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Are The Markets On Spring Break, Shellady Asks

Ag commodities face a strong dollar.

The U.S. Stock market continues to lurch from one headline to another. Waiting for new news and moving in a binary way. At times, it feels like it wants to punish as many people at one time as possible.

The markets are the markets.

First there is oil. After the stories of a massive supply situation on our hands, oil has found a base and it trading back above $50 per barrel. Was the move below $50 per barrel a head fake?  Was the move above 2.60% in the 10 year Treasury yield the same head fake?

These are the things that have traders vibrating in the corner of the room, asking for a blanket and a bottle of milk. There have been rumors of more OPEC action and the shorts got a little ahead of themselves. The $45 per barrel oil price level was what those in the trade were targeting as their downside support. We really didn’t make it south of $47, so the shorts clearly weren’t that committed.

So just like the 10-year yield, we creep back into that $50 to $55 dollar range. We are stuck - just like the leadership in Congress.

It is becoming frustrating watching Congressional lawmakers puff their chests and stomp their feet, but when it comes down to it, the laws that they have been harping about for the last 7 years don’t seem to have bothered them enough to come up with an alternative plan.

In my youth, my father would say, don’t just complain, come up with a solution. Maybe some of these so called ‘leaders’ could take a bit of old fashioned advice.  The only thing worse than bad policy is having the opportunity to fix it but come up empty handed.

Confucius once said (apparently) ‘Perfection is the enemy of good’. If we wait around and go round and round to try and get it perfect, we will have missed our opportunity. At an early age, another valuable lesson my dad taught me was this - ‘Be decisive. Right or wrong, make a decision. The road of life is paved with flat squirrels that couldn’t make a decision’.

That is what is great about this job and these markets. Get in there and get going. The market will tell you pretty quickly whether you are right or wrong. He also fine tuned his decision making process to one of ‘ready, SHOOT, aim’. That way, if his shot was wrong, he could quickly change directions and get in on the trend rather than the ‘analysis paralysis’ that his cohorts would employ. 

Commodities Markets

The markets too, feel like they are on spring break. I have written about commodities, as of late, because I was concerned about their lack of a bid in the face of a cheapening dollar. It is safe to say that I am still concerned, as the dollar has started to turn around and commodities are not.

Copper is the outlier, holding on to its gains and basically trading in a range from the beginning of March up until now. Other than that it has been a lackluster performance all around. Watch this space.

The other big story – only big story – is the performance of bonds. There are a lot of people, much smarter than me that believe that the bond bull market is over. They cite the increasingly better economic data combined with the hope – not fact – that the president will be able to get something or anything done on his economic agenda.

If these ideas get derailed, then all the bets are off. That is the feeling of the bond market. Bonds are the ‘Missouri’ of the market – they are the ‘Show me’ of what we trade. Bonds are the ‘what have you done lately for me’ product.

They tell us that we still have some nerves and volatility on the horizon. The stock market is valued in many different ‘touchy feely’ ways and is trying to tell us that everything will be all right in the end. Maybe that is correct. But, the question is does the average investor have the stomach for it?

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Most Recent Poll

Will you have enough on-farm storage for harvest?

I just want to see the responses
45% (25 votes)
38% (21 votes)
No, it’s going to be a bin-buster
7% (4 votes)
Maybe, depending on yields
5% (3 votes)
No, I am looking at new bins or temporary storage
4% (2 votes)
Total votes: 55
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