The document summarizes and analyzes recent economic data and events that impact commodity markets. It discusses:
- The July US jobs report which showed 215,000 jobs added and unemployment at 5.3%, a result that was neither strongly positive nor negative. This leaves uncertainty around the timing of the Fed's first rate hike.
- Comments from an Atlanta Fed president supporting a September rate hike if data holds.
- Implications for commodity markets, including that oil and natural gas prices declined last week while uncertainty persists over the Fed and US dollar.
- Upcoming seasonal trends that may lead to natural gas price increases in the next few months.
US dollar strengthening once more as focus remains on the data this weekHantec Markets
Are we set for another improvement in the dollar? There continue to be market reactions to the negative surprises, but there now seems to be a different mind-set to positive data surprises and this is showing in a turn around in sentiment on the greenback. Last week there was a sharp pick up in the Home Starts and Building permits which...
UK assets have been given a significant shot in the arm as the General Election confounded all expectations of the pollsters and returned a Conservative majority government. Broadly speaking this was considered to be the best case scenario for traders and investors with the Tories considered to be the most pro-business, pro-market and pro-wealth creation.
Greece negotiations and tier one US data key for traders this weekHantec Markets
Negotiations between Greece and its creditors (the IMF and the EU) continue, but as yet there is no deal. Greek claims
that a deal was close were swiftly rebuffed by the IMF, leaving Greece still without the final €7.2bn bailout tranche it
needs to pay €1.6bn of debt repayments owed to the IMF in June. However, it would appear a 5th June deadline (for a €300m repayment) is not actually a deadline at all. There is an IMF technicality that allows a lumping together of all
payments, to then be paid at the end of the month.
China and expectations over a Fed rate hike continue to dominate trading sent...Hantec Markets
The build up to Non-farm Payrolls is always much hyped and as we get ever closer to the point of which a rate hike could be announced, the focus on tier one US economic data is magnified even more. On the headline figure 215,000 jobs added with an upward revision of last month to 231,000 is solid if a little unspectacular. Unemployment remains at 5.3% just above the 5.0%/5.2% that the Fed deems to be “full employment”. All fine so far. However, the average hourly earnings fell to 2.1% on the yearly data which remains stubbornly low.
Energy Industry Report: Energy Perspectives - January 2015Duff & Phelps
This edition of Energy Perspectives provides a recap of industry activity in 2014. Despite fairly consistent falling crude oil prices over the past six months, the industry experienced a record number of oilfield (OFS) M&A transactions for the fourth year in a row, achieving 329 announced transactions in 2014. For more detail on recent OFS trends, public comps and deal activity, read the report.
The magnificienty 7 and equity markets review 8Markets Beyond
The April-July 15% equity markets correction did breach the year low but quickly rebounded. Despite muted economic news, no double deep is expected to take shape.
Continue investing in high yielding securities / net cash companies with strong franchise and selected stocks in fast growth economies.
Market fears remain, Brexit in focus stillHantec Markets
As markets have been gripped by increased fear we consider the outlook on forex, equities and commodities this week. We also look at the latest developments in Brexit.
Manufacturing PMI came in at 54.4, half a point higher on the month and nearly a point above forecast. Sterling strengthened by an average of 0.6% after the announcement and adding three quarters of a euro cent. However, despite a UK construction sector purchasing managers' index that was unchanged on the month and half point above forecast.
The magnificent 7 and equity markets review 9Markets Beyond
Turmoil in the Arab world triggered a market correction that was overdue. We are still in a bull market and opportunities to re-enter will soon materialize.
The magnificent 7 and equity markets review 11Markets Beyond
2011 was a bumby year for financial markets and 2012 will be no less hectic. However the US economic picture is improving and as written in early 2011 no double dip to be expected but for FED policy folly.
Global imbalances remain, but the eurozone is where lies the deepest problems which have not been properly addressed.
Remain invested in high yielding equities / net cash companies with a strong franchise and look at strong brands in fast growing economies; stay clear from the bond market and financials.
US dollar strengthening once more as focus remains on the data this weekHantec Markets
Are we set for another improvement in the dollar? There continue to be market reactions to the negative surprises, but there now seems to be a different mind-set to positive data surprises and this is showing in a turn around in sentiment on the greenback. Last week there was a sharp pick up in the Home Starts and Building permits which...
