Errol Tech and others

[malleefarmer]

The old saying China sneezes the wold gst pneumonia hmmmm bit more serious than that now

https://www.abc.net.au/news/2020-02-03/interest-rates-coronavirus-pandemic-economy-contraction/11922348 https://www.abc.net.au/news/2020-02-03/interest-rates-coronavirus-pandemic-economy-contraction/11922348

[jazz]

They are injecting $1.2T yuan into the system this afternoon. Markets likely to be up.

Another day of extend and pretend for the Chinese economy.

[ajl]

They are injecting $1.2T yuan into the system this afternoon. Markets likely to be up.

Another day of extend and pretend for the Chinese economy.

You think they are going to get a day out of that? More serious question: what is farmland worth now that China has hit the skids? Some has come up in proximity to my operation recently.

[flea beetle]

You think they are going to get a day out of that? More serious question: what is farmland worth now that China has hit the skids? Some has come up in proximity to my operation recently.

Depends how many want it. $300,000-$800,000 per quarter. Your guess is as good as any.

[macdon02]

Lumber futures says everything is roses in the USA. My old mentor played in them considerably and his rule of thumb was it was great indicator of the mood of the nation. When in doubt, see if people want to build houses, it's an excellent indicator of what the people on the ground are thinking. Outside reversal up on weekly and monthly.

[burnt]

Lumber futures says everything is roses in the USA. My old mentor played in them considerably and his rule of thumb was it was great indicator of the mood of the nation. When in doubt, see if people want to build houses, it's an excellent indicator of what the people on the ground are thinking. Outside reversal up on weekly and monthly.

Copper is usually considered to be the barometer, I thought.

[jazz]

You think they are going to get a day out of that? More serious question: what is farmland worth now that China has hit the skids? Some has come up in proximity to my operation recently.

The days of BTOs hauling canola off the combine just died. Wonder if any of them have the stomach for storing 500,000 bu of canola.

[macdon02]

Copper is usually considered to be the barometer, I thought.

Well, i guess the line of thought is, if the average guy isn't prepared to fork over several hundred thousand to build a house, he likely isn't that optimistic on retaining a job and being able to afford it the next 10 years +. Copper is more an industrial market, demand for electronics, cars, equipment etc primarily manufactured in China to some degree. Anything, and i mean absolutely everything that is dependent on Chinese use, looks like it's gonna blow chow, crude, copper, cotton, beans, pork, canola.

[TechAnalyst]

Sorry about the delay Mallee, a bit tied up.

Commodities associated with Chinese imports have been dealing with uncertainty around the virus the same way they have since the 2008 market meltdowns – sell first and ask questions later. The recovery from the lows in the ag markets today suggest traders may be starting to view things a bit more rationally.

Corn has merely moved to the lower end of its recent trading range while wheat markets have actually been in an orderly bull market correction (about 40 cents below their high in Chicago after an 80 cent rally from mid Nov) and are close to triggering buy signals on daily chart indicators.

It has been the oilseeds that have really taken it on the chin but that could be trade related, not virus. Instead of making significant symbolic purchases of soybeans upon signing of the trade deal, China has done everything possible to do the opposite. Between proclaiming need and market conditions will dictate purchases and following that with a boycott of business. One would have to assume it is to display their displeasure over the entire trade war. When they have disappointed markets in the past, they use the ensuing price break to their advantage and begin to buy at much cheaper prices. If you assume they do need the soybeans and have a long way to go to even reach their 30 MMT+ purchases made in 2017, you would expect them to do the same here and begin to take advantage of the price break.

Back to the coronavirus impact on markets, the trade will likely be looking for signs of containment. A few days with very little increase in the number infected will be interpreted as the worst is over and efforts to prevent the spread were successful. Bargain hunting should follow and the oilseeds would be prime candidates for a significant rebound.

Regarding interest rates and risks to the stock market, I’m affraid the greatest dangers that lurk there are not virus related. The article you had linked to mentioned the issues in the US repo market. Something is preventing banks from lending to each other in the overnight market forcing the Fed to step in and provide funding. No one will give an honest answer why. In 2007 it was the banks fear of mortgage backed securities being worthless. If this is the corporate level version where corporations were lent money with no collateral (similar to the homeowner Ninja – no income no job application loans of the last crisis), the financial markets may have much more to worry about than a virus. The weekly US treasury charts have buy signals that suggest all-time record highs could be seen this year (translating into modern history record low interest rates).

Hopefully the last paragraph is wrong…

[macdon02]

Last paragraph is what I'm seeing as well. 30's are headed for 180 again. Twas a 3 year "reaction".

[furrowtickler]

Thanks Mac and tech .... some good insight 👍.

[jazz]

Regarding interest rates and risks to the stock market, I’m affraid the greatest dangers that lurk there are not virus related. The article you had linked to mentioned the issues in the US repo market. Something is preventing banks from lending to each other in the overnight market forcing the Fed to step in and provide funding. No one will give an honest answer why.

Not that hard to figure out. Looks like somebodies derivatives portfolio got out of hand and its a technical insolvency being propped up. Banks will always lend to each other and buy each others backed lending. Even in 2008, other banks bought up distressed assets from Bear Sterns as they went out of business. Some institution is holding a portfolio nobody wants to buy or prop up. Gotta be deutsche bank.

[Oliver88]

Lumber futures says everything is roses in the USA. My old mentor played in them considerably and his rule of thumb was it was great indicator of the mood of the nation. When in doubt, see if people want to build houses, it's an excellent indicator of what the people on the ground are thinking. Outside reversal up on weekly and monthly.

Lumber company stock prices are all higher this morning due to reports in USA.

BNN was discussing this.

[macdon02]

Lumber company stock prices are all higher this morning due to reports in USA.

BNN was discussing this.

Don't listen to BNN. They never say sell. They come up with reasons to stay in halfway through the carnage. It's paid advertising moreso then informational. Look at their promotion of pot stocks for example. McCreath is decent and in my eyes the exception

[errolanderson]

Expect stock market volatility to pick-it-up as market now torn between global slowdown and a massive central bank liquidity injection. Gold has been the casualty this week . . . now breaking its uptrend.

Tesla stock all over the map with little reasoning . . . Soars, than tumbles nearly 20 percent today. Dow soars to record highs, NASDAQ struggles to hold head above water.

Soybeans trying to draft behind equity gains, but Brazil Real currency now at record lows. China demand for U.S. product remains muted. Canola recovers on soyoil gains tied to the India / Malaysia dispute impacting veg oil purchases.

Markets difficult to call as new factors can appear in overnight markets. But commodities will likely remain under pressure as the debt game has killed off growth potential. Central bankers remain in the ‘Land of Oz’ believing they can create inflation via money printing, but ain’t working on incredible debt loads. Rates heading lower this year as deflation remains a major threat. Stock markets running higher on this reality and juice, but clock now appears well past midnight on this one.