A Few Thoughts Before Vacation

We at Minter had been expecting that the end of June to end of July market action would be highlighted by range trading for the most part.

The past month in the 4 major commodities we follow, has seen some movement with Silver down close to 6%, Copper down 4.6% and Brent Crude up 2%, but in reality, when compared with price action for the past 12 months, pretty calm.

In global equities, we expected supportive markets until we see the Fed waver on inflation.  This hasn’t happened yet and equities have held in with the Nikkei being the only loser of note the past 30 days.

Even the USD has been a bit uninteresting this month so far.

With the main focus on the handicapping of inflation, it is worthwhile having in the back of our minds, what may upset the rosy Federal Reserve picture that the current high inflation numbers are indeed transitory!

  1. Ongoing supply chain challenges have been blamed for causing shortages and price pressure.  They may last longer than the market expects, causing continued pressure on prices?
  2. Will the difficulties businesses are having finding workers, and retain staff, continue to feed through and cause wage inflation to increasingly contribute to price pressures?
  3. Will the upcoming 3.5 trillion USD stimulus package which may start hitting the economy in late 2021, contribute to possible increased inflation pressure?
  4. U.S. Senate just passed legislation to ban the import of products from China’s Xinjiang region.  While the amount of exports is very small compared to the total Chinese exports, and the U.S. has put in sanctions earlier on the region, this may increase the hostilities between China and the U.S. going forward.  Could contribute to price pressure.
  5. “Fit for 55”:  In very short summary, the focus on cutting down emissions over the next decade, Europe is looking to enact a plan to cut greenhouse gas emissions by 55% before 2030

                       Areas that will be affected:

                       Transportation will be in focus:  clean cars, planes and ships

                       More stringent price charging for pollution

                       Putting in place a Carbon border Adjustment Mechanism, where EU will put a price on imports of steel, aluminum, cement, fertilizer and electricity, starting in 2023.

                       Large boost for renewables, moving the renewable energy target up by 5 to 10% from the current target in 2030.

One could write forever regarding the opportunities, challenges, political issues and total costs of the FIT for 55 climate package. I will refrain, but it is pretty plain that in order to achieve the targets and goals outlined in the EU package, there will be a high cost! How it all gets paid for will most likely be a combination of taxes, fees, government grants etc. etc. It is reasonable to expect that there will be many worthwhile projects and some that are not. There will be higher prices to pay across many products and there will be pressure on related commodities and other products that will be needed to achieve the above goals. It seems reasonable that there could well be an inflationary consequence in some important sectors.

A break and close of the $1,840 level opens for a test of $1,865.  Support is at the $1,810/15 level and at $1,780

Our trade recommendation to buy Norsk Hydro on break and close above 57.25 has been triggered. Target is 64 and stop is at 55.

Contact us if you are interested in receiving real time trading signals. In doubt? Check out our track record below!

TickerDate OpenedEntry PriceStopTarget PriceCurrent Price% Change
LONG Ocean Yield (OCY:xosl)2021/03/1930.2028.50 (27.00)40.0030.74+1.79%
LONG Saga Pure ASA (SAGA:xosl)2021/06/282.922.703.502.865-1.88%
LONG Aker ASA (AKER:xosl)2021/07/05673.00630.00825.00631.00-6.24%
LONG Copper (COPPERUSSEP21)2021/07/05434.00415.00490.00428.70-1.22%
LONG Norsk Hydro (NHY:xosl)2021/07/1557.2555.0064.0057.64+0.68%

Visit our Position Tracker to look at all of our realized trades and proven track record! 
2018: 45 Trades, Hit Ratio 53,66%, Profit +35,87 %
2019: 31 Trades, Hit Ratio 45,16%, Profit +26,97%
2020: 52 Trades, Hit Ratio 39,22%, Profit +69,27% 

– Mark W

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