Row of round cotton modules shows production of Arkansas field
Dozens of round modules grace the edge of a cotton field near Portland, Ark., in 2016.

Global equities respond favorably; commodity markets mixed

Global equity and commodity markets respond favorably to initial blast of directives from new administration and Congress.

For the most part Global Equity and a number of Commodity Markets shrugged off “Geopolitical and Geo-economic Uncertainties” and responded favorably to presidential, congressional, and Federal Reserve leadership provided by them and their respective global counterparts to ongoing and planned global simulative economic activity.

A week does not make a trend, but presently the global equity and a number of commodity markets” appear to acknowledge the intent of political and central bank leadership to achieve an accelerated move away from:

  • Chronic low inflation to an aggressive simulative reflation economic setting
  • S. Central Bank’s monetary accommodation to managing economic activity in a rising interest rate environment

The following is a select list of International and Commodity ETFs which provide insight into the market’s reaction to the first week of presidential, congressional and central bank activities. 

International ETFs

Symbol

Name

Weekly %

Change

EWW

Mexico (iShares)

5.77%

EPOL

Poland Investable (iShares)

5.25%

RSX

Russia (MV)

4.74%

ERUS

Russia Capped (iShares)

4.64%

SCIF

Asia India Small Cap Fund (MV)

4.17%

BRF

10_LA Brazil SmallCap (MV)

3.93%

FM

EM Frontier Markets (GH)

3.72%

INDA

10_Asia India MSCI Index (iShares)

3.55%

EPI

Asia India Earnings Fund (WT)

3.43%

ILF

LA Latin America 40 (iShares)

3.42%

PIN

Asia India (PS)

3.33%

EWT

Asia Taiwan (iShares)

3.00%

EWZ

LA Brazil (iShares)

2.97%

EEM

Emerging Markets (iShares)

2.88%

EIS

Israel (iShares)

2.86%

THD

Asia Thailand Investable (iShares)

2.78%

ENZL

Asia New Zealand Investable (iShares)

2.77%

CQQQ

Asia China Sector Technology (GH)

2.74%

EPU

LA Peru (iShares)

2.73%

FRN

Frontier Markets 100 MSCI (iShares)

2.71%

HEEM

Currency Hedged Emerging Mkts (iShares)

2.67%

VWO

Emerging Markets (Vanguard)

2.67%

AAXJ

Asia Ex-Japan (iShares)

2.63%

IEMG

EM Emerging Markets Core (iShares)

2.58%

VNM

Asia Vietnam (MV)

2.48%

EGPT

AF Egypt (MV)

2.43%

EUFN

EU Europe Financial Sector (iShares)

2.37%

KWEB

Asia China Sector Internet (KS)

2.36%

EIDO

Asia Indonesia (MV)

2.22%

MCHI

Asia China Broad MSCI Index (iShares)

2.19%

EDIV

Emerging Dividend (SPDR)

2.15%

EPHE

Asia Philippines Investable (iShares)

2.12%

EWM

Asia Malaysia (iShares)

1.91%

EWY

Asia South Korea (iShares)

1.85%

EWO

EU Austria (iShares)

1.80%

NORW

EU Norway 30 (GX)

1.77%

EWG

EU Germany (iShares)

1.72%

HEWG

Currency Hedged Germany (iShares)

1.69%

EWP

EU Spain (iShares)

1.69%

EWD

EU Sweden (iShares)

1.68%

EWC

NA Canada (iShares)

1.60%

HAO

Asia China Broad SmallCap (GH)

1.55%

EWH

Asia Hong Kong (iShares)

1.54%

EWL

Switzerland (iShares)

1.49%

DXJ

Currency Hedged Japan (WT)

1.49%

TAO

Asia China Sector Real Estate (GH)

1.46%

FXI

Asia China Broad LargeCap 50 (iShares)

1.46%

NGE

AF Nigeria (GX)

1.40%

EWU

EU United Kingdom (iShares)

