December 20, 2013 - Issue #716

In This Issue

1. Holiday Greetings and Christmas Schedule
2. Dec-Jan outlook: Holiday Cheer
3. Economic Calendar

1. From all of us at Cannon Trading Company, to you and yours, we wish you a healthy and prosperous 2014 New Year.

May your holiday season and the new year be filled with much joy, happiness and success. We look forward to working with you in the coming year!

Christmas Schedule available at:

https://www.cannontrading.com/tools/support-resistance-levels/christmas-holiday-futures-trading-schedule-2013/

2. TTN Outlook: Dec 2013-Feb 2014: Holiday Cheer

Tue, 17 Dec 2013 21:36 PM EST 

A sense of peace has overtaken the markets in recent months. After five years, the global financial crisis seems to have been tamed and there is a genuine feeling that the economy is on the mend. Political flashpoints have cooled, economic indicators have improved, and financial markets have calmed if not normalized. 

Each global region still has its problems to contend with, but they dont seem as daunting as they did a few years ago. The proverbial light at the end of the tunnel is visible and forward looking markets have been galloping toward it. This winter season is expected to bring more good tidings of economic recovery which could presage a move away from the new normal of anemic growth back to the old normal. 

We may finally turn a new page in 2014 and it seems there are fewer and fewer obstacles toward that goal. This seems to be one of the rare moments in recent history when there is no looming crisis that could topple the modest economic progress that has been made over the past few years. Barring the unlikely flare up of a Great Recession era problem, it seems only an unexpected shock can derail the New Year from showing the promise that markets have predicted for it with their movements this year. 

Tis the Season...to be Tapering

The tense political situation in Washington that has been a fiscal drag on the economy in the last year seems to finally be easing. The mini budget deal reached in recent days will provide some relief from the Sequesters automatic cuts but it didnt touch on more the difficult issues of entitlements or tax reform. Still if it gets through both houses of Congress with bipartisan support from the centrists it will serve as a hopeful sign that Washington can get back to governing after five years of political cock-fighting. That should help assuage the ratings agency Fitch, which is expected to resolve its ratings watch on the US AAA sovereign rating by the end of March, having threatened to cut the rating if the brinkmanship in Washington continued unabated. By the time President Obama delivers The State of the Union Address on January 28th, he may be able to claim Washington is working again, though still under the threat of another debt ceiling battle.

The budget deal under consideration will keep the government funded for two years, averting another shutdown in January, but it does not include provisions for raising the debt ceiling, which the Treasury has forecast will be hit sometime between March and June. Thus the door is still open for another dust up in Washington over the debt limit in the spring. Despite the dtente brought by the budget compromise, partisanship still simmers in the wake of Senate Democrats stripping the minority party of some filibuster powers and as the GOP continues to hammer the bungled Obamacare roll out.

This potential turbulence in Washington could be problematic for Janet Yellen's Fed. Yellen is expected to be confirmed as the next Chairman of the Fed in the week before Christmas the same week the FOMC is set to hold its next two-day policy meeting (Dec 17-18). There has been some speculation that once she is confirmed by the full Senate, Bernanke could immediately step aside and allow Yellen to chair the January meeting, leaving the next policy steps in her hands. Though the leadership under Yellen may be slightly more dovish than under Bernanke, the rotating FOMC voting membership will become decidedly more hawkish in 2014. Dallas Fed President Fisher and Philadelphia Fed President Plosser will both rotate into the voting membership at the FOMC and carry more weight for the hawkish camp, pushing Yellens toward the rhetorical center as she represents the full views of the collegial committee.The U.S. dollar index is a basket of six major world currencies weighted against the greenback. See on the daily bar chart that USDX prices are in a solid downtrend and have just hit a 10.5-month low. The path of least resistance for the dollar index will remain sideways to lower until early technical clues suggest otherwise. A down-trending U.S. dollar index is a bullish underlying factor for the raw commodity sector.

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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!