November 16th, 2018 - Issue #944

In This Issue

1. TradeTheNews.com Global Markets Review: The Results Are In
2. Hot Market Report: Natural Gas - Wow!
3. Economic Calendar

ThanksGiving Holiday next week. Markets will have modified trading hours and some are closed on Thursday/Friday.

1. TradeTheNews.com Global Markets Review: The Results Are In

TradeTheNews.com November/December Outlook

The return of volatility has created dread in some investors and excitement in others that see opportunity in a less complacent market. The stock market had a classic October sell off, but other markets also suffered. The junk bond market had its worst month in a decade, and the 10-year Treasury yield hit a 7-year high as markets reassessed sentiment about Fed rate tightening, even at a “gradual” and predictable pace.

With the resolution of the US midterm elections, at least one of the key uncertainties of the last year is now resolved. The outcome of the election will not only change the tenor of US politics for the next two years, but it will also influence the other major outstanding geopolitical issues that play into the assessment of the balance of risks. Now risk analysis will focus squarely on Fed rate policy, the final outcome of the Brexit deal, and the nascent trade war between the world’s largest economies.

US Election ‘Blues’ In the US, the House going ‘blue’ thwarts any White House dreams of additional tax cuts, but could result in some bipartisan issues getting more attention, particularly infrastructure spending – though it remains to be seen if Trump and the Democrats can agree on the structure of any such spending legislation (highways vs. walls). A Democratic House does give Trump a foil to run against for the next two years and he will definitely use the “obstructionist Democrats” to share the blame for any policy failures, stock market weakness, or economic downturn. On the policy level, the absence of any new fiscal stimulus could give the Federal Reserve some room to slow its monetary tightening if any red flags appear in the economic data, even as it deflects criticism from President Trump about higher rates.

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2. Hot Market Report: Natural Gas Making Historic Moves

Click on image below to enlarge

After trading between ±2.85 and ±3.20 for more than two years – a veritable 35-cent stupor – natural gas futures (Dec.) broke out of that price range early this month and proceeded to rocket up ±$1.13 (an $11,300 move) in four days to $4.69 which included on Wednesday an intra-day high of 4.92– an additional 23-cent spike before the close and the largest daily percentage gain for the energy contract in 14 years.

Not to be outdone, on Thursday the market staged its biggest one-day retreat ever, selling off a whopping 79 cents. Drastic changes from one day to the next in weather forecasts for the coming months seemed to be the major catalyst.

The whipsaw in price resulted in the CME Group’s NYMEX exchange taking “emergency action” to maintain orderly trading by widening price fluctuation limits on the eight front month futures contracts.

3. Economic Calendar

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!