3,138
– Gross Longs:	26,385	19,406	6,436
– Gross Shorts:	17,891	31,038	3,298
– Long to Short Ratio:	1.5 to 1	0.6 to 1	2.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	20.5	81.4	10.3
– Strength Index Reading (3 Year Range):	Bearish	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	20.5	-18.6	-6.1

Palladium Futures:

The Palladium Futures large speculator standing this week came in at a net position of -1,209 contracts in the data reported through Tuesday. This was a weekly fall of -455 contracts from the previous week which had a total of -754 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 16.4 percent. The commercials are Bullish-Extreme with a score of 82.3 percent and the small traders (not shown in chart) are Bearish with a score of 30.3 percent.

Palladium Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	26.3	58.3	14.3
– Percent of Open Interest Shorts:	44.1	37.1	17.8
– Net Position:	-1,209	1,444	-235
– Gross Longs:	1,793	3,968	975
– Gross Shorts:	3,002	2,524	1,210
– Long to Short Ratio:	0.6 to 1	1.6 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	16.4	82.3	30.3
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	2.3	-4.0	16.9

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates investing Metals Opinions

21 Oct

Measuring the ‘Halloween effect’ – can retail investor optimism really affect stock returns?

By Moritz Wagner, University of Canterbury

The upcoming spooky season is not only a favourite time for most kids (and a few adults), but also for share markets due to what’s been called the “Halloween effect” – often referred to as “sell in May and go away”.

There is hardly a year investors and the media do not refer to the popular market wisdom suggesting higher stock returns in the months November through to April, compared with May through to October (that is, in the northern hemisphere’s winter and summer, but it also applies to southern hemisphere countries where the seasons are offset by six months).

With investors looking for a crystal ball to help with investing, predictable patterns can offer a guide for when to invest and when to sell. But has this pattern survived the financial volatility of the past two decades?

New research shows this seasonal investment pattern is still alive and well in most stock markets around the world and, if anything, has become more pronounced in recent years.

Both the Halloween and January effect – the observation that stock prices of mainly smaller firms tend to increase in January more than in other months – are pervasive. These patterns seemingly provide guidance for the two most fundamental decisions when making an investment: what assets to buy or sell, and when.

Of course, such anomalies appear to be inconsistent with the common hypothesis that markets are efficient and that prices change randomly.

Finally answering the ‘why’

A recent analysis using stock returns and mutual fund flows in the United States provides a simple answer to the nagging question of why these anomalies exist and why they have worked for so long. Previous explanations have largely been inconclusive.

Aggregate fund flows (the bars depicting money invested or withdrawn by investors) exhibit a similar calendar-based pattern as market returns (the lines). The returns are substantially higher during winter months than during summer months.

Remarkably, in years where this is not the case – when summer flow is higher than winter flow – the winter excess returns are also negative.

Markets influenced by optimism or pessimism

When examined jointly, high average stock returns in winter months (Halloween effect) and in January (January effect) can be attributed to a large average influx of funds. After accounting for the effect of these increased fund flows, there are no seasonal factors affecting market returns anymore.

The study builds on earlier findings, providing strong evidence of the price-pressure effects from funds that expand their portfolios when they receive money from investors (cash inflow) and sell their shares when investors withdraw money (cash outflow).

In other words, large cash inflow induces fund managers to invest the excess cash, driving up the demand for stocks. When funds experience outflow, they liquidate investment positions, increasing the supply of stocks.

Such trading across funds can affect returns by temporarily driving stock prices away from their fundamental value. Interestingly, only flows to retail funds catering to individual investors, as opposed to institutional funds catering to high-net-worth or institutional investors, are seasonal.

The effect also appears to be short-lived and reverses within a few months and highlights the behavioural nature of the patterns observed in the market.

Overall, the interrelation between seasonal flows and stock returns originates from the buying and selling activities of perhaps overly optimistic or pessimistic individual retail investors.

Time to get into investing?

Some readers might ask whether it is still a good idea to buy stocks in the coming Halloween season, as the recent downturn in markets may appear like a good entry point.

However, the troublesome mix of record high inflation, rising interest rates and Russia’s war in Ukraine may ultimately result in a recession.

If retail investors then stay away from the market, seasonal patterns are less likely to materialise this time around. But there is no crystal ball to predict what is going to happen.

The best advice is to keep emotions out of investment decisions and focus on a broader strategy – look for long-term opportunities in the market rather than trying to time it.

About the Author:

Moritz Wagner, Lecturer, University of Canterbury

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

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