UK assets have been given a significant shot in the arm as the General Election confounded all expectations of the pollsters and returned a Conservative majority government. Broadly speaking this was considered to be the best case scenario for traders and investors with the Tories considered to be the most pro-business, pro-market and pro-wealth creation.
Greece negotiations and tier one US data key for traders this weekHantec Markets
Negotiations between Greece and its creditors (the IMF and the EU) continue, but as yet there is no deal. Greek claims
that a deal was close were swiftly rebuffed by the IMF, leaving Greece still without the final €7.2bn bailout tranche it
needs to pay €1.6bn of debt repayments owed to the IMF in June. However, it would appear a 5th June deadline (for a €300m repayment) is not actually a deadline at all. There is an IMF technicality that allows a lumping together of all
payments, to then be paid at the end of the month.
China and expectations over a Fed rate hike continue to dominate trading sent...Hantec Markets
The build up to Non-farm Payrolls is always much hyped and as we get ever closer to the point of which a rate hike could be announced, the focus on tier one US economic data is magnified even more. On the headline figure 215,000 jobs added with an upward revision of last month to 231,000 is solid if a little unspectacular. Unemployment remains at 5.3% just above the 5.0%/5.2% that the Fed deems to be “full employment”. All fine so far. However, the average hourly earnings fell to 2.1% on the yearly data which remains stubbornly low.
Energy Industry Report: Energy Perspectives - January 2015Duff & Phelps
This edition of Energy Perspectives provides a recap of industry activity in 2014. Despite fairly consistent falling crude oil prices over the past six months, the industry experienced a record number of oilfield (OFS) M&A transactions for the fourth year in a row, achieving 329 announced transactions in 2014. For more detail on recent OFS trends, public comps and deal activity, read the report.
The magnificienty 7 and equity markets review 8Markets Beyond
The April-July 15% equity markets correction did breach the year low but quickly rebounded. Despite muted economic news, no double deep is expected to take shape.
Continue investing in high yielding securities / net cash companies with strong franchise and selected stocks in fast growth economies.
Market fears remain, Brexit in focus stillHantec Markets
As markets have been gripped by increased fear we consider the outlook on forex, equities and commodities this week. We also look at the latest developments in Brexit.
Manufacturing PMI came in at 54.4, half a point higher on the month and nearly a point above forecast. Sterling strengthened by an average of 0.6% after the announcement and adding three quarters of a euro cent. However, despite a UK construction sector purchasing managers' index that was unchanged on the month and half point above forecast.
The magnificent 7 and equity markets review 9Markets Beyond
Turmoil in the Arab world triggered a market correction that was overdue. We are still in a bull market and opportunities to re-enter will soon materialize.
The magnificent 7 and equity markets review 11Markets Beyond
2011 was a bumby year for financial markets and 2012 will be no less hectic. However the US economic picture is improving and as written in early 2011 no double dip to be expected but for FED policy folly.
Global imbalances remain, but the eurozone is where lies the deepest problems which have not been properly addressed.
Remain invested in high yielding equities / net cash companies with a strong franchise and look at strong brands in fast growing economies; stay clear from the bond market and financials.
The US shale oil revolution is a classic example of high prices and technological innovation spurring previously unimaginable increases in production. But can the boom continue despite the drop in global prices, driven by further technological development, or are we set to see some unravelling as margins evaporate?
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
1. See important disclosures on last page 1 www.eqstrading.com
SIGNALS
Apple has lost over $105 billion
in market cap over the last two
weeks. The lost value in market
cap would place Apple greater
than the #62 economy in the
world GDP list, just behind the
country of Morocco. This is why it
makes news when Apple’s stock
goes up or down. With a market
cap of almost ¾ of a trillion dol-
lars, Apple’s market cap is about
the size of the Switzerland’s GDP,
making it #20 on the world list.
In terms of
wealth, if Apple
were a country, it
would be the
55th richest
country in the
world.
