Archive for Opinions – Page 6

03 Oct

Brown bananas, crowded ports, empty shelves: What to expect with the US dockworkers strike

By Anna Nagurney, UMass Amherst 

Getting any product to consumers, whether it’s a can of sardines or a screwdriver, requires that supply chains function well.

The availability of labor is essential in each link of the supply chain. That includes the workers who make sure that your tinned fish and handy tools smoothly journey from their point of origin to where they’ll wind up, whether it’s a supermarket, hardware store or your front door.

Amazingly, 90% of all internationally traded products are carried by ships at some point. At the height of the COVID-19 pandemic, it was hard not to notice the supply chain disruptions. For U.S. ports, there were many bouts of congestion. Demand for goods that were either more or less popular than they would normally be became volatile. Shortages of truckers and other freight service providers wreaked havoc on land-based and maritime transportation networks.

Consumers became exasperated when they saw all the empty shelves. They endured price spikes for items that were suddenly scarce, such as hand sanitizer, computer equipment and bleach.

I’m a scholar of supply chain management who belongs to a research group that studies ways to make supply chains better able to withstand disruptions. Based on that research, plus what I learned while writing a book about labor and supply chains, I’m concerned about the turmoil that could be in store for cargo arriving on ships.

Concerns over pay and technology

The International Longshoremen’s Association’s six-year contract with the East Coast and Gulf Coast ports expired on Sept. 30, 2024, at midnight without an agreement. About 45,000 dockworkers are now on a strike that has paralyzed ports from Maine to Texas. Only military cargo and cruise ships, as well as oil, gas and liquid chemicals, can go in and out.

It’s the first such work stoppage for the East Coast ports since 1977.

Labor and management disagree over how much to raise wages, and the union also wants to see strict limits on the use of automation for cranes, gates and trucks at the ports in the new contract. The union is seeking a 77% increase in pay over the next six years and is concerned that jobs may be lost because of automation. When management offered a nearly 50% raise, the union rejected it.

Dockworkers on the West Coast, who are not on strike, are paid much higher regular wages than their East Coast and Gulf Coast counterparts who are on strike. The West Coast workers earn at least an estimated US$116,000 per year, for a 40-hour work week, versus the roughly $81,000 dockworkers at the East Coast and Gulf Coast ports take home, not counting overtime pay.

Management is represented in the talks by the U.S. Maritime Association, which includes the major shippers, terminal operators and port authorities.

What to expect

Starting on Oct. 1, 36 ports, including those in Philadelphia and Houston, ceased operations due to the strike, blocking almost half of the cargo going in and out of the U.S. on ships.

If the strike lasts just a day, then it would not be noticeable to a typical consumer. However, businesses of all kinds would no doubt feel the pinch. J.P. Morgan estimates that a strike could cost the U.S. economy $5 billion every day.

Even if the strike were to last only a day, it could take about five days to straighten out the supply chain.

If a strike lasts a week, the results would quickly become apparent to most consumers.

Some shipping companies have already begun to reroute their cargo to the West Coast. Even had there been no strike at all, costs would have risen and the warehouses could have run out of room.

The effects on everything from bananas and cherries to chocolate, meat, fish and cheese could be severe, and the shipping disruption could also hamper trade in some prescription drugs if the strike lasts at least a week.

If the strike were to last a month or more, supplies needed by factories could be in short supply. Numerous consumer products would not be delivered. Workers would be laid off. U.S. exports, including agricultural ones, might get stuck rather than shipped to their destinations. Inflation might increase again. And there would be a new bout of heightened economic anxiety and uncertainty – along with immense financial losses.

All the while, West Coast ports would face unusually high demand for their services, wreaking havoc on shipping there too.

Yes, we’d have no bananas

My research group’s latest work on supply chain disruptions and the effects of various transportation disruptions, including delays, quantifies the impact on the quality of fresh produce. We did a case study on bananas.

This isn’t a niche problem.

Bananas are the most-consumed fresh fruit in the U.S.

Many of the bananas sold in the U.S. are grown in Ecuador, Guatemala and Costa Rica. About 75% of them arrive at ports on the East and Gulf coasts.

Although bananas are relatively easy to ship, they require appropriate temperatures and humidity. Even under the best conditions, their quality deteriorates. Long delays will mean shippers will be trying to foist mushy brown bananas on consumers who might reject them.

Alternatively, banana growers may opt to find other markets. It’s reasonable to expect to find fewer bananas and much higher prices – possibly of a lower quality. Flying bananas to the U.S. would be too expensive to sustain.

Fresh meat, seafood, cheese and other refrigerated foods could spoil before they can complete their journeys, and fresh berries, along with other fruits and vegetables, could perish before reaching their destinations.

Tons of fresh produce, including bananas arriving after Oct. 1, could end up having to be discarded. That is unfortunate, given the rising food insecurity rate in the U.S.

1947 Taft-Hartley Act

More than 170 trade groups had urged the Biden administration to intervene at the last minute to avoid a strike.

Even now, the government can invoke the 1947 Taft-Hartley Act, which allows the president to ask a court to order an 80-day cooling-off period when public health or safety is at risk.

However, President Joe Biden reportedly does not plan to invoke it. Instead, he has urged the two sides to settle their differences.

So if you’re planning to bake banana bread or were thinking you might get an early start on your holiday shopping, I’d advise you to make those shopping trips as soon as possible – just in case.

This is an updated version of an article first published on Sept. 28, 2024.The Conversation

About the Author:

Anna Nagurney, Professor and Eugene M. Isenberg Chair in Integrative Studies, UMass Amherst

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

 

Economics & Fundamentals Opinions
01 Oct

Brent: Slips into Q4 on supply fears

By ForexTime 

  • Brent ↓17% in Q3
  • OPEC+ JMMC, EIA & NFP in focus
  • Over past year US NFP triggered ↑ 0.4% & ↓ 1.9%
  • Key level of interest – $70.80

The past few months have been rough and rocky for oil benchmarks.

Crude and Brent shed over 16% in Q3 due to expectations around OPEC+ bringing back production while a slowdown in China rubbed salt into the wound.

Brent monthly

Oil has already entered October on the back foot, falling 1% thanks to the bearish market sentiment.

