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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 higher after U.K. Prime Minister Boris Johnson said a Brexit deal has been reached with Brussels. In addition, third quarter corporate earnings reports are coming in mostly stronger than expected.
U.S. housing starts in September were 1.256 million when analysts expected 1.300 million and the more market sensitive residential building permits, which can signal how much construction is in the pipeline, were 1.387 million. The median estimate for permits was 1.335 million.
Initial jobless claims remained near a 50-year low at 214,000 in the week ended October 12 when economists had expected 215,000 claims.
The Philadelphia Federal Reserve October business index was 5.6 when 6.4 was anticipated.
September industrial production was down .4% when a decline of 0.2% was expected and capacity utilization was 77.5%, which compares to the anticipated 77.8%.
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 rallied to its highest levels in almost two months against the U.S. dollar after the E.U. and Britain reached a Brexit deal.
The British pound was higher after British Prime Minister Boris Johnson said, “We have a great new Brexit deal.” However, the gains were given back after the Northern Irish party, the DUP, said it would not vote for the deal.
The Canadian dollar is higher after Statistics Canada reported that manufacturing sales in August increased 0.8%, which was better than the market expectation for an increase of 0.6%.
INTEREST RATE MARKET FUTURES
Flight to quality longs were liquidated in light of the encouraging news on Brexit.
Federal Reserve speakers today are Federal Reserve Member of the Board of Governors Michelle Bowman at 1:00, Chicago Federal Reserve Bank President Charles Evans at 1:00 and New York Federal Reserve Bank President John Williams at 3:20
Market participants believe there is an 88% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at the October 30 policy meeting. The probability yesterday was 85%.
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 under pressure to become more accommodative.
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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