Morning Minutes 09/25/2018

Morning Minutes

Oil Keeps Climbing Ahead of Trump UN Speech

September 25, 2018
10:00 am EDT

At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

North American stock markets are off to a positive start today. The S&P/TSX Composite is up another 50 points or 0.3% this morning with Metals up 1.0% and Energy up 0.75% leading the charge. US indices have regained their footing after Monday’s tumble with the Dow up 0.2%. Overseas, the big move was a 1.6% drop in the Hang Seng. This comes in reaction to the news that China has called off trade talks with the US while under the threat of additional tariffs, leaving the door open to further escalation of the US-China trade war. Meanwhile, US bond prices keep sinking and treasury yields keep creeping upward leaving me to wonder if China is starting to quietly unload some
of its US treasury holdings.

Today investors should get a better idea of what President Trump is thinking on foreign policy when he speaks to the UN General Assembly starting at 10:15 am EDT. With midterm elections about six weeks away, a tough stance on foreign policy appears likely whether related to trade disputes with Canada and China, sanctions related to Iran and North Korea or other issues. Usually political speeches don’t have much of an impact on markets, but the level of belligerence in his tone (conciliatory seems highly unlikely at this point) could have an influence on trading in commodity markets.

Crude Oil is active again this morning. Brent Crude is building on its breakout over $80.00/bbl, climbing another 0.8% to trade above $82.00. WTI is up 0.5% trading near $72.00/bbl ahead of this afternoon’s API inventory report. The combination of slowing US supply growth, supply constraints in Canada (pipeline capacity), Iran (sanctions), Venezuela (crumbling economy/state crisis) and Saudi Arabia/Russia (production limits unchanged), and strong demand from a strong US economy has put a squeeze in the market and tailwind behind energy prices.

Energy stocks have also started to respond to higher prices. In Canada yesterday, junior energy producers in particular have showed significant gains in relative strength this week.

SIA Wealth in the Media:
Colin Cieszynski appeared on BNN Bloomberg recently, speaking about Relative Strength, Oil, interest rates, stock market action and more.
https://www.bnnbloomberg.ca/video/u-s-bonds-are-something-to-keep-an-eye-on-market-strategist~1497785

Colin Cieszynski was quoted by Kitco News on what the Barrick-Randgold deal could mean for gold and gold stocks.
https://www.kitco.com/news/2018-09-24/Barrick-Randgold-Merger-Good-Sign-For-Gold-Market-Analysts.html

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