Many forces are set to influence prices, ranging from China’s stimulus plans, a return of Libya’s oil production, ongoing geopolitical tensions, and bets around lower US interest rates.

This potent cocktail may translate to significant price swings in Q4.

Regarding Libya, the producer is preparing to restore output after a month-long shutdown. This is likely to fuel concerns over supply at a time when OPEC+ may move ahead with planned production increases in December.

The OPEC+ Joint Ministerial Monitoring Committee meeting on Wednesday 2nd October is expected to conclude with no policy changes. However, any hints of further delays to the planned production increase beyond December may support oil.

 

Also, watch out for the EIA data on Wednesday and US jobs report on Friday which could inject oil benchmarks with more volatility.

As covered in our week ahead report, the US jobs report has the potential to impact Fed cut cuts.

Note: Lower interest rates could stimulate economic growth, which fuels oil demand. Lower interest rates may also lead to a weaker dollar, which boosts oil which is priced in dollars.

Golden nugget: Over the past year, the US jobs report has triggered upside moves on Brent of as much as 0.4% or declines of 1.9% in a 6-hour window post-release.

 

Looking at the technicals…

Prices are under pressure on the daily charts with Brent respecting a bearish channel.

There have been consistently lower lows and lower highs while the MACD trades to the downside. However, daily support can be seen around the $70.80 level.

  • A solid breakdown and daily close below $70.80 could send prices back toward $68.80 and the levels not seen since December 2021at $67.00
  • Should $70.80 prove reliable support, this could trigger a rebound toward the 21-day SMA at $72.30 and $75.00.

brenttt98

Forex-Time-LogoArticle by ForexTime

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

Energy Opinions
01 Oct

Can NVDA’s Share Buybacks and AI Innovation Drive the Next Rally?

By The Ino.com Team

NVIDIA Corporation (NVDA) has undoubtedly been one of the hottest large-cap stocks this year, surging over 150% year-to-date and more than 195% in the past 12 months. This stellar performance is driven by the massive demand for its graphics processing units (GPUs), which help run and train AI algorithms.

For the second quarter that ended July 28, 2024, Nvidia’s revenue increased 122% year-over-year to $30.04 billion and 15% from the first quarter. This robust growth exceeded analysts’ expectations, who had forecasted around $28.75 billion. NVDA’s Data Center Group (primarily connected to its AI operations) generated $26.30 billion in revenue, resulting in a 16% sequential gain and a triple-digit growth of 154% over the same period last year.

The company’s bottom line remained buoyant, with operating income surging 174% from the year-ago value to $18.64 billion. NVDA’s non-GAAP net income amounted to $16.95 billion or $0.68 per share, compared to $6.74 billion or $0.27 per share in the previous year’s quarter, respectively. The chipmaker is now gearing up for new AI hardware releases based on the Blackwell architecture, which could boost demand in the coming years.

Moreover, it forecasted a revenue of $32.50 billion, plus or minus 2%, for its fiscal third quarter, representing an 81.6% growth from the year-ago quarter. However, this slightly falls short of the analysts’ estimates of $32.91 billion.

Is NVDA’s Buyback a Boost for Earnings or a Sign of Investor Fatigue?

In addition to its strong financials, NVIDIA’s board has approved a massive $50 billion share buyback program. This adds to the $7.5 billion remaining from its previous buyback plan. Share repurchases typically boost earnings per share by reducing the number of outstanding shares, making the stock more attractive to investors.

The company has already returned $15.4 billion to shareholders through repurchases and dividends during the first half of fiscal 2025. However, despite the strong financial performance and the buyback announcement, NVDA’s stock dropped around 10% after its earnings report. It seems investors had such high expectations that even strong results weren’t enough to impress them.

“Investors want more, more and more when it comes to Nvidia,” said Dan Coatsworth, investment analyst at AJ Bell. “It looks like investors might not have taken the average of analyst forecasts to be the benchmark for Nvidia’s performance, instead, they’ve taken the highest end of the estimate range to be the hurdle to clear.”

On the brighter side, the company’s upcoming AI-focused chips, particularly the Blackwell architecture, are poised to meet rising demand and could reignite investor confidence. While its production has been slightly delayed, the company plans to ramp up shipments in the fourth quarter, with strong demand already building up.

Alongside Blackwell, Nvidia’s Hopper platform continues to see robust demand, and shipments of its upgraded H200 platform are targeting cloud service providers and large enterprises, with more demand expected in the second half of 2024. Thus, Nvidia still has plenty of fuel left to drive another rally.

Bottom Line

Thanks to the surging demand for its AI platforms, upcoming product launches, and a broadening market, we believe that Nvidia is well-positioned for continued expansion. The recent dip in its share price could simply be a brief pause before the next phase of growth unfolds.

Moreover, analysts remain bullish on the chipmaker’s long-term prospects. Out of 42 analysts that rated NVDA, 39 rated it Buy, while three rated it Hold. The 12-month median price target of $152.44 indicates a 22.9% upside potential from the last closing price. The price targets range from a low of $90 to a high of $200.

Therefore, investors looking for long-term opportunities could consider scooping up the shares of this tech giant before the stock regains momentum.

By Ino.com – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Can NVDA’s Share Buybacks and AI Innovation Drive the Next Rally?

Opinions Stock Market News
29 Sep

US Dollar Index Speculator bets drop for 2nd week to lowest since April

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 September 24th 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 Australian Dollar & British Pound

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

Leading the gains for the currency markets was the Australian Dollar (28,874 contracts) with the British Pound (24,013 contracts), the Japanese Yen (9,171 contracts), the Canadian Dollar (7,561 contracts), the Mexican Peso (4,703 contracts), the EuroFX (2,052 contracts) and the New Zealand Dollar (432 contracts) recording positive weeks.

The currencies seeing declines in speculator bets on the week were the Brazilian Real (-4,956 contracts), the Swiss Franc (-2,182 contracts), the US Dollar Index (-839 contracts) and with Bitcoin (-573 contracts) round out the lower bets on the week.

