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Weekly Crude Update 8.15.2012

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The Israel and Iran geopolitical tension remains a tell tail of where this spread is headed in the short-mid term. Sources say that diplomatic solutions to the tensions are still on the table, and as long as they do the spread will remain in control. I would long the spread in anticipation of a nonviolent solution to the problem. As you can see from the chart below, the spread is much wider than the historical average.

Today’s U.S. crude reserves number should cause a short-term price spike in WTI crude. Right now analysts are expecting high reserves due to lack of demand and increases in supply and crude imports.

CrudeSpread

David Cornes holds a degree in economics from the University of Montana.

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Morning Rage 8.15.2012

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The Hang Seng dropped 1.2% today drug down by China Life Insurance who lost 3.4% today. The
mainland’s biggest insurer was hit by a larger than expected decline in July premium income. Turnover
was down 25% compared to yesterday’s trading. Tencent Holdings slipped .2% ahead of its first half
earnings, which are due out later this week. China Shenhua energy lost 1.6% as spot coal prices declined.

The FTSE 300 is down .6% today after hitting a 4 month closing high yesterday. The Kazakh Group
lost 3.2% after cutting back spending plans. British American Tobacco and Imperial Tobacco are also
suffering today losing 2.5 and 2.2% respectively as Australia’s high court dismissed a case relating to
packaging. Around Europe the DAX, CAC 40 and Madrid index are down 0.5, 0.4 and 0.38% respectively.

The MBA mortgage applications are down 4.5% and the 30 year fixed remains flat at 3.76%.

Nokia is up 5.6% premarket after an announcement of a window’s 8 smartphone in the near future.

Commodities all look similar with crude, natural gas, gold and silver all set to begin the day negative.

Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market.
Comments can be directed to ryghcw19@uww.edu

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Doherty at the Close 8.14.2012

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Michael Kors (KORS) also rose 16.43% after they announced that first quarter earnings nearly tripled.

In Europe, markets were broadly higher with the Stoxx Europe 600 rose 0.7%, closing at the highest level since March, after better-than-expected growth readings from the Continent’s two largest economies. German gross domestic product increased 0.3% in the second quarter, beating expectations. In France, GDP was flat compared with the first quarter but topped forecasts for a slight contraction.

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Trade of the Day (ANF) 8.14.2012

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shutterstock 35457625 2Trade:  Selling the ANF Aug 29-28 Put Spread and 35-36 Call Spread for $.37 total

Risk: $63 per 1 lot

Reward: $37 per 1 lot

Notes:  good risk vs reward that ANF does NOT move the measured move target

UPDATE 9.11.2012  This Spread blew up a little and went to fair value of $1.  Not every Condor will Work.

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Weekly Grains Update 8.14.2012

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On Friday morning, the USDA released their monthly report stating that U.S. corn production will be reduced by 13% to 10.779 billion bushels. A price drop after a number like this simply does not make sense. Analysts expected a corn yield of 127.3 bushels per acre while the surveyed number was 123.4, a significant drop from July’s number of 146 bushels. A drop in expectations like this should cause a rise in corn prices. Apparently traders are taking this time to cover their positions before markets continue to rise. Markets have shown that supply is low. I think that markets will continue to slowly rise as this year’s crop is harvested. Soybeans were reported to have a yield of 2.692 million bushels, the lowest in 9 years.

Wheat estimates came in stronger than expected at 74.67 million bales, causing a pullback in wheat prices. As of Monday, wheat prices have lost 4% since the USDA data release.

In my opinion this year’s grain markets will remain strong. Although wheat is having a pullback, yields are still low for the year across the grains markets and in many analysts’ opinions, it is too late to fix damaged crops.

soyyyyyyyyyyyyyyyyy

David Cornes holds a degree in economics from the University of Montana.

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Morning Rage 8.14.2012

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Hong Kong snaps two days of losses with a 1.1% gain today as investors venture back into Chinese bank
stocks with each of the Big Four banks seen at least a 1% gain on the day. China Mobile had its best day
in two months, adding 2.2%, putting it at its highest since August 27 of 2008. Its shares are up 22% so far
this year and the company is set to report earnings Thursday. Utilities rose with Power Assets and Hong
Kong and China gas both adding 1.2%.

Europe is on the rise today as low figures give way for hopes of new stimulus. The FTSEurofirst is up .4%
as GDP data shows a .2% decrease in the second quarter compared to the first and a .4% decrease
compared to a year earlier. The Eurozone bank index was up .8% today and has jumped 25% since
Draghi’s comments on doing whatever it takes to preserve the Euro. Banco Santander, Unicredit and
Natixis are up 1.4, 1.2 and .9% respectively.

Greece sells 4.063B 13-week treasury bills to yield 4.43%.

A Ford subsidiary in India recalls 130K vehicles for a manufacturers defect in models from 2008-10.

Commodities are set with gold, silver, crude and natural gas all trading up this morning.

Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market.
Comments can be directed to ryghcw19@uww.edu