Good morning,

 

DXM0  99.265  +0.728              GCM0  1640.1  -14.0                                      ESM0  2540.00  +16.00                  CLK0  20.21  -1.30

 

President Trump announced the COVID-19 precautions that have been put in place in the country are to remain through April 30, for now.  With the situation constantly being monitored and reviewed, that date is likely to change.  The President is optimistic/hopeful that the country can begin to really pick itself back up by June 1.  Equity futures were lower to open the week last night, and have been back and forth, being up a tad at the moment.  Clearly, the severity of the economic implications from the precautions being taken will be long standing.  There will be a lot of back and forth price movement, as the markets continue to control risk and allocate investments across assets as needed.  That being said, tomorrow is month and quarter end, and asset re-allocation has been taking place and should continue with this. 

 

Oil futures have come under pressure overnight, with the lead WTI contract trading briefly below $20.   The extension of many portions of the US economy being shut down dampens further the expected demand for oil consumption.  In addition, the Saudi Arabia / Russia impasse on production limits appears to be escalating a bit, as Russia made comments saying it could withstand oil at $25 (Brent) while Saudi Arabia has said it has more oil to hit the export market with. 

 

Gold prices are approximately $10 lower at this moment, having traded $20 higher than settlement in the overnight hours, primarily as a safety harbinger with global governments getting more aggressive on the pandemic fight.  China stepped in overnight, and cut its reverse repo rate, along with injecting 7B worth of stimulus into the market.  (this helped support the dollar overnight).  The gold market is continuing to work off last week’s delivery squeeze rally, which saw prices scream to $1700.

 

Grain markets are higher today, with the exception of corn which is being tugged lower on the oil/ethanol trade.  Soybeans, soymeal and wheat are all firm this morning, as increased demand is expected as the country will remain on lockdown longer.  This will put a bid into staple products, such as flour and bread.  Soybeans also have an opportunity to capture some additional market share.  Pro-active steps being taken in South America to control the spread of the pandemic by placing restrictions at the ports slows the distribution of the newly harvested South American crops, creating the US window.  Tomorrow brings the Quarterly Stocks report and Planting Intentions forecast.  An increase to the amount of acres planted for both corn and soybeans is expected.  With the latest plunge in corn prices on the ethanol demand story, some are questioning if there may be a late switch to soybeans from corn.  Most feel it’s probably too late in the game for any significant changes to take place.      

 

Coffee also has a bid this morning for similar reasons, the extension of the shelter in place increases demand for the staples, along with the SA port restrictions.  Coffee prices were hit hard on Friday, in a combination of long liquidation, increased amount of available inventories and demand questions.  Cocoa prices are up slightly today, having been under pressure most of last week as the seasonality demand is likely not to be as strong this year.  Cotton prices are also down sharply, both last week and today, as demand is certainly in question with the global economic lockdown to be in place longer than originally thought.

 

There is a lot of data on the economic calendar this week, however not sure how much of it really matters.  It is very safe to assume all the manufacturing index numbers will be very soft, as will Friday’s non-farm payrolls data.  The most significant piece of economic news, should be the jobless claims data on Thursday.  Following the 3+ million claims filed last week, the market is expecting to see a number as much as double that this week.                

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SK0                       890.75                   916.00                   925.25

CK0                      375.25                   382.75                   400.25

WK0                     545.25                   542.00                   528.50

KWK0                  470.50                   465.50                   462.50

MWK0                 536.00                   539.00                   548.50

SMK0                   303.5                     305.4                     310.2

BOK0                   29.56                     31.27                     30.65

CLK0                    44.13                     50.99                     52.62

GCM0                  1597.5                   1552.4                   1522.7

LHM0                  78.340                   83.235                   86.030

LCM0                   104.960                 111.570                 110.885

KCK0                    110.20                   116.80                   112.20

CCK0                    2655                       2611                       2518

CTK0                    64.48                     66.36                     65.19

SBK0                    13.52                     13.39                     13.11

JOK0                    100.90                   102.25                   106.50

HGK0                    252.00                   263.60                   264.45      

HOK0                   147.83                   169.83                   177.70

XBK0                    139.75                   162.05                   167.98

NGK0                   1.880                     2.059                     2.191

 

Thanks,

Mike

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404