US Dollar Index Speculator bets drop for 2nd week to lowest since April

Highlighting the COT currency’s data this week is the decline of the speculator’s positioning in the US Dollar Index. The large speculative US Dollar Index positions declined for a second straight week and for sixth time out of the past ten weeks this week. This recent weakness has brought the US Dollar Index speculator net position (currently at just a total of +959 contracts) to the lowest level since April 30th, a span of 21 weeks.

The Dollar Index has been under pressure with the US Federal Reserve reducing interest rates by 50 basis points at the last central bank meeting to bring the current rate to a range of 4.75-5.00 percent. The CME Fedwatch tool shows at the current time, there is a 53.3 percent probability outlook that the Fed will cut the rate by another 50 basis points at the November 7th meeting while there is a 46.7 percent probability outlook of a 25 basis point reduction.

The US Dollar Index is currently at significant price levels and closed this week at 100.11. The 100.00 level has been a major support and resistance level in the past and also coincides with the 200-week moving average which is currently right around the 100.40 level. The Dollar Index has not traded consistently below the 200-week MA since 2021. A break below the 100.00 would see the 99.00 level come immediately into play which is also where the 61.8 Fibonacci retracement support level resides (from the January 2021 bottom to September 2022 high). Needless to say, these will likely be some important weeks coming for the USD and its future direction.

Currencies Net Speculators Leaderboard

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

*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 speculators) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). CFTC criteria here.

Strength Scores led by Japanese Yen & Australian Dollar

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 Japanese Yen (100 percent) and the Australian Dollar (81 percent) lead the currency markets this week. The British Pound (75 percent), Swiss Franc (62 percent) and the Canadian Dollar (59 percent) come in as the next highest in the 3-Year strength scores.

On the downside, the US Dollar Index (6 percent) and the Brazilian Real (17 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent). The next lowest strength scores are the Mexican Peso (38 percent) and the New Zealand Dollar (38 percent).

3-Year Strength Statistics:
US Dollar Index (6.1 percent) vs US Dollar Index previous week (7.9 percent)
EuroFX (50.8 percent) vs EuroFX previous week (50.0 percent)
British Pound Sterling (75.2 percent) vs British Pound Sterling previous week (64.4 percent)
Japanese Yen (100.0 percent) vs Japanese Yen previous week (96.3 percent)
Swiss Franc (61.8 percent) vs Swiss Franc previous week (66.2 percent)
Canadian Dollar (58.6 percent) vs Canadian Dollar previous week (55.2 percent)
Australian Dollar (81.2 percent) vs Australian Dollar previous week (56.8 percent)
New Zealand Dollar (38.1 percent) vs New Zealand Dollar previous week (37.3 percent)
Mexican Peso (37.6 percent) vs Mexican Peso previous week (35.3 percent)
Brazilian Real (16.7 percent) vs Brazilian Real previous week (21.4 percent)
Bitcoin (43.1 percent) vs Bitcoin previous week (51.8 percent)

Canadian Dollar & New Zealand Dollar top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Canadian Dollar (51 percent) and the New Zealand Dollar (27 percent) lead the past six weeks trends for the currencies. The Australian Dollar (26 percent), the EuroFX (19 percent) and the British Pound (18 percent) are the next highest positive movers in the latest trends data.

The US Dollar Index (-37 percent) leads the downside trend scores currently with Bitcoin (-29 percent) and the Mexican Peso (-18 percent) following next with lower trend scores.

3-Year Strength Trends:
US Dollar Index (-37.5 percent) vs US Dollar Index previous week (-30.6 percent)
EuroFX (19.0 percent) vs EuroFX previous week (15.4 percent)
British Pound Sterling (17.6 percent) vs British Pound Sterling previous week (-5.1 percent)
Japanese Yen (17.1 percent) vs Japanese Yen previous week (27.3 percent)
Swiss Franc (4.8 percent) vs Swiss Franc previous week (10.1 percent)
Canadian Dollar (51.1 percent) vs Canadian Dollar previous week (48.6 percent)
Australian Dollar (26.4 percent) vs Australian Dollar previous week (0.1 percent)
New Zealand Dollar (27.2 percent) vs New Zealand Dollar previous week (28.6 percent)
Mexican Peso (-18.5 percent) vs Mexican Peso previous week (-28.3 percent)
Brazilian Real (15.7 percent) vs Brazilian Real previous week (21.4 percent)
Bitcoin (-29.2 percent) vs Bitcoin previous week (-22.7 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 959 contracts in the data reported through Tuesday. This was a weekly lowering of -839 contracts from the previous week which had a total of 1,798 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 6.1 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 3.8 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:61.125.57.8
– Percent of Open Interest Shorts:57.622.114.6
– Net Position:959899-1,858
– Gross Longs:16,5246,8852,097
– Gross Shorts:15,5655,9863,955
– Long to Short Ratio:1.1 to 11.2 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):6.1100.03.8
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-37.537.0-4.5

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week resulted in a net position of 71,698 contracts in the data reported through Tuesday. This was a weekly gain of 2,052 contracts from the previous week which had a total of 69,646 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 50.8 percent. The commercials are Bearish with a score of 47.0 percent and the small traders (not shown in chart) are Bullish with a score of 63.7 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.655.912.8
– Percent of Open Interest Shorts:17.172.56.8
– Net Position:71,698-112,82841,130
– Gross Longs:187,795379,57787,312
– Gross Shorts:116,097492,40546,182
– Long to Short Ratio:1.6 to 10.8 to 11.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):50.847.063.7
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:19.0-22.032.1

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week resulted in a net position of 86,992 contracts in the data reported through Tuesday. This was a weekly gain of 24,013 contracts from the previous week which had a total of 62,979 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 75.2 percent. The commercials are Bearish-Extreme with a score of 19.9 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 98.7 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:61.720.816.3
– Percent of Open Interest Shorts:27.262.39.4
– Net Position:86,992-104,38317,391
– Gross Longs:155,32552,37440,935
– Gross Shorts:68,333156,75723,544
– Long to Short Ratio:2.3 to 10.3 to 11.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):75.219.998.7
– Strength Index Reading (3 Year Range):BullishBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:17.6-18.314.4

