top of page

Weekly Memorandum 4/20/2020

The big mover this morning is Crude Oil, which is down big-time and trading around $11.50 as of this writing. The collapse in this commodity market speaks to the level of deflationary pressures witnessed throughout the economy. One very key observation worth note here is that the June futures contract is about $9-10 higher than the May futures contract. This is known as contango and is often construed as a bullish sign within a futures market. We continue to monitor this situation closely, because the longer prices stay this low, the higher the probability of massive defaults in the energy sector. Not only could this cause a domino effect in capital markets, but it could also lead to a supply-shock, and perhaps even stagflation.


Equities are down slightly this morning as well, after posting very nice gains last week. It was stated then, "It looks like the equity rally could go on for a little while longer. Ideally, we see a secondary low form over the next few months that is higher than the lows formed in March." This continues to be what we are looking for -- a secondary, and preferably higher, low. Even so, we are witnessing several very clean set ups in the market, which suggest some momentum plays could be coming back into the picture. Some of these were shared in detail in this past weekend's publication of the Mercator Letter.


The U.S. Dollar remains steady, and T-Notes continue to consolidate their gains, as QE-Infinity roars. Alas, another week has passed, and the dollar still hasn't "collapsed." Maybe the hyper-inflationists will finally admit they're wrong? Unlikely. That's okay. In every market, somebody has to take the other side of a trade.


Precious metals pulled back slightly last week, but cryptocurrencies had a nice week. We will be publishing another edition of the Mercator Crypto report next week as well. Stay tuned!

37 views0 comments

Recent Posts

See All
bottom of page