Grain Futures, Crypto, and AI For Research & Idea Generation

Top things to watch this week

The Economic Calendar:

MONDAY: President’s Day Holiday: U.S. Markets Closed

TUESDAY: Leading Economic Indicators (9:00a CT)

WEDNESDAY: MBA Morgage Applications (6:00a CT), Raphael Bostic Speaks Speaks (7:00a CT), Redbook (7:55a CT), 20-Year Bond Auction (12:00p CT), Michelle Bowman Speaks (12:00p CT), FOMC Minutes (1:00p CT)

THURSDAY: Jobless Claims (7:30a CST), Chicago Fed National Activity Index (7:30a CT), PMI (8:45a CT), Existing Home Sales (9:00a CT), Philip Jefferson Speaks (9:00a CT), EIA Petroleum Status Report (9:30a CT), EIA Natural Gas Report (10:00a CT), 30-Year TIPS Auction (12:00p CT), Patrick Harker Speaks (2:15a CT), Lisa Cook Speaks (4:00p CT), Neel Kashkari Speaks (4:00p CT), Christopher Waller Speaks (9:00a CT)

FRIDAY: Baker Hughes Rig Count (12:00p CST)

Key Events:

• The President’s Day holiday is Monday and U.S. markets are closed.
• Lite economic reports with home sales and PMI.
• Key earnings reports on Nvidia and Walmart.
• FOMC minutes are due out on Wednesday.
• Fed speakers active: Jefferson, Cook, Harker, Kashkari, and Waller.
• U.S. Treasury bond auctions and the futures market reaction.
• ECB minutes are due out on Thursday.

STOCK INDEX FUTURES

The S&P 500 futures finished the week lower -0.34%, after two hotter-than-expected inflation readings. The Nasdaq-100 futures closed the week down -1.48%.

The higher inflation data prints have investors rethinking the timing and extent of the interest rate cuts that the central bank has penciled in for this year.

Higher interest rates hit small-cap stocks the most. Despite that, the Russell 2000 traded +1.16% higher last week.

75% of S&P 500 companies have beaten EPS estimates for Q4, below the 5-year average of 77%, but above the 10-year average of 74%.

INTEREST RATE FUTURES

The recent January CPI report is a stark reminder that the United States’ inflationary challenges may persist despite previous resolution expectations.

U.S. CPI came in higher than expected. The January Year-Over-Year Consumer Price Index reading printed at 3.1% vs an estimated 2.9%.

The market now sees no chance for a rate hike in March, with Fed swaps shifting the highest probability of a rate cut to June. See probabilities below.

Leading up to the December 2023 meeting, the prevailing sentiment among most Federal Open Market Committee (FOMC) members was a steadfast commitment to prolonged high interest rates to drive inflation back to its 2% target rate, even if it meant risking economic recession. The prioritization of taming inflation outweighed concerns about short-term growth setbacks.

Federal Reserve Chairman Jerome Powell expressed confidence that reducing inflation from its current level of 4% to the target rate of 2% would not pose a significantly greater challenge than the preceding drop from 6% to 4%.

Source: CME FedWatch

CHANGING NARRATIVE ON U.S. INTEREST RATES

Wow, the narrative changed fast after higher-than-expected CPI (inflation) data.

Former Treasury Secretary Lawrence Summers sees “Meaningful Chance That Next Fed Move Will Be a Hike.”

Source: Bloomberg

CORN & SOYBEAN FUTURES

Both corn and soybean futures touched fresh three-year lows last week.

According to Food Business News, “grain futures dropped Thursday after the U.S. Department of Agriculture forecasted larger crop inventories for the 2024-25 marketing year amid waning global demand for U.S. supplies.”

The WASDE report in May should provide a better assessment when information on spring plantings and survey-based estimates of farmers’ planting intentions are available.

A factor being watched by traders and providing some support for corn is talks of farmers applying fertilizer early in response to abnormal temperatures thawing out fields. Dry soils and seasonally warm temperatures have triggered light fieldwork.

CRYPTO & BITCOIN FUTURES

The news and narrative are positive for crypto markets. So far in 2024, Bitcoin prices are up +24% and Ethereum is up +22%.

Coinbase (COIN), the largest U.S. crypto exchange, outperformed analysts’ Q4 earnings and revenue expectations.

Key Takeaways:

• Coinbase exceeded analysts’ Q4 earnings and revenue expectations, fueled by increased cryptocurrency prices.
• Reported EPS of USD 1.04, significantly surpassing the estimated USD 0.02.
• Revenue stood at USD 953.8M, outperforming the forecasted USD 826.1M.
• Trading volume on the exchange doubled compared to Q3, reaching USD 154B.
• Anticipates generating USD 410-480M in subscription and service revenue in Q1 2024.
• COIN’s shares surged +8% in after-market trading following the announcement of results.

AI FOR RESEARCH AND IDEA GENERATION

Traders and asset managers use AI for research and ideas generation.

Finding a key concept and phrase count from a 40-page research report on the Natural Gas market took about 30 seconds to produce.

traders can now focus on topics that matter; the impact of lower prices, warm weather, high production, and the significance of LNG capacity additions. It also emphasizes the effects of colder temperatures, storage forecasts, domestic demand stability, and the Golden Pass LNG project delay on export forecasts and market dynamics. ​

asset class performance sheet

These performance charts track the daily, weekly, monthly, and yearly changes of various asset classes, including some of the most popular and liquid markets available to traders.

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