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week resulted in a net position of 66,011 contracts in the data reported through Tuesday. This was a weekly gain of 9,171 contracts from the previous week which had a total of 56,840 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 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 91.5 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:50.428.219.7
– Percent of Open Interest Shorts:18.665.514.2
– Net Position:66,011-77,50811,497
– Gross Longs:104,69058,60640,901
– Gross Shorts:38,679136,11429,404
– Long to Short Ratio:2.7 to 10.4 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):100.00.091.5
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:17.1-19.826.8

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week resulted in a net position of -19,290 contracts in the data reported through Tuesday. This was a weekly fall of -2,182 contracts from the previous week which had a total of -17,108 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 61.8 percent. The commercials are Bearish with a score of 34.4 percent and the small traders (not shown in chart) are Bullish with a score of 67.7 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:12.464.122.4
– Percent of Open Interest Shorts:44.128.825.9
– Net Position:-19,29021,396-2,106
– Gross Longs:7,50138,88413,588
– Gross Shorts:26,79117,48815,694
– Long to Short Ratio:0.3 to 12.2 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):61.834.467.7
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:4.8-8.011.5

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week resulted in a net position of -65,589 contracts in the data reported through Tuesday. This was a weekly rise of 7,561 contracts from the previous week which had a total of -73,150 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 58.6 percent. The commercials are Bearish with a score of 40.8 percent and the small traders (not shown in chart) are Bearish with a score of 48.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:11.971.814.7
– Percent of Open Interest Shorts:42.643.812.0
– Net Position:-65,58959,7465,843
– Gross Longs:25,305153,06531,425
– Gross Shorts:90,89493,31925,582
– Long to Short Ratio:0.3 to 11.6 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):58.640.848.0
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:51.1-49.921.2

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week resulted in a net position of -11,248 contracts in the data reported through Tuesday. This was a weekly gain of 28,874 contracts from the previous week which had a total of -40,122 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 81.2 percent. The commercials are Bearish-Extreme with a score of 16.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 97.6 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:46.433.119.9
– Percent of Open Interest Shorts:52.835.810.9
– Net Position:-11,248-4,64415,892
– Gross Longs:81,92458,48835,139
– Gross Shorts:93,17263,13219,247
– Long to Short Ratio:0.9 to 10.9 to 11.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):81.216.097.6
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:26.4-36.560.0

 

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 -1,458 contracts in the data reported through Tuesday. This was a weekly increase of 432 contracts from the previous week which had a total of -1,890 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 38.1 percent. The commercials are Bullish with a score of 53.9 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 83.8 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:48.041.410.5
– Percent of Open Interest Shorts:50.743.16.2
– Net Position:-1,458-9282,386
– Gross Longs:26,47522,8535,792
– Gross Shorts:27,93323,7813,406
– Long to Short Ratio:0.9 to 11.0 to 11.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):38.153.983.8
– Strength Index Reading (3 Year Range):BearishBullishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:27.2-32.445.4

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week resulted in a net position of 12,426 contracts in the data reported through Tuesday. This was a weekly increase of 4,703 contracts from the previous week which had a total of 7,723 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 37.6 percent. The commercials are Bullish with a score of 63.7 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 7.4 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:38.156.93.1
– Percent of Open Interest Shorts:28.965.04.2
– Net Position:12,426-10,852-1,574
– Gross Longs:51,48076,8164,127
– Gross Shorts:39,05487,6685,701
– Long to Short Ratio:1.3 to 10.9 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):37.663.77.4
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-18.518.1-1.1

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week resulted in a net position of -37,262 contracts in the data reported through Tuesday. This was a weekly decrease of -4,956 contracts from the previous week which had a total of -32,306 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 16.7 percent. The commercials are Bullish-Extreme with a score of 83.7 percent and the small traders (not shown in chart) are Bearish with a score of 23.6 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:20.173.44.2
– Percent of Open Interest Shorts:74.419.83.5
– Net Position:-37,26236,777485
– Gross Longs:13,84050,3962,883
– Gross Shorts:51,10213,6192,398
– Long to Short Ratio:0.3 to 13.7 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):16.783.723.6
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:15.7-16.34.9

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week resulted in a net position of -1,546 contracts in the data reported through Tuesday. This was a weekly reduction of -573 contracts from the previous week which had a total of -973 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 43.1 percent. The commercials are Bullish-Extreme with a score of 92.5 percent and the small traders (not shown in chart) are Bearish with a score of 23.2 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:78.16.74.7
– Percent of Open Interest Shorts:83.23.13.2
– Net Position:-1,5461,093453
– Gross Longs:23,8562,0331,433
– Gross Shorts:25,402940980
– Long to Short Ratio:0.9 to 12.2 to 11.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):43.192.523.2
– Strength Index Reading (3 Year Range):BearishBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-29.245.03.9

 

Article By InvestMacro – Receive our weekly COT Newsletter

 

COT Updates Forex and Currency News Opinions
28 Sep

Speculator Extremes: Russell2000, VIX, Silver, Yen, Gold top Bullish 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 September 24th.

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:

Russell 2000 Mini


The Russell 2000 Mini speculator position comes in as the most bullish extreme standing this week. The Russell 2000 Mini 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 24.8 this week. The overall net speculator position was a total of 21,907 net contracts this week with a gain of 18,921 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.

VIX


The VIX speculator position comes at the top as well in the extreme standings this week. The VIX 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 15.0 this week. The speculator position registered -5,067 net contracts this week with a weekly rise of 1,446 contracts in speculator bets.

Silver


The Silver speculator position comes in with a maximum score this week in the extreme standings. The Silver speculator level resides at a 100.0 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 22.6 this week. The overall speculator position was 62,198 net contracts this week with an increase by 3,900 contracts in the weekly speculator bets.

Japanese Yen


The Japanese Yen speculator position remains at the top of the extreme standings this week for multiple weeks in a row. The Japanese Yen speculator level is at a 100.0 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 17.1 this week. The overall speculator position was 66,011 net contracts this week with an addition of 9,171 contracts in the speculator bets.

Gold


The Gold speculator position also is at the top in this week’s bullish extreme standings. The Gold speculator level sits at a 100.0 percent score of its 3-year range. The six-week trend for the speculator strength score was 18.3 this week.

