March 6th, 2015 - Issue #777
In This Issue
1. March-April Outlook
2. Hot Market Report: US Dollar Index Hits 11.5 Year High
3. Economic Calendar
1. March-April Outlook
TTN March April 2015 Outlook: Award Season
by TradeTheNews.comThe equivalent of a financial police radio, TradeTheNews.com covers economic numbers, interest rate decisions, stock up/down grades, rumors, central banker speak, energy news, terrorism, geopolitical developments and natural disasters in real-time.
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Trade the NewsIn the spirit of Hollywood's self-congratulatory award season, let's start with a pat on our own back for what we got right in our January-February outlook. The ECB did indeed step up the timetable for its Quantitative Easing program, announcing the go ahead in January. The risk-on appetite generated by the new plate of QE, however, was initially tempered by the demands of the newly elected leftist government in Greece. As predicted, after a brief flirtation with brinkmanship, the Syriza Party leadership sobered up to the realities of governing and accepted a deal to keep Greece in the euro zone. In Eastern Europe, President Putin played at peace maker again, as we suspected he might, but the result of reaffirming the Minsk accord is as yet inconclusive. Also as expected, China took another swing at stimulus, which could be just the beginning as the nation reshapes its economy toward a more sustainable long term growth model. And finally, the strengthened dollar crimped Q4 results for a number of US multinationals, and oil prices have found a near term bottom, which has helped ease forex volatility in the last few weeks.
Over the next two month period the path of four crucial economic issues will become clearer. First down the red carpet, the oil market will tip its hand, either recovering some ground in a sign of growth returning or hitting fresh lows if new demand does not materialize amid continued high output. The latter seems more likely at this point as Saudi King Abdullah finally succumbed to old age, but his new oil policy lives on - Saudi is unwilling to act as the swing producer anymore, weighing heavily on oil prices and dragging down global inflation with it. Second is that issue of weak inflation, which most policy experts believe will avoid morphing into a deflationary spiral once low oil prices start to exert a stimulative effect. The third issue is how impactful the latest round of global stimulus will be as Europe and Asia add more logs to the fire, and to what extent smaller central banks will be forced to play a supporting role. Lastly, by April we should have more clarity on when the Fed plans to finally start dismantling its extraordinary stimulus machine.
Dark Horse Upsets
Just like award ceremonies, not every outcome in the market is predictable. There have been some genuine surprises in the last few months that could set up a counterproductive current in 2015. The monumental easing programs of the world's biggest central banks have recently pushed smaller national banks to new policy extremes. The shocking move by the Swiss National Bank to abandon its tightly defended floor in the franc against the euro seemed to open the floodgates for other smaller central banks enlist in the currency war. After the SNB move, central bankers from Singapore to Australia to Israel surprised markets by cutting already low rates, and some, like Sweden, joined the Swiss in experimenting with negative rates. As pressure builds on policy makers to address declining inflation, sliding commodity prices, and softening growth expectations such moves may become more commonplace, if not the norm. And now that the Swiss, who are more dependent on the banking sector than anyone, have resorted to negative rates, more central banks may find this course necessary to prompt commercial banks to channel their money into investments that will stimulate the economy. The downside is that if such aggressive and unprecedented monetary policy moves do not yield demonstrable results, it could erode trust in the global central bank monetary regime that won some praise for averting a Great Depression in 2008.
The Early Favorites
For market prognosticators, the show gets off to a quick start in early March. The first week of the month will be highlighted by an ECB policy meeting detailing the launch of its quantitative easing program. Meanwhile in China, leaders will gather to do the accounting of last year's reform efforts and slowing growth and set new targets, and in the US banks will see their statutory stress test results aired in public.
China's Q4 GDP report confirmed that the PRC's economic growth has fallen to its slowest pace in 24 years, and missed the official annual target (7.5% for 2014) for the first time since 1998. The leadership is now expected to further reduce its growth goal to around 7% for this year, an announcement that will come at the spring party plenum in early March. There are even some predictions that amidst the very public anti-corruption and reform campaign that has been waged over the last year, Beijing may take this moment to deemphasize the numerical GDP target as it strives to improve the qualitative shape of its growth. This means aiming to reduce its dependence on credit-fueled investment and government spending, and putting more emphasis on spurring domestic consumer consumption. Indeed some progress on this front shone through in the latest GDP data which indicated that consumption accounted 51.2% of 2014 growth, a full three percentage point higher than the prior year.
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Cannon Trading respects your privacy and will never give this information to a 3rd party.2. Hot Market Report: US Dollar Index Hits 11.5 Year High
From our friend Jim Wyckoff
Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at www.jimwyckoff.com click on image below to enlarge
The U.S. dollar index is a basket of six major currencies weighted against the greenback. See on the daily chart that the DX has this week hit an 11.5-year high. The greenback bulls are in strong command and there are no early technical clues that a market top is close at hand. The surging U.S. currency has been a significantly bearish weight on the raw commodity sector in recent months. It's a safe bet that when the U.S. dollar index finally tops out, the bust cycle in the raw commodity sector will end.
3. Economic Calendar
Source: Moore Research Center, Inc.
| Date | Reports | Expiration & Notice Dates |
| 03/09 Mon |
LT: Mar Cotton(ICE) | |
| 03/10 Tues |
9:00 AM CDT - JOLTS-Job Openings(Jan) 9:00 AM CDT - Wholesale Inventories(Jan) 11:00 AM CDT - WASDE Report & Crop Production |
|
| 03/11 Wed |
6:00 AM CDT - MBA Mortgage Purchase Index 9:30 AM CDT - API & DOE Energy Stats 1:00 PM CDT - Treasury Budget(Feb) 2:00 PM CDT - Dairy Products Sales |
LT: Mar Orange Juice(ICE) |
| 03/12 Thurs |
7:30 AM CDT - USDA Weekly Export Sales 7:30 AM CDT - Initial Claims-Weekly 7:30 AM CDT - Retail Sales(Feb) 7:30 AM CDT - Retail Sales-Ex Auto(Feb) 7:30 AM CDT - Import(ex-ag) & Export(ex-oil) Prices(Feb) 9:00 AM CDT - Business Inventories(Jan) 9:30 AM CDT - EIA Gas Storage 3:30 PM CDT - Money Supply |
|
| 03/13 Fri |
7:30 AM CDT - Core PPI & PPI(Feb) 9:00 AM CDT - Mich Sentiment(Mar) |
LT: Mar Corn(CBT) Mar Wheat(CBT) Mar Oats(CBT) Mar Rough Rice(CBT) Mar Soybeans,Soymeal,Soyoil(CBT) Mar Lumber(CME) Apr Coffee Options(ICE) |
| 03/16 Mon |
7:30 AM CDT - Empire Manufacturing(Mar) 8:15 AM CDT - Capacity Util & Industrial Prod(Feb) 9:00 AM CDT - NAHB Housing Market Index(Mar) 11:00 AM CDT - NOPA Crush 5:00 PM CDT - Net Long-Term TIC Flows(Jan) |
FN: Mar Lumber(CME) LT: Mar Currencies(CME) Mar Eurodollar(CME) Mar Cocoa(ICE) Mar US Dollar Index(ICE) Mar Eurodollar Options(CME) Apr Sugar-11 Options(ICE) |
* 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!
