Nemenoff Report 8/1/19
Financials: Sept. Bonds are currently 8 lower at 155’11, 10 Yr. Notes 5 lower at 127’08.5 and 5 Yr. Notes 2.5 lower at 117’15.75. The long Dec. 2019/short Dec. 2020 Eurodollar spread has narrowed 2 points to 39.50 premium the Dec. 2020, slightly our way for the week. Yesterday the Fed cut rates by 25 basis points as expected with the expected result of disappointment in the rational for the cut expressed in the follow up interview with Chairman Powell. While leaving the door open for future rate cuts he sited slowing growth in Europe and Asia and that the decision to cut was not necessarily data dependant. Personally I feel this move was more politically driven than economically motivated. Given all that I remain short the 5 Yr. Notes and continue to hold the mentioned Eurodollar spread.
Grains: Dec. Corn is currently 1’4 higher at 411’4, Nov. Beans 1’2 lower and Dec. Wheat2’0 lower at 491’0. We are now long Dec. Corn from the 415’0 area as the market filled a chart gap between 420’0 and 422’0 made May 24th and May 28th. I am on the sidelines in Beans and Wheat. However let me note that throughout my 40+ years in the business I have had on average some success going long Beans on the first 90 degree day of August.
Cattle: Live and Feeder Cattle have trended lower this week along with most other agricultural futures .Resistance continues in the 110.00 area for both Aug. and Oct. LC. I am still looking for the Feeder Cattle to rally to the mid 140’s given the cheaper than feared cost of feed.
Silver: Sept. Silver is currently 40 cents lower at 16.01, falling due to a stronger dollar as a result of the FOMC less than dovish comments following the announcement of the interest rate cut. We have been stopped out of recent purchases with a moderate profit.
S&P’s: Sept. S&P’s are currently 1.00 higher at 2983.25. Yesterday’s dramatic drop (the low was 2958.00 has left many traders wondering if the market is making a top. We will be sellers above 2993.00. Support is now yesterday’s low of 2958.00
Currencies: As of this writing the Sept. Euro is 51.5 lower at 1.10690, the Yen 4 higher at 0.92275, the Pound 60 lower at 1.2128 and the Dollar Index0.352 higher at 98.62. We were stopped out of our short D.I. position when the Dollar Index rallied through the 98.00 level. Slowing growth and negative interest rates in Europe and the possibility of a no deal Brexit have weighed heavily on the Euro and Pound over the last week. I am on the sidelines.