The speculator position was 315,390 net contracts this week with an increase of 5,324 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Heating Oil


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

The six-week trend for the speculator strength score was -43.7 this week. The overall speculator position was -14,807 net contracts this week with a dip of -1,422 contracts in the speculator bets.

10-Year Note


The 10-Year Note speculator position comes in next for the most bearish extreme standing on the week. The 10-Year Note speculator level is at a 5.5 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.2 this week. The speculator position was -1,025,278 net contracts this week with a boost of 68,748 contracts in the weekly speculator bets.

US Dollar Index


The US Dollar Index speculator position comes in as third most bearish extreme standing of the week. The US Dollar Index speculator level resides at a 6.1 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 959 net contracts this week with a reduction by -839 contracts in the speculator bets.

WTI Crude Oil


The WTI Crude Oil speculator position comes in as this week’s fourth most bearish extreme standing. The WTI Crude Oil speculator level is at a 6.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -25.0 this week. The speculator position was 158,597 net contracts this week with a rise of 13,269 contracts in the weekly speculator bets.

5-Year Bond


Finally, the 5-Year Bond speculator position comes in as the fifth most bearish extreme standing for this week. The 5-Year Bond speculator level is at a 11.2 percent score of its 3-year range.

The six-week trend for the speculator strength score was 8.6 this week. The speculator position was -1,554,432 net contracts this week with a gain of 39,428 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
27 Sep

Rising electricity demand could bring Three Mile Island and other prematurely shuttered nuclear plants back to life

By Todd Allen, University of Michigan 

Constellation, an energy company that provides electricity and natural gas to customers in 16 states and Washington, announced on Sept. 20, 2024, that it plans to restore and restart Unit 1 at Three Mile Island, a nuclear plant near Middletown, Pennsylvania, that was shut down in 2019. Microsoft has signed a 20-year agreement to purchase electricity generated by the plant to offset power demand from its data centers in the mid-Atlantic region.

Three Mile Island was the site in 1979 of a partial meltdown at the plant’s Unit 2 reactor. The Nuclear Regulatory Commission calls this event “the most serious accident in U.S. commercial nuclear power plant operating history,” although only small amounts of radiation were released, and no health effects on plant workers or the public were detected. Unit 1 was not affected by the accident. University of Michigan nuclear engineering professor Todd Allen explains what restarting Unit 1 will involve, and why some other shuttered nuclear plants may also get new leases on life.

What is the history of TMI-1?

Three Mile Island Unit 1 is a large nuclear power station with the capacity to generate 837 megawatts of electricity – enough to power about 800,000 homes. It started commercial operations in 1974 and ran until September 2019.

After the accident at Unit 2 in 1979, Unit 1 was shut down for six years, until the operator at the time, Metropolitan Edison, demonstrated to the Nuclear Regulatory Commission that it could operate the reactor safely.

Constellation closed Unit 1 down in 2019, even though the plant’s operating license had been extended through 2034 and it had no operational or safety problems. TMI-1 could not compete economically at that point with natural gas-fueled power plants because gas had become extremely cheap.

Pennsylvania also had a policy preference for increasing electricity generation from solar and wind power. The state legislature chose not to reclassify the plant as a carbon-free electricity source, which would have qualified it for state support.

The 1979 accident at Three Mile Island had broad, lasting effects on nuclear power regulation.

What is the reactor’s current condition?

Since the shutdown in 2019, the plant has sat idle. The NRC calls this status safe storage, or SAFSTOR. The plant is shut down, uranium fuel is removed from the reactor, and the facility is maintained in a safe, stable condition. Irradiated fuel is stored in large steel and concrete casks on a physically secured portion of the site, known as an Independent Spent Fuel Storage Installation.

In addition to the fuel, other materials in the plant are radioactive, such as structural channels that direct the cooling water during operation and the large vessel in which the reactor is housed. Radioactive decay occurs during the SAFSTOR period, reducing the plant’s radioactivity and making it easier to dismantle the plant later.

A half-dozen large cylindrical casks on a concrete pad.
The United States does not have a licensed long-term disposal site for spent nuclear fuel, so it is stored in large dry casks on-site at operating and closed reactors.
U.S. Nuclear Regulatory Commission, CC BY

What will Constellation need to do to prepare the reactor to restart?

Constellation will need to ensure that it has enough fuel and sufficiently trained personnel. It also will have to ensure that the reactor’s components are still in a condition that allows for safe operation.

This will require detailed inspections and mandatory maintenance actions to ensure that all components are running correctly. In some cases, the company may need to install new equipment.

The exact work will depend on the results of inspections but could include upgrading or replacing the reactor’s major components, such as the turbine and associated electricity generator; large transformers that move the electricity from the reactor out to the grid; equipment used to cool the reactor during operation; and systems for controlling the plant during startup, shutdown and power generation.

As an analogy, imagine that you move to a city and stop driving your car for five years. When you decide to resume driving, you’d need to ensure you have gas, that your driver’s license is still valid and that all of the car’s components still operate correctly. It would probably need new oil, air in the tires, new filters and other replacement parts to run well.

A nuclear plant is much more complicated than a car, so the number of checks and verifications will take longer and cost more. Constellation expects to bring the restored plant online in 2028 at a projected cost of US$1.6 billion.

What will the NRC consider as it decides whether to relicense the reactor?

The agency needs to independently confirm Constellation has enough fuel and trained personnel, and that the plant can run safely. These checks must be approved by the commission before the plant can operate.

In my view, Constellation will need to show that the plant is in a condition to operate at the same levels of safety that existed there in September 2019 when the company terminated operations.

Do you expect other utilities to try this type of restoration at closed reactors?

Constellation is not the only utility considering restarting a nuclear plant. Holtec International, an energy technology company, bought the closed Palisades nuclear plant in southwest Michigan in 2022 with the intent to decommission it, but then the company decided to restore and reopen the plant.

That work is underway now. Recently, in its first major inspection at the plant, the NRC found a number of components that it said required more testing and repair work.

Wolverine Power Cooperative, a not-for-profit energy provider to rural communities across Michigan, plans to purchase electricity from the restored Palisades plant, with support from the U.S. Department of Agriculture’s Empowering Rural America program. Holtec is receiving support for restoring Palisades from the U.S. Department of Energy and the state of Michigan.