Like it or not,
Apple matters,
and the outlook
of the largest
company in the world matters to the economic health and com-
modity demand outlook of the world. However, this week we
have not been waiting on Steve Jobs to come back to life and
turn around Apple—what we were waiting for was the release of
the jobs data from the US Labor Department. (Continued on
Page 2)
All About J-O-B-S
Some good results this week!
*EQS short signals of oil and
products were up on average
17.37% last week!
*Gasoline short was up a strong
8.04% last week for a total gain
of 16.38% since the short call was
made on 7-13-15
**You can achieve these results
with discipline and by following
the EQS daily trade recommen-
dations and using the daily EQS
Stop Loss guidance
I N S I D E T H I S I S S U E :
Jobs Continued 2
Natural Gas 3
Oil and Products 4
Terms and Disclosures 5
EQS TR A D E RE C O M M E N DA T I O N S
THE SOUR C E
F OR C OM M OD ITY
TR AD ING SIGN ALS
Volume 1, Issue 7 August 10, 2015
A Weekly Publication on the Commodity Markets
TM
2. See important disclosures on last page 2 www.eqstrading.com
(Continued from page 1)
American companies added 215,000 jobs in the month of July, while the unemployment rate
remained at 5.3%. The labor force participation rate also remained flat at 62.6%, its lowest level
since 1977.
Economists polled by Reuters expected nonfarm payroll gains of 223,000 in July, with the un-
employment rate at 5.3%. The news was not good, but it was not bad. However what the mar-
ket needed was either a big gain or a big miss, as at least that would have given us some cer-
tainty around the Fed’s next move.
On Tuesday, Dennis Lockhart, the president of the Atlanta Fed, said that he supports a rate hike
at the U.S. central bank's next policy meeting in September. In an interview with the Wall Street
Journal, Lockhart said it would take major weakness in the data to convince him not to move. "I
think there is a high bar right now to not acting, speaking for myself," Lockhart said.
The positive is that jobs are growing and unemployment is stable and actually about where it
should be, but the large concern is that the labor participation rate is only 62.6, which if you
remember back to ECON 101 means that the actual unemployment rate is much higher than
the 5.3% reported as many people have just simply given up hope of finding work and are not
even counted in the jobs data.
As we talked about last week, the Fed is tight lipped, leaving the markets in limbo on exactly
when the first rate hike in over nine years is coming. If there is one thing the market hates, it is
uncertainty. Because the jobs number did not provide any real clarity, it was a huge disappoint-
ment as we still do not have any clear picture of how the Fed will digest the data and what and
when will be their move.
Though the market hates uncertainty, traders can use this uncertainty to their advantage. Vola-
tility creates opportunity, and as EQS teaches our readers, with trading discipline we can make
money no matter what direction the market and the economy moves. It is clear that the market
has finally been waking up to what we have been pointing out for weeks: the world economy is
approaching the end of a business
cycle. The US dollar continues to
have global strength, commodities
are still on a back slide, and now
Wall Street approaches something
that has not happened in over four
years: seven straight down days on
the Dow Jones Industrial average.
It is really all about the jobs. The
jobs data was really a no-win situa-
tion for the market. A big gain and
the Fed was more likely to raise
rates, a big miss and the business
cycle has begun to end and we will
face recession. The data that was
released was neither positive nor
negative, and this could be an even
bigger blow to the markets as it now
throws further uncertainty into an
already fragile world economy.
ALL ABOUT THE JOBS….(CONT.)
Dennis Lockhart, the
president of the Atlanta
Fed, on Tuesday said he
supports a rate hike at
the U.S. central bank's
next policy meeting in
September.
3. See important disclosures on last page 3 www.eqstrading.com
Natural gas prices settled higher for the week at $2.80/mmbtu. The EIA reported Thursday morn-
ing that U.S. natural gas stocks increased by 32 billion cubic feet for the week, ending on July 31.
Analysts polled by Bloomberg expected a storage injection (increase) of 40 billion cubic feet. The
five-year average for the week is an increase of around 53 billion cubic feet. The 52-week low for
natural gas futures is $2.59. One year ago, the price for a million BTUs was around $3.87.
