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Alan has been a commodity analyst since 1976, focusing on the fundamental and technical aspects of precious metals, stock index, interest rate and foreign currency markets. He has authored several articles for Futures magazine and Stocks Futures and Options magazine. Alan served on the faculty of Oakton College as instructor of a course entitled “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports. Alan is currently the Senior Financial Economist with ADM Investor Services, Inc.
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STOCK INDEX FUTURES
Traders are looking ahead to the upcoming G-20 meeting in Osaka, Japan on Friday and Saturday, where President Donald Trump and China’s President Xi are scheduled to hold trade talks.
There are three 9:00 central time reports. May new home sales are expected to be 680,000. The June consumer confidence index is anticipated to be 132 and the June Richmond Federal Reserve manufacturing index is estimated to be 4.
At 12:00 Federal Reserve Chairman Jerome Powell will discuss the challenges facing the U.S. economy and the policies of the Federal Reserve.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.
In the overnight trade the U.S. dollar declined to its lowest level in three months before a recovery to slightly higher on the day.
The Swiss franc and the Japanese yen are likely to advance against the U.S. dollar in the longer term.
The Canadian dollar is higher after a report showed Canadian wholesale sales increased more than expected in April.
INTEREST RATE MARKET FUTURES
In addition to Fed Chair Powell, other Federal Reserve speakers today are Atlanta Federal Reserve Bank President Raphael Bostic at 11:00 and St. Louis Federal Reserve Bank President James Bullard at 5:30.
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its July 31 policy meeting. A July rate cut would be the first reduction in a decade. A second rate cut is likely later this year.
Longer term, higher prices are likely for the interest rate futures market in light of a coming new round of central bank easing of credit.
Gold futures advanced to six year highs.
Central banks were massive buyers of gold in 2018 and are continuing their buying spree this year.
It should be viewed as a sign of strength for gold futures to be as strong as they are in spite of limited inflation pressures.
In addition, gold futures have a historical tendency to trade higher one to two months in advance of the Fed’s first fed funds rate cut.
Also, with approximately $13 trillion of world debt yielding below zero percent, gold, which basically yields zero percent, comparatively has a “positive yield.”
Expect higher prices for gold futures.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
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