A third company, NextEra Energy, is considering restarting its Duane Arnold nuclear plant in Palo, Iowa. And others could follow. In the past decade, a dozen nuclear plants closed before the end of their licensed operating lives because they were having trouble competing economically. But with electricity demand rising, especially to power data centers and electric vehicles, some of those plants could also become candidates for reopening.The Conversation

About the Author:

Todd Allen, Professor of Nuclear Engineering & Radiological Sciences, University of Michigan

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

 

Energy Opinions
27 Sep

Week Ahead: All that glitters isn’t always gold…

By ForexTime 

  • Silver ↑ 33% since start of 2024
  • 83% correlation with gold over past 5 years
  • Supported by Fed cut & industrial demand
  • Over past year US NFP triggered moves of ↑ 2.2% & ↓ 2.6%
  • Bloomberg FX model – 70% – ($30.14 – $33.41)

The week ahead is stacked with key data and speeches by numerous policymakers!

But all eyes will be on the incoming US jobs report which could rock silver prices.

Monday, 30th September

  • CN50: China Official & Caixin PMIs
  • EU50: Germany CPI, ECB President Christine Lagarde speech
  • JP225: Japan industrial production, retail sales
  • ZAR: South Africa trade balance
  • UK100: UK Q2 GDP (final)
  • USDInd: Fed Chair Jerome speech

Tuesday, 1st October  

  • EU50: Eurozone Manufacturing PMI, CPI, Germany Manufacturing PMI
  • JP225: Japan unemployment, Tankan index, Manufacturing PMI
  • UK100: S&P Global Manufacturing PMI
  • US500: US job openings, ISM Manufacturing
  • USDInd: Speeches by Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins
  • US30: Nike earnings

Wednesday, 2nd October

  • EU50: Eurozone unemployment
  • US500: Speeches by Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman.
  • UK100: BoE meeting minutes

Thursday, 3rd October

  • AU200: Australia trade
  • EU50: Eurozone Services PMI, PPI
  • USDInd: US ISM services, initial jobless claims,
  • RUS200 index: Speeches by Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic.

Friday, 4th October

  • SG20: Singapore retail sales
  • XAGUSD: US September jobs report

Why cover silver when gold recently touched another all-time high?

Well, the white metal has been trending higher –  touching its highest level since 2012.

silver

It has also outperformed gold on a week-to-date (wtd), month-to-date (mtd) and year-to-date (ytd) basis:

  • XAGUSD: ↑ 1.9% wtd / 10% mtd / 33% ytd
  • XAUUSD: ↑ 1.6% wtd / 6% mtd / 29% ytd

Investor appetite for precious metals jumped after the Federal Reserve cut interest rates for the first time in 4 years.

But silver is also drawing strength from the possibility of increased industrial use after China unleashed a wave of stimulus to revive its economy.

These fundamental forces point to further gains for silver which has moved in tandem with gold 83% of the time in any given 5-day period over the past 5 years.

Still, the incoming NFP report could shape the white metal’s outlook for October.

What are the market forecasts for the September NFP report?

  • 140,000 jobs added in September (lower than the 142,000 added in August)
  • Unemployment rate to remain unchanged at 4.2%
  • Average hourly earnings to slip to 0.3% month-on-month (0.4% in August)
  • Average hourly earnings to slip 3.7% year-on-year (3.8% in August)

Traders are currently pricing in a 49% probability of a 50 bp Fed cut by November with a 90% probability that 75 bp worth of cuts will be achieved by the end of 2024.

  • Silver prices could push higher if a soft NFP report weakens the dollar and supports the case for deeper US rate cuts in Q4.
  • A stronger-than-expected jobs report could weaken silver, especially if this results in a stronger dollar and reduced expectations over lower US rates.

It will be wise to keep a close eye on speeches by numerous Fed officials which may provide insight into future Fed moves – resulting in potential volatility for precious metals including silver.

Golden nugget: Over the past year, the US jobs report has triggered upside moves of as much as 2.2% or declines of 2.6% in a 6-hour window post-release.

 

Technical outlook:

Silver is trending higher on the daily charts with prices above the 50, 100 and 200-day SMA. However, the Relative Strength Index (RSI) is close to 70 – indicating that prices are near overbought territory.

  • A solid breakout above $32.70 may open doors to the next level of interest at $34.00.
  • Sustained weakness below $32.70 may encourage a decline toward $31.20 and $29.60 – where the 100-day SMA resides.

silver 2

According to Bloomberg’s FX forecast model, there’s a 70% chance that XAGUSD will trade within the $30.14 – $33.41 range over the next one week.

Forex-Time-LogoArticle by ForexTime

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

Metals Opinions
26 Sep

Bitcoin: Tests 200-day SMA ahead of Powell & US data

By ForexTime 

  • Bitcoin ↑ 6% since Fed cut last week
  • Fundamental spark could trigger price swings
  • Powell’s pre-recorded speech & US data in focus
  • Tough resistance at 200-day SMA
  • Technical levels – $68,250, $64,000 & $60,000

Bitcoin has struggled for direction since the Federal Reserve announced its 50-basis point rate cut last week.

Despite rising roughly 6% post-Fed decision, bulls failed to conquer the 200-day SMA at $64,000.

Note: Lower US interest rates may boost appetite for riskier assets such as cryptocurrencies.

Looking at the daily charts, prices seem to be trending higher but the Relative Strength Index (RSI) is near overbought territory – signalling a potential throwback.

bITCOIN1

Still, the world’s largest cryptocurrency could experience big price swings with the right fundamental drivers. This may come in the form of a pre-recorded speech by Powell and key US data including the jobless claims in addition to the personal consumption expenditure gauge.

The biggest takeaways from the Fed decision last week were:

  • Dot plot projections showed two more 25 bp cuts expected.
  • Future rate cuts would be data-dependent.
  • Markets currently expect 75 bp of cuts by the end of 2024.

So, investors are likely to closely scrutinize Powell’s pre-recorded speech and US data for additional clues on the Fed’s next move in Q4.

Traders are currently pricing in a 60% probability of a 50 bp Fed cut by November with 75 bp worth of cuts priced in by the end of 2024.

