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Tuesday, June 23, 2015
Investors have become a bit more optimistic about the possibility of a Greek bailout deal being reached after EU officials actually call the country’s new budget proposals “a positive step forward.” This is a big change from sentiment expressed towards previous proposals. The European Central Bank (ECB) also offered up some relief by again raising the ceiling on emergency liquidity funds to support Greek banks, which seemed to ease the pace of bank withdrawals yesterday. The problem is I’m starting to hear more professional traders talking about a possible lose-lose scenario following a Greek and EU debt deal announcement. The theory is if EU leaders do NOT reach some-type of a compromise with Greece, the fears surrounding a banking meltdown become more of a reality and contagion across the EU becomes a more serious concern. These concerns would obviously push the U.S. dollar higher. If the EU and Greece leaders are able to ink some type of new deal, it may bring along more monetary manipulation by Draghi and the ECB. It more than likely also opens the door for the U.S. Fed to raise interest rates. Many insiders believe if the EU can avoid a meltdown with Greece and put at least a temporary bandaid on the situation or kick the can further down the road, it gives Janet Yellen and the Fed a window of opportunity to make a move an raise rates. In turn both situations, good or bad may eventually push the U.S. dollar higher and ultimately weigh on U.S. corporate earnings. Here at home today, Fed Governor Jerome Powell will be speaking on monetary policy in a Q&A format at a Wall Street Journal breakfast in Washington, D.C.. Traders will then be digesting the latest Durable Goods data and a couple of housing reports. As of this morning the U.S. dollar and the stock market are slightly higher, with crude oil steady to lower.

Group says TPA is ‘key to successfully negotiating trade agreements’

Release Date: 2015-06-11

The American Feed Industry Association (AFIA) has strongly urged members of the House of Representatives in a letter to vote “yes” for Trade Promotion Authority (TPA), stating, “TPA is key to successfully negotiating trade agreements vital to the growth of the U.S. animal food industry.”

AFIA, which represents 75 percent of the commercial animal food produced in the U.S., explained the breadth of the feed industry, as it indirectly represents 70-plus percent of the cost of producing meat, milk and dairy products.

“With the passage of TPA — and subsequently new trade agreements down the line — the feed industry will have better access to growing global demands,” said Gina Tumbarello, AFIA director of international policy and trade.

Tumbarello noted last year alone the U.S. exported more than $10 billion worth of animal feeds, animal food ingredients and pet food.

“Passage of TPA sends a clear message to our trade partners that U.S. representatives have unambiguous authority to negotiate these agreements,” AFIA wrote. “TPA ensures negotiating partners have confidence in the United States’ ability to live up to the terms of any negotiated agreement because Congress cannot change the draft treaty prior to voting to approve or disapprove the deal.”

AFIA firmly believes a lack of TPA for this administration will likely scuttle other pending trade agreements, such as the Trans-Pacific Partnership and the TransAtlantic Trade and Investment Partnership. If these agreements collapse, the U.S. loses new export market opportunities for agricultural products.

“We need trading rules developed on sound science — rules that create an equal, level playing field. Passage of TPA can provide that,” said Tumbarello.

TUESDAY, JUNE 09, 2015
U.S. investors are finding little reason to push stock prices higher as they face a myriad of unanswered questions both here at home and internationally. The Dow Jones is now in negative territory for the year following three consecutive weeks of declines. The recent pullbacks aren’t stemming from any new developments, rather they are spurred by growing anxiety as we get closer to next weeks Fed meeting and an overall lack of “motivational headlines” to attract new money needed to further fuel the bullish campaign. Greece and their EU counterparts are supposedly in talks that may kick the can out to March of 2016. Certainly this is not being viewed as a solution, but rather simply prolonging the inevitable. Traders also appear a bit more concerned about the Chi- nese “bubble” which continues to inflate. Not only will the trade this week be digesting several key Chinese economic numbers, but an event that many big money managers are monitoring is whether the MSCI will allow top yuan-denominated stocks into its influential Emerging Markets Index. From what I know, a lot of funds have reportedly been buying up select Chinese stocks ahead of this decision and the event has been very much hyped in the Chinese press, which in turn has a ton of Chinese retail investors placing long bets. The worry is if the answer ends up being “no”, a massive knee-jerk type selloff could en- sue, in turn sending shockwaves through the rest of global markets. On the flip side, a “yes” could provide major bullish enthusiasm. I believe the decision will be announced this evening after the market closes, so there could be some potentially odd market moves come Wednesday morning. Today here at home, we will see a more detailed look at the U.S. job market with the release of April JOLTS report. Analysts will mostly be looking at the number of jobs that are going unfilled, which indicates a lack of qualified candidates. That’s not necessarily “slack” in the labor, something the Fed is watching closely, but it is problematic for employers in that the only way to fill those positions may be to start up- ping the compensation. That in turn eventually adds to inflation, the other major card the Fed wants to see played before raising rates. As for crude oil, it seems the market is keep- ing a closer eye on Iran, believing they could quickly add new surplus to global supply if sanctions are lifted by the June 30th deadline. Something else I find interesting is the fact many U.S. shale producers are saying that OPEC’s strategy of flooding the market with “supply” is failing, because the low prices have simply forced the U.S. producer to become even more efficient…perhaps lower energy prices are here to stay for an extended period?