1.32%

IXUS

Global Core MSCI Total (iShares)

1.29%

HEWJ

Currency Hedged Japan (iShares)

1.28%

CHIQ

Asia China Sector Consumer (GX)

1.25%

VEU

All World Ex-US (VG)

1.25%

GULF

Middle East Dividend (WT)

1.23%

CHIX

Asia China Sector Financials (GX)

1.21%

EZA

South Africa (iShares)

1.21%

ECH

Chile (iShares)

1.15%

DWX

International Dividend (SPDR)

1.08%

GXG

Columbia 20 (GX)

1.06%

SCZ

Europe-Australasia-FarEast SmallCap (VG)

1.05%

HEDJ

Currency Hedged Europe (WT)

0.99%

ALD

Asia Local Debt (PS)

0.98%

EFA

Europe-Australasia-FarEast Index (iShares)

0.98%

ASHR

Asia China Broad CSI 300 A-Shares (XT)

0.97%

EWS

Asia Singapore (iShares)

0.94%

GAF

Emerging Middle East Africa (SPDR)

0.86%

IDV

International Select Dividend (iShares)

0.85%

IEFA

Europe-Australasia-FarEast Core (iShares)

0.83%

HEFA

Currency Hedged EAFE (iShares)

0.79%

EWJ

Asia Japan (iShares)

0.67%

DBEF

Currency Hedged EAFE (DBX)

0.63%

EWK

Belgium (iShares)

0.62%

EZU

All Eurozone (iShares)

0.61%

HEZU

Currency Hedged EMU (iShares)

0.56%

EWA

Asia Australia (iShares)

0.52%

SDIV

Global SuperDividend (GX)

0.52%

EMLC

Emerging Markets Local Currency Bond Fund (MV)

0.39%

EWN

Netherlands (iShares)

0.32%

HYEM

Emerging Markets High Yield Bond Fund (MV)

0.29%

EMB

Emerging Markets USD Bond Fund (iShares)

0.24%

EDD

Emerging Markets Domestic Debt Fund (MS)

0.14%

PCY

Emerging Markets Sovereign Debt Fund (PS)

0.03%

PCY

Emerging Markets Sovereign Debt Fund (PS) 2

0.03%

GREK

EU Greece (GX)

0.00%

EWQ

France (iShares)

-0.16%

BNDX

Total International Bond Fund (VG)

-0.19%

TUR

Turkey (iShares)

-1.20%

EWI

EU Italy (iShares)

-1.30%

 

 

 

 

 

 

 

 

 

Commodity ETFs

Symbol

Name

Weekly %

Change

LD

Lead Bloomberg SubIndex ETN (iPath)

9.04%

UNG

Natural Gas Fund (USCF)

4.84%

JJC

Copper Bloomberg SubIndex ETN (iPath)

3.05%

BAL

Cotton Bloomberg Subindex ETN (iPath)

2.83%

LIT

Lithium (GX)

2.00%

GAZ

Natural Gas Bloomberg Subindex ETN (iPath)

1.87%

JJU

Aluminum Bloomberg SubIndex ETN (iPath)

1.25%

PPLT

Physical Platinum Shares (ETFS)

0.75%

DBB

Base Metals Fund (PS)

0.50%

SGG

Sugar Bloomberg Subindex ETN (iPath)

0.38%

SLV

Silver Trust (iShares)

0.19%

USO

Oil Fund 03 Month Fund (USCF)

0.09%

DJP

Bloomberg Commodity Bloomberg Index ETN (iPath)

-0.37%

GSP

GSCI Commodity Total Return ETN (iPath)

-0.49%

BNO

Oil Brent Fund (USCF)

-0.59%

DBC

Commodity Tracking Fund (PS)

-0.76%

USL

Oil Fund 12 Month Fund (USCF)

-0.90%

DBE

Energy Fund (PS)

-0.90%

DBP

Precious Metals Fund (PS)