Taking a deeper dive, the initial jobless claims is expected to rise 223k in the week ended September 21st. A figure that exceeds market forecasts could fuel fears over the health of the US labour market – supporting the argument for deeper rate cuts.

 

Golden nugget: Over the past 12 months, the initial jobless claims have triggered upside moves as much as 1.5% or declines of 2% in a 6-hour window post- release.

 

Note: It will be worth keeping an eye on the second quarter GDP data (final print) which is expected to confirm that the US economy expanded 3%.

On Friday, Fed speeches and the US August PCE report will be in focus. Ultimately, further signs of cooling price pressures may reinforce bets around the Fed cutting rates by 75 bp by the end of 2024.

 

Golden nugget: Over the past 12 months, the PCE report has triggered upside moves as much as 0.7% or declines of 2% in a 6-hour window post- release.

Looking at the technical picture…

Bitcoin is on breakout watch with prices lingering around the 200-day SMA.

  • A solid breakout and daily close above $64,000 may open a path toward $68,250.
  • Should $64,000 prove to be reliable resistance, this could trigger a selloff back towards the 100-day at $61,000 and $60,000 – where the 50-day SMA resides.

bITCOIN2

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
25 Sep

Is Gold Ready To Outshine Stocks?

Source: John Newell (9/24/24)

John Newell of John Newell & Associates explains how you can decode the Dow Gold ratio to understand better which asset, stock, or gold is outperforming the other.

The Dow Gold ratio is one of the most insightful tools for understanding the relationship between stock markets and gold, particularly in times of financial upheaval.

By comparing the price of the Dow Jones Industrial Average to the price of gold, this ratio helps investors gauge which asset, stock, or gold (which has historically been considered money) is outperforming the other.

Today, the ratio is calculated by dividing the Dow at ~42,000 by the gold price at ~ $2,600, equating to approximately 16.15 ounces of gold to buy one Dow share.

A high ratio indicates that stocks are expensive relative to gold, while a low ratio suggests that gold is more highly valued compared to stocks. Throughout history, this ratio has fluctuated dramatically, marking pivotal moments in the global financial landscape.

Key Moments in the Dow Gold Ratio

1971: 25:1

  • At the beginning of 1971, it took roughly 25 ounces of gold to purchase a single share of the Dow. This was a period when stocks had outpaced the performance of gold for years, reflecting a broad belief in the strength of financial markets and economic growth. However, the U.S. was on the verge of significant changes in monetary policy.

1974: 3:1

  • Just a few years later, by 1974, the ratio plummeted to 3 ounces of gold for each Dow share. The rapid devaluation of stocks relative to gold occurred as inflation surged and economic uncertainty took hold, particularly after the U.S. abandoned the gold standard in 1971. Investors flocked to gold as a hedge against inflation, causing gold’s value to soar.

Late 1970s: 10:1

  • Following this sharp decline, the Dow Gold ratio staged a partial recovery, rallying to 10:1 in the late 1970s. However, inflationary pressures and economic instability persisted, preventing a full recovery and keeping gold as a preferred asset for wealth preservation.

1980: 1:1

  • By 1980, the ratio dropped to its lowest point in history — 1:1. This meant that one ounce of gold could buy one Dow share. This dramatic shift came at the peak of economic uncertainty, runaway inflation, and soaring interest rates. Gold had become the ultimate safe haven, while stocks were seen as highly volatile and risky.

2000: ~45:1

  • The long bull market in stocks that began in the 1980s pushed the Dow Gold ratio to an astonishing 45:1 by the year 2000. This period was marked by technological innovation, economic growth, and low inflation, driving stocks to outperform gold significantly. Gold was out of favor, seen as a relic in a time of booming stock markets and rapid technological advancements.

2011: 6:1

  • After the financial crisis of 2008, gold surged once again as investors sought safety amidst economic turmoil. By 2011, the ratio had corrected back to 6:1, reflecting a significant loss of confidence in the global financial system, while gold regained its stature as a store of value.

Today: ~16:1

  • Currently, the Dow Gold ratio sits at approximately 16:1. The market has rebounded significantly since the lows of 2011, but we believe that these markets could be entering another period where gold starts to outpace stocks.

What’s Next? Could We See a Return to 6:1 or Even 1:1?

As the saying goes, “History doesn’t repeat, but it often rhymes.”

Looking at past cycles, it’s clear that the Dow Gold ratio tends to revert toward certain key levels during times of economic stress and uncertainty. If “past is prologue,” the charts suggest that we may be heading back toward a 6:1 ratio and possibly even another ~ 1:1 scenario, as we saw in 1933 and 1980

Several factors support this thesis:

  1. Global Inflation and Monetary Policy: Inflation is again a significant concern for investors, with central banks worldwide continuing to grapple with rising prices. Historically, periods of high inflation have favored gold over stocks as investors seek to preserve their purchasing power.
  2. Geopolitical Instability: The ongoing geopolitical tensions, trade wars, and economic uncertainty are causing shifts in global financial markets. Gold traditionally performs well in these environments, as it is seen as a safe-haven asset.
  3. Debasement of Fiat Currencies: With massive debt levels and aggressive monetary stimulus measures, fiat currencies are losing value relative to hard assets like gold. As more central banks move toward looser monetary policies, gold’s relative strength is likely to increase, pushing the Dow Gold ratio lower.
  4. Investor Sentiment: While stocks have performed well over the last decade, there are growing concerns about valuations, especially in tech-heavy indices like the Dow. A correction or a prolonged period of stagnation in stock markets could further tilt the ratio in gold’s favor.

The Big Picture Dow / Gold Ratio Chart

Conclusion: The Dow Gold Ratio and the Case for Gold

The Dow Gold ratio has been a reliable barometer of market sentiment and economic conditions for decades. It tells a story of booms, busts, and the cyclical nature of markets.

If history is any indication, we may be on the cusp of another significant move in favor of gold. The current ratio of 16:1 is far from the extremes we’ve seen in the past, and we believe that a return to 6:1 is possible in the near future.

In more extreme cases, we could even see a return to the historic 1:1 ratio, as the chart shows is possible, because it happened before in 1933 and 1980.

For investors seeking protection against economic uncertainty and inflation, the Dow Gold ratio offers a compelling case for gold as a valuable part of any diversified portfolio.