Although demand for natural gas is expected to decline as temperatures moderate across much of
the more heavily populated regions of the United States, natural gas will continue to steal market
share from coal, as many coal-fired power plants are retired in 2015 and 2016 due to EPA emission
requirements. Furthermore, we are approaching a time period where seasonal lows occur, as illus-
trated by the attached bar chart. Watch for a turning point between now and September, when
buyers step in to stock
up and hedge for the
upcoming winter season.
As mentioned in previ-
ous issues of Signals,
EQS advises clients to
pay close attention to a
key resistance line in
tact since February
2014 (see attached
chart). A breach in this
line could break loose a
stampede for the bulls!
Stay tuned, it appears a
turning point is near!
Natural Gas: Close to a Turning Point
Bearish
Natural Gas
Natural Gas Spot Price Seasonal Analysis
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
NumberofOccurences
Annual Low
Annual High
NG Prices
Feb 2014
Aug 2015
4. See important disclosures on last page 4 www.eqstrading.com
Crude and refined product prices declined for the
week, and West Texas Intermediate Crude Oil (WTI)
settled at $43.87/bbl, near a six-year closing low of
$43.46/BBL reached in March. WTI appears to be
testing a
major sup-
port level
that can be
traced back
to 1998
(see at-
tached
chart).
However,
during Fri-
day’s ses-
sion, the
price de-
cline did not
end without
a fight from the bulls. Indeed, buyers were step-
ping in, and ultra-low sulfur diesel was getting the
strongest bid. A weekly report by The U.S. Energy
Information Administration (EIA) and Baker Hughes
revealed that although oil and refined product in-
ventories declined and demand remained strong,
both rig counts and production levels increased,
which helped the bears claw their way to victory.
Friday’s WSJ discussed how rising production was a
theme during the past week as shale drillers report-
ed their second-quarter earnings. Companies are
finding new ways to drill wells faster and cheaper
than before, and many producers are trying to
make up for revenue lost to declining oil prices by
pumping more oil. Specifically, Whiting Petroleum
stated they are setting up the company to run and
grow in a $40/bbl to $50/bbl environment.
IS NOW THE TIME TO BUY CRUDE?
NOT SO FAST...
Bearish
Oil & Refined Products
Relating to the cover story, the jobs report
appeared to be strong enough for many ana-
lysts to feel we may see the Fed hike rates in
September. A combination of rate hikes in
the US and monetary easing in Europe are
bullish for the US dollar, which consequently
is bearish for oil. However, although the US
dollar initially rose after the jobs report, the
DXY (an index of the value of the US dollar
relative to a basket of foreign currencies)
struggled to stay above key resistance at
98.3. See the attached chart that shows the
DXY versus the S&P GSCI (Goldman Sachs
Commodity Index) that illustrates the nega-
tive correlation between the US dollar and
commodities.
So, is now the time to buy crude? Watch the
US dollar and US production levels as a ma-
jor change in these indicators are needed to
shift market sentiment for a rebound in oil
prices.
WTI Oil Prices
1998
2009 2015
DXY (US Dollar) vs GSCI (Commodity Index)
5. See important disclosures on last page 5 www.eqstrading.com
EQS Trading
A Division of EQS Capital Management, LLC
8480 Honeycutt Road, Suite 200
Raleigh, NC 27615
Phone: 919.714.7453
www.EQStrading.com
E-mail: JL@EQScapital.com
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PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. HYPOTHETICAL PERFORMANCE RE-
SULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESEN-
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VERSELY AFFECT ACTUAL TRADING RESULTS.
THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THERE-
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TO LARGE LOSSES AS WELL AS GAINS.
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PROSPECTIVE CLIENTS OF A CTA RECEIVE A DISCLOSURE DOCUMENT WHEN THEY ARE SOLICITED TO
ENTER INTO AN AGREEMENT WHEREBY THE CTA WILL DIRECT OR GUIDE THE CLIENT'S COMMODITY
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OF THE DISCLOSURE DOCUMENT BY EMAILING EQS. THE CFTC HAS NOT PASSED UPON THE MERITS
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APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
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AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED
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THE SOUR C E
F OR C OM M OD ITY
TR AD ING SIGN ALS
TERMS and DISCLOSURES