Data-Driven Commodity Research, The Commodity Report

The Commodity Report

Data-Driven Commodity Research

A unique newsletter about commodities and macro analysis in a weekly format.

Commodities

<ul><li>The Federal Reserve has done a spectacular job of keeping inflation expectations “anchored” in this market, despite multi-decade high levels of inflation.</li><li>From the perspective of the Federal Reserve, it’s important to have well-anchored inflation expectations because this can help to keep actual inflation close to the central bank's target rate.</li><li>When inflation expectations are well-anchored, households and businesses are more likely to base their decisions on the assumption that inflation will remain stable and close to the target rate. </li></ul>

The Federal Reserve has done a spectacular job of keeping inflation expectations “anchored” in this market, despite multi-decade high levels of inflation.From the perspective of the Federal Reserve, it’s important to have well-anchored inflation expectations because this can help to keep actual inflation close to the central bank's target rate.When inflation expectations are well-anchored, households and businesses are more likely to base their decisions on the assumption that inflation will remain stable and close to the target rate. 

<ul><li>US manufacturing contracted in November for the first time since May 2020 as output weakened in the face of a third-straight month of shrinking orders.</li><li>According to data released Thursday, the ISM’s gauge of factory activity slid to 49 from 50.2 in the prior month.</li><li>The measure has fallen in five of the last six months and stands below 50, the threshold separating expansion and contraction, for the first time since the pandemic lockdowns.</li></ul>

US manufacturing contracted in November for the first time since May 2020 as output weakened in the face of a third-straight month of shrinking orders.According to data released Thursday, the ISM’s gauge of factory activity slid to 49 from 50.2 in the prior month.The measure has fallen in five of the last six months and stands below 50, the threshold separating expansion and contraction, for the first time since the pandemic lockdowns.

<ul><li>The world economy will be as weak next year as it was in 2009 after the financial crisis as the conflict in Ukraine risks becoming a “forever war,” the Institute of International Finance said.</li><li>Global growth is expected to slow to 1.2% in 2023, according to the IIF.</li><li>The slowdown will be led by Europe, which is impacted most by the war, according to the IIF. </li></ul>

The world economy will be as weak next year as it was in 2009 after the financial crisis as the conflict in Ukraine risks becoming a “forever war,” the Institute of International Finance said.Global growth is expected to slow to 1.2% in 2023, according to the IIF.The slowdown will be led by Europe, which is impacted most by the war, according to the IIF. 

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Despite $IWM already hitting our price target at 200-day MA/YTD downtrend, and the $SPX getting to within 1% of our target at 200-day MA, we see this 1.5-month rally continuing.</li>
<li>We expect further upside as long as the 1.5-month uptrend channels remain intact on the SPX and IWM, and we believe that breakouts above their 200-day MAs could be coming</li>
<li>Breakouts above their 200-day MAs that would likely signal the end to this bear market.</li>
</ul>


Despite $IWM already hitting our price target at 200-day MA/YTD downtrend, and the $SPX getting to within 1% of our target at 200-day MA, we see this 1.5-month rally continuing.
We expect further upside as long as the 1.5-month uptrend channels remain intact on the SPX and IWM, and we believe that breakouts above their 200-day MAs could be coming
Breakouts above their 200-day MAs that would likely signal the end to this bear market.


Small- And Mid-Cap Indexes Poised to Break Out?; Further Upside Expected; Buys Within Cyclicals

<ul><li>The Rabobank issued a research note last week where they forecasted that prices for agricultural commodities like coffee, feed grains and oilseeds could dip next year as many major economies enter recession, but also stated that they will remain high in historical terms.</li><li>We think the general call is correct, but the timing isn’t. We already see this dip move playing out at the moment.</li><li>Just take a look at coffee, cotton, oil, or copper. We believe this dip in the long-term cyclical bull market will end towards Q2 of 2022 before the rally in many commodity markets resumes again as demand strikes back.</li></ul>

The Rabobank issued a research note last week where they forecasted that prices for agricultural commodities like coffee, feed grains and oilseeds could dip next year as many major economies enter recession, but also stated that they will remain high in historical terms.We think the general call is correct, but the timing isn’t. We already see this dip move playing out at the moment.Just take a look at coffee, cotton, oil, or copper. We believe this dip in the long-term cyclical bull market will end towards Q2 of 2022 before the rally in many commodity markets resumes again as demand strikes back.

United States

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals. It is a nonrenewable resource, also known as a fossil fuel, which means that it can't be replaced naturally at the rate we consume it and is therefore a limited resource.

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Crude Oil (CL1 COM COMDTY)

The Commodity Report #81

The Federal Reserve has done a spectacular job of keeping inflation expectations “anchored” in this market, despite multi-decade high levels of...

The Commodity Report

The Commodity Report #80

US manufacturing contracted in November for the first time since May 2020 as output weakened in the face of a third-straight month of shrinking...

The Commodity Report

The Commodity Report #79

The world economy will be as weak next year as it was in 2009 after the financial crisis as the conflict in Ukraine risks becoming a “forever war,”...

The Commodity Report

Small- And Mid-Cap Indexes Poised to Break Out?; Further Upside Expected; Buys Within Cyclicals

Despite $IWM already hitting our price target at its 200-day MA/YTD downtrend, & the $SPX getting to within 1% of our target at its 200-day MA, we...

Vermilion Research

The Commodity Report #78

The Rabobank issued a research note last week where they forecasted that prices for agricultural commodities like coffee, feed grains and oilseeds...

The Commodity Report

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