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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
U.S. stock index futures are sharply higher after China said overnight that it was planning to roll out additional stimulus in an attempt to address an economic slowdown. In addition, there was support after German Finance Minister Olaf Scholz hinted that Germany may initiate an approximately $55.55 billion new fiscal stimulus package.
Also, there appears to be some progress in the U.S.-China trade situation after President Donald Trump tweeted over the weekend that trade talks with China were going well and that Chinese officials could soon be visiting the White House for additional negotiations.
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.
The euro currency advanced on German fiscal stimulus hopes.
Gains in the euro were limited by news that consumer prices in the euro zone in July eased more sharply than first estimated, as inflation remained well below the European Central Bank's target.
The Japanese yen is lower after a report showed Japan's exports dropped for an eighth straight month in July.
In light of the reported plans for new fiscal stimulus in China and Germany, flight to quality longs were liquidated in the Japanese yen and the Swiss franc.
In spite of long liquidation today, the main trend is higher for the Japanese yen and the Swiss franc.
INTEREST RATE MARKET FUTURES
Flight to quality longs were liquidated on reports of overseas fiscal stimulus plans.
Federal Reserve Chairman Jerome Powell will speak at the Jackson Hole Economic Policy Symposium on Friday.
Market participants believe there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at its next meeting on September 17-18.
Another rate cut after that is very likely before the end of the year.
In the longer term, higher prices are likely for futures, especially at the long end of the curve, as most major central banks, including the Federal Reserve, are likely to embark on a new round of easier credit policies.
In spite of lower prices today, the main trend is higher for the interest rate futures markets, especially the 30 year Treasury bond futures.
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