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Tag Archives: Tariffs

Technically Speaking: The Risk Of A Liquidity Driven Event

Over the last few days, the internet has been abuzz with commentary about the spike in interest rates. Of course, the belief is that the spike in rates is “okay” because the market are still rising.  “The yield on the benchmark 10-year Treasury note was poised for its largest weekly rally since November 2016 as investors checked prior concerns that the U.S. was careening toward an economic downturn.” – CNBC See, one good economic data point and apparently everything is “A-okay.”  Be careful...

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China steel, refining capacity rises as supply-side reforms come under pressure

China’s supply-side reform agenda was launched by President Xi Jinping in late 2015 with a view to stripping out excess capacity that had built up in key industries during China’s emergence as an economic power. Industries targeted in a five-year plan presented in 2016 by the country’s top economic planner, the National Development and Reform Commission, included steel, coal, cement and aluminum. These sectors were deemed to have become too big, too polluting, and in some cases too dependent...

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US-China trade conflict’s mounting impact on commodity flows and demand

The US-China trade dispute has evolved into a very different animal in the past year. After multiple bouts of tariffs and counter-tariffs, on August 23, Beijing slapped a 5% levy on US crude for the first time, targeting a commodity already influenced by the trade tensions, and adding to a swathe of US-origin commodities like propane, LNG and soybeans. This was part of a wider tariff on $75 billion of US imports into China. US President Donald Trump responded with raising tariffs on $550...

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The ISM Conundrum

Bond yields have tumbled this morning, bringing the 10-year US Treasury rate within sight of its record low level. The catalyst appears to have been the ISM’s Manufacturing PMI. Falling below 50, this widely followed economic indicator continues its rapid unwinding. Back in November 2018, at just about 59 the overall index had still been close to its multi-decade high. Over the next nine months through the latest update for August 2019, it has shed almost 10 points. Dropping into the 40s,...

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Sluggish global steel demand pressures iron ore, met coal prices

Global steel mill margins have shrunk in 2019, in turn pushing down iron ore and coke consumption and prices for coking coal. In 2018 Platts benchmark US hot rolled coil (HRC) spot prices exceeded $1000/mt delivered Midwest for the first time since 2008, and the sustained run in steel pricing and demand since 2016 delivered high profits for steel producers.   High global steel prices last year have quickly been forgotten, as offtake from steel buyers in the US and Europe reduced into...

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Technically Speaking: Just How Long Will Markets Keep “Buying” It?

Tighten up stop-loss levels to current support levels for each position. Hedge portfolios against major market declines. Take profits in positions that have been big winners Sell laggards and losers Raise cash and rebalance portfolios to target weightings. We are closer to the end of this cycle than not, and the reversion process back to value has historically been a painful one.” Remember, it is always far easier to regain a lost opportunity. It is a much more difficult prospect to...

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8-Reasons To Hold Some Extra Cash

Over the past few months, we have been writing a series of articles that highlight our concerns of increasing market risk.  Here is a sampling of some of our more recent newsletters on the issue.  The common thread among these articles was to encourage our readers to use rallies to reduce risk as the “bull case” was being eroded by slower economic growth, weaker earnings, trade wars, and the end of the stimulus from tax cuts and natural disasters. To wit: These “warning signs” are just that....

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Insight from Washington: US refiners remain pragmatic amid tariff disputes

Like many ways the Trump administration has reshaped US policy norms, the use of tariffs and tariff threats to address non-trade policy issues with other countries is here to stay, and companies like US Gulf Coast refiners are learning to adapt. That reality has set in for the energy sector not only because of the ongoing trade conflict with China, but also since President Donald Trump’s threat to impose a 5% tariff on all Mexican imports. Although the threat was called off at the 11th...

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Technically Speaking: Market Risk Is Rising As Retail Sends Warning

Given that markets still hovering within striking distance of all-time highs, there is no need to immediately take action. However, the continuing erosion of underlying fundamental and technical strength keeps the risk/reward ratio out of favor. As such, we suggest continuing to take actions to rebalance risk. Tighten up stop-loss levels to current support levels for each position. Hedge portfolios against major market declines. Take profits in positions that have been big winners Sell...

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