 

Important Disclosures:

  1. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. 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. Any disclosures from the author can be found  below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
  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.

John Newell Disclaimer

As always it is important to note that investing in precious metals like silver carries risks, and market conditions can change violently with shock and awe tactics, that we have seen over the past 20 years. Before making any investment decisions, it’s advisable consult with a financial advisor if needed. Also the practice of conducting thorough research and to consider your investment goals and risk tolerance.

Metals Opinions
23 Sep

Immigrants are unsung heroes of global trade and value creation

By Bedassa Tadesse, University of Minnesota Duluth and Roger White, Whittier College 

In nearly every country that hosts foreign-born citizens, immigration emerges as a lightning rod for controversy. The economic realities of immigration, however, are far more complex than the negative sound bites suggest.

Far from being a burden, as critics claim, immigrants play pivotal roles in driving innovation, enhancing productivity and fostering economic growth in their adopted countries. They also elevate their adopted and origin countries’ standings in global value chains, contributing to economic resilience.

We are economists who study global trade and migration, and our recent work reveals that immigrants contribute far more to the economic fabric of nations than previously understood.

By facilitating what’s known as “trade in value added,” or TiVA, immigrants play a crucial role in helping countries specialize their production, move up the value chain and significantly enhance trade sophistication.

Moving up the value chain means progressing from producing basic, low-value goods to more complex, higher-value products. This shift involves improving skills, technology and production techniques, allowing a country to capture more economic value and develop advanced industries.

So, what exactly is trade in value added, and why is it important?

In today’s global economy, products are rarely made entirely in one country. Instead, different stages of production occur across multiple nations. TiVA measures each country’s contribution to a final product, providing clearer insight into global value chains. For instance, while an iPhone may be assembled in China, its components come from various countries, each adding value.

Measuring the effect on global value chains

Our study found that a 10% increase in immigrants from a particular country residing in one of the 38 Organization for Economic Cooperation and Development member states leads to a 2.08% increase in the value added from their home country that becomes embedded in their host country’s exports to the world.

This effect was strongest in the services sector, followed closely by agriculture and manufacturing.

To understand how this works, consider Indian software engineers in Silicon Valley. Their understanding of the U.S. tech industry and India’s IT sector can lead to partnerships. These partnerships lead to Indian firms providing specialized coding services for American tech giants. The result? Higher-value U.S. tech exports that incorporate Indian expertise. This perfectly illustrates how immigrants boost trade in value added.

Or take Chinese immigrants in Italy’s fashion industry. Their cultural knowledge might help Italian luxury brands tailor products for the Chinese market and connect Italian designers with highly skilled textile workers in China. The result? Italian fashion exports incorporate Chinese craftsmanship, elevating both countries’ global fashion value chain positions.

Our findings show that immigrants are pivotal bridges in global trade networks. They leverage their unique knowledge, skills and connections to strengthen economic bonds between nations. That’s in line with previous research showing the significant role immigrants play in fostering bilateral trade.

Why immigration matters in the global economy

In an era of increasing skepticism toward globalization and migration, understanding the positive economic impacts of immigration is crucial. Our current and previous research, and the findings from related studies, indicate that rather than “stealing jobs,” immigrants often create value and new economic opportunities that might not otherwise exist.

Immigrants bring diverse skills, knowledge and networks to their host countries that can enhance innovation, fill labor shortages and open new market opportunities. They often possess unique insights into their home country markets, helping host country firms navigate cultural nuances and business practices that might otherwise pose trade barriers.

For home countries, emigrants can serve as cultural ambassadors, creating awareness, showcasing products and services, and helping to integrate their homeland into global value chains. They may also contribute to knowledge transfer, investment flows and business connections that boost their home and host countries’ economic development.

Moreover, immigrants’ ability to enhance trade in value added suggests they play a role in moving countries up the economic value chain. Rather than simply facilitating trade in raw materials or essential manufactured goods, immigrants appear to boost trade in more sophisticated, higher-value products and services. This is crucial for economic development, as countries that position themselves higher in global value chains tend to see bigger benefits.

Rethinking immigration and trade policies

Our observations have important implications for both immigration and trade. For one, they suggest that restrictive immigration policies might have unintended consequences, hindering a country’s trade performance and position in global value chains. Countries that want to become more economically competitive might consider more open immigration policies.

What’s more, our research indicates that immigrants’ economic benefits extend beyond the often-cited labor-market and fiscal impacts – in other words, having more workers who pay more taxes.

The evidence suggests policymakers should take a more holistic view of immigration’s economic effects, considering its role in facilitating sophisticated international trade and value creation.

Our results also align with previous research highlighting the potential value of workforce diversity for businesses, particularly for firms engaged in international trade. Employees from diverse national backgrounds can bring valuable insights and connections that help their companies navigate global markets and value chains.

It’s worth noting that immigrants’ impact on trade in value added varies across countries and sectors. This suggests that rather than one-size-fits-all approaches, targeted policies might most effectively leverage immigration for economic benefit.

Maximizing immigration’s positive impacts on trade and value chains also requires supportive policies and institutions that allow immigrants to use their skills and networks fully. These might include programs to assist with economic integration, language training, credential recognition and support for immigrant entrepreneurship.

A new perspective on immigration

As the global economy continues to evolve, with value chains becoming ever more complex and interconnected, the role of immigrants as facilitators of trade and value creation is likely to grow even more significant. Countries that recognize and leverage this potential stand to gain a competitive edge in the global marketplace.

Our research paints a picture of immigrants not as economic burdens but as valuable assets who enhance their host and home countries’ positions in the global economy. By making sophisticated trade linkages possible, and by boosting participation in global value chains, immigrants contribute to economic growth and development in ways that go far beyond conventional understanding.

As debates around immigration continue, it’s crucial to move beyond simplistic narratives and recognize the complex and often subtle ways that immigrants contribute to prosperity. In an interconnected world, immigrants aren’t just crossing borders – they are helping to weave the fabric of global trade and value creation.The Conversation

About the Author:

Bedassa Tadesse, Professor of Economics, University of Minnesota Duluth and Roger White, Professor of Economics, Whittier College

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

 

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