Hello traders everywhere. Tax Reform has taken center stage this week as the House approved its version of the legislation. We now wait on the Senate who is still debating its own plan.
I feel like the market is uncertain about the tax bill's ability to move to the next stage of approval, thus letting some volatility enter the picture as indicated by the VIX and the recent market action over the past few days. The VIX hit it's highest level since August.
Elsewhere, bitcoin is hovering just under $8000. Crude oil jumped to $56 a barrel as Saudi Arabia, and OPEC moved to dispel doubts over Russia's readiness to extend output curbs. The Japanese yen gained the most in more than two months against the dollar and the emerging market shares headed for the highest close in six years.
Key levels to watch next week: Continue reading "Stocks Dip On Tax Reform Concerns"
One year has passed since President Donald Trump was elected to office. That month I wrote a post about copper’s ultimate monthly performance compared to other commodities thanks to the new president’s promises of huge infrastructure rebuilding.
Below is a 1-year performance chart of copper to see how the metal has been doing since Election Day.
Chart 1. 1-Year (from November 8th, 2016) Copper Performance
Chart courtesy of tradingview.com
Cooper gained a hefty 25% for the period with a peak of around 33% that it hit last month. In the post-election months copper exploded to the upside, but then the euphoria in the market was changed with profit taking erasing earlier gains. Continue reading "Copper Update: 1-Year After The Election Of Donald Trump"
Crude prices bottomed in the current price cycle during the third week of June. Subsequently, there has been a surge to the highest crude prices in two years. My theory is that the market has priced-in a geopolitical risk premium given the de-certification of the Iran nuclear deal by President Trump as signaled by the White House on October 5th.
Another factor has emerged. It has become increasingly clear that the DOE’s estimates of weekly U.S. crude production have overestimated the actual monthly figures, as reported two months in arrears. The errors since April have been large. Some have concluded that American shale oil production is not as big of a countermeasure to rising oil prices as had been believed.
Continue reading "Oil Price Surge May Become OPEC's Worst Enemy"
Be careful what you wish for. That’s my modest advice to some bankers and their government regulators who want to ease up on bank oversight.
An article in the Wall Street Journal last week reported that several banks around the country are dropping the Federal Reserve as a regulator. The actions so far seem innocent enough, and perfectly reasonable in the examples mentioned, but they did conjure up some bad memories of how the housing bust – and subsequent global financial crisis – got started.
Here’s the story.
According to the Journal, Little Rock-based Bank of the Ozarks in June opted to ditch its holding-company structure, which means it is no longer regulated by the Fed. Now, as a bank only, and not a BHC, it will be regulated solely by the Federal Deposit Insurance Corp.
Saving money from having two layers of regulation was the main motivator for the bank. George Gleason, the bank’s CEO, said, “We didn’t really need to be regulated by both.”
The bank, which has about $21 billion in assets, is the largest bank to make such a move, but it’s not the only one. Continue reading "Let's Not Relive The Past The Hard Way"
Hello traders everywhere. Bitcoin (CME:BRTI) is staging a comeback today recovering more than $1,000 after losing almost a third of its value in less than five days as traders started buying back the volatile cryptocurrency.
The drop started mid-week last week with Bitcoin falling to a low of 5,645.66 on Sunday culminating a 5-day streak of losses. As trading opened today, Bitcoin rose as much as 14% before backing off the highs in afternoon trading.
Most traders believe that the fall had been driven by a decision on Wednesday to abandon a planned software upgrade that could have split the cryptocurrency in a so-called "fork." A move that had initially had a positive impact, sending it to a record high of $7,823.46 on the view that this marked a resolution of a long-term dispute.
But some were disappointed that "Segwit2x" fork had been abandoned. It would have increased the capacity of the "blocks" transactions are processed in, thereby reducing competition to get payments processed and lowering transaction fees.
Key levels to watch this week: Continue reading "Bitcoin Fights Back"