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Trump Ties Brazil, Argentina Steel Tariffs to U.S. Farm Woes

Eoin Treacy's view A link to today's video commentary is posted in the Subscriber's Area. Some of the topics discussed include: Dollar eases as investors weigh the impact of additional monetary stimulus. stocks ease back, oil quiet, gold steadies, bonds weak.

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Video commentary for December 2nd 2019

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: Dollar eases as investors weigh the impact of additional monetary stimulus. stocks ease back, oil quiet, gold steadies, bonds weak. 

 

 

Trump Ties Brazil, Argentina Steel Tariffs to U.S. Farm Woes

This article by Brendan Murray and Joe Deaux for Bloomberg may be of interest to subscribers. Here is a section:

Linking his trade agenda with his Fed criticism in an early morning tweet, he said the two South American countries “have been presiding over a massive devaluation of their currencies, which is not good for our farmers.”

The president’s action amounts to retaliation against two nations that have become alternative suppliers of soybeans and other agricultural products to China, grabbing market share away from the U.S. Rural voters, including farmers, are a key constituency for Trump as he heads into the 2020 presidential elections.

While the steel tariffs could crimp trade, the Latin American countries gain much more shipping crops to Chinese buyers. In the first 10 months of the year, Brazil has shipped $25.5 billion in farm products including soybeans and pork to China. That’s more than 10 times the value of steel and iron product sold to the U.S.

 

Eoin Treacy's view

This action is as much about the persistent strength of the Dollar as it is about pandering to farm voters in swing states. The US Dollar has been trending higher against the vast majority of international currencies for the last few years. The growth differential the USA has enjoyed has been one factor in that strength but the Fed’s policy of balance sheet contraction and hiking interest rates was more important.

 

 

OPEC+ Gambles That U.S. Shale's Golden Age Is Over

This article by Javier Blas for Bloomberg may be of interest to subscribers. Here is a section:

Perhaps the biggest problem for OPEC isn’t American shale but rising output elsewhere. Brazilian and Norwegian production is increasing, and will increase further in 2020. After several years of low prices, engineers have made many projects cheaper, and the results are clear.

Norway’s Johan Sverdrup oil field, the biggest development in decades in the North Sea, started up earlier this year, months ahead of schedule and several billion dollars under its original budget. And Guyana, a tiny country bordering Venezuela in Latin America, is about to pump oil for the first time.

“For OPEC, it remains a difficult first half of 2020,” Russell Hardy, Vitol’s chief executive officer, said in an interview. “U.S. production is growing strongly this quarter and in the first half of next year we’ll add non-OPEC production from Norway, Brazil and Guyana.”

The cartel knows well that’s taking a gamble. The group’s own estimates show that if it continues pumping as much as it has done over the last couple of months -- roughly 29.9 million barrels a day -- it would supply about 200,000 barrels more crude daily than the market needs on average next year. The oversupply would be concentrated in the first half, when OPEC estimates it needs to pump just 29 million barrels a day to prevent oil stocks building up.

Still, OPEC officials, speaking privately, believe the world’s supply and demand balance could be tighter than many expect -- a big change from the past three years. They see non-OPEC output growth falling short of forecasts while global demand increases could be higher than expected.

 

Eoin Treacy's view

The decade long commodity bull market that began in the early 2000s encouraged massive investment in additional supply. That new supply generally came in at a higher marginal cost of production which means that while $40 was previously a peak for price rallies, it now represents a floor.

 

 

Consumer Conference: Strategy Sector Views + Analyst Stock Picks

Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

 

Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area

The stock market is one of the best lead indicators we have. It is literally a discounting mechanism and yet a cottage industry has evolved attempting to predict when the next economic contraction is going to take place. The number of such indicators has proliferated over the last year with alarm being expressed from many corners that a recession is a virtual certainty in the near term. Let’s think instead what the consistency of the trend tells us.

 

 

Email of the day - on p&f charts

I am very pleased to see you resurrecting point & figure charting in your weekly commentary. A graduate of the Spring 1990 Chart Seminar, I cut my teeth on David's p&f charts, and still find them to be an extremely useful tool for filtering out the non-essential, "noisy" price movements that can cloud our judgement. As you Brits say, "well done you!"

 

Eoin Treacy's view

Thank you for this supportive email and I intend to include p&f charts in the daily commentary when they provide valuable insight.

 

 

Eoin's personal portfolio: precious metals long initiated

 

Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.

 

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