-1.09%

SOYB

Soybeans Fund (TC)

-1.10%

DBA

Agriculture Fund (PS)

-1.25%

JO

Coffee Bloomberg Subindex ETN (iPath) 2

-1.31%

GLD

Gold Trust (SPDR)

-1.36%

JJN

Nickel Bloomberg SubIndex ETN (iPath)

-1.40%

COW

Livestock Bloomberg Subindex ETN (iPath)

-1.62%

CORN

Corn Fund (TC)

-1.83%

JJG

Grains Bloomberg Subindex ETN (iPath)

-2.20%

WEAT

Wheat Fund (TC)

-2.34%

UGA

Gasoline Fund (USCF)

-2.99%

NIB

Cocoa Bloomberg Subindex ETN (iPath)

-3.39%

PALL

Physical Palladium Shares (ETFS)

-6.57%

President Trump’s First Week of Action

https://www.whitehouse.gov/the-press-office/2017/01/28/president-trumps-first-week-action

Week “ONE” for United States President Donald Trump produced an array of emotions for all watching the unfolding events. The following is how two news outlets described the week:

The Wall Street Journal Editorial Board: “President Trump Is Making Short Work Of Campaign Promises…” “President Trump is making short work of campaign promises, and on Tuesday he signed executive orders reviving the Keystone XL and Dakota Access pipelines.” (Editorial, “No More Keystone Capers,” The Wall Street Journal, 1/24/17)

USA Today Editorial Board: Trump “Came Down On The Right Side Of The Debate… By Advancing Construction Of The Keystone XL And Dakota Access Pipelines.” “President Trump, following through on a campaign promise, came down on the right side of the debate Tuesday by advancing construction of the Keystone XL and Dakota Access pipelines, both of which had been blocked by the Obama administration.” (Editorial, “Trump Revives Pipeline Projects,” USA Today, 1/24/17)

Select White House Happenings for January 20-28, 2017 are as follows:

Near Term Market Considerations Week Beginning January 30, 2017

Near Term Summary Considerations:

  • 10-Year US Treasury Yield: Neutral, acting a little bullish with a lower yield potential
  • US Dollar Index: Correcting upside move underway or possible sideways consolidation for a period
  • CRB Index: Global macro forces supportive and providing green-shoot inflationary support
  • $WTIC Light Crude Oil: A market which appears in search of higher highs, fundamentals suggest some corrective price action should be anticipated  
  • Soybeans: Near term price strength remains, which makes one revisit 2016 price action in March, April and May of 2016; fundamentals remain bearish
  • Corn: Consolidating, this market continues to act more bullish than bearish, closing and holding above $3.69 likely implies a move into the $4.15-plus area
  • Rice: Price weakness remains defined in part by global economic, political, and social uncertainties. Overplanting in 2017 given present fundamentals would provide added market challenges
  • Cotton: Bullish, if prices fall below 68-cents corrective price action likely, revaluate price expectations
  • Wheat: Consolidating, needs to close and hold above $4.40 to maintain any upward momentum
  • SPY SPDR S&P 500 ETF: Trend remains positive, prices may need to correct some of their gains
  • QQQ NASDAQ Power Shares: Another strong week, corrective price action needed, but not required
  • EFA iShares ETF - Global Equities Excluding U.S. and Canada: Building momentum
  • EEM iShares ETF, Emerging Market Equities: Range bound –Potentially bullish – Positive for commodities in general
  • MCHI iShares ETF - China Equities Available International Investors: Potentially bullish, momentum appears to be building

Market-by-Market: Near Term Market Considerations Week Beginning January 30, 2017

Charts 1 - 3. $UST10Y - 10-Year US Treasury Yield

Primary Consideration:

  • Neutral: the 10-Year Treasury Yield acting a little bullish with a lower yield potential
  • This is a market that likely builds a trading range for the next one to two years maybe between 2.0 and 4.0, but too early to tell
  • We simply need to allow chart activity to provide guidance
  • Present market structure suggests financial institutions and borrowers are winners at these levels
  • Some suggest the 35 year bull bond market will be over with a yield that holds above 2.6, others at 3.0; Actually, global fiscal and policy intervention may make picking these points premature
  • This is a market that could simply move sideways for a few years and even revisit the previous low or make a new low

Charts 4 - 6. Power Shares US Dollar Index

Primary Considerations:

  • Neutral - The following determines sideways consolidation for a period or a resumption of the Dollar’s move to the upside:
    • 2017 European Union management/mismanagement a key factor in dollar strength or weakness in year ahead
    • Bigger Picture: Global interventionist government and Central Bank activities will define dollar strength or weakness over the next 3 to 12 months, including President Trump’s currency policy objectives

Chart 7. EURO 

  • Potentially bullish near term

Chart 8. Australian Dollar

  • Near term building momentum

Chart 9. Canadian Dollar

  • Potential near term strength

Chart 10. Japanese Yen

  • Potential near term strength

Chart 11. British Pound

  • Possible corrective price action before heading lower

Chart 12. Dow Jones

  • Trend remains up

Chart 13. Dow Transports

  • Trend remains up

Chart 14. S&P 500 Large

  • Trend remains up

Chart 15. NASDAQ Composite

  • Trend remains up

Chart 16. World less U.S. & Canada

  • Positive momentum appears to be building

Chart 17. Emerging Markets

  • Positive momentum appears to be building

Chart 18. Australia

  • Positive momentum appears to be building

Chart 19. Brazil

  • Positive momentum appears to be building

Chart 20. Canada

  • Positive momentum appears to be building

Chart 21. China

  • This China equity remains neutral

Chart 22. Mexico

  • Possible bottom being formed

Chart 23. Japan

  • Positive momentum appears to be building

Chart 24. Russia

  • Price direction likely dependent on oil price firmness

Chart 25. India

  • India is presently dealing with a number of internal issues

Charts 26 - 28. CRB Index

Primary consideration:

  • The CRB Commodity Index appears to be building a base to move higher, which near term would be a primary function of oil price strength leadership and/or broad commodity support, reasonably stable dollar, and belief and confidence in the near term future.

Charts 29 - 31. $WTIC Light Crude Oil

Primary Consideration:

  • A market which appears in search of higher highs, some corrective price action should be anticipated

2017 – Likely primary range $40 to $60 with possible high in $72 area

  • A challenging market being influenced by economic and geopolitical issues
  • Washington Leadership likely bullish U.S. production
  • OPEC and other oil producers have major role in defining 2017 price structure
  • Global uncertainties supportive of prices

Charts 32 - 34. Soybeans

Primary Consideration:

  • Near term price strength remains, which makes one revisit 2016 price action in March, April and May. Given fundamentals I remain concerned about additional price weakness and the culmination of a bottoming process

2017 – Pricing opportunities likely emerge as the year progresses

  • Additional Thought:
    • Market participants appear to be building a risk appetite. Being short means at least having close mental stops

Charts 35 – 37. Corn

Primary consideration:

  • Consolidating, but this market continues to act more bullish than bearish, closing and holding above $3.69 likely implies a move into the $4.15-plus

2017 – Pricing opportunities emerge as the year progresses in corn, soybeans, and wheat

Charts 38 - 39. Rice

Primary consideration:

  • Neutral – Price weakness remains defined in part by global economic, political and social uncertainties
  • Overplanting in 2017 without additional demand source could be highly problematic for 2017 marketing year prices

Charts 40 - 42. Cotton

Primary Consideration:

  • Bullish prices likely into the 84-cent area. Near term if prices fall below 68-cents, then likely corrective price activity underway

Charts 43 - 45. Wheat

Primary consideration:

  • Consolidating, needs to close and hold above $4.40 to maintain any upward momentum

 

  1. Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected]

 

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