The Highlights of USDAs 2023 Commodity Outlook // Where Stock Prices Are Headed in 2023
The Commodity Report #92
Welcome to another 11 people who subscribed to the Commodity Report during the last week, bringing the total subscriber count up to 4.851.
USDA Agricultural Outlook
The agency estimates that roughly 46% of Ukraine’s wheat production lies in areas where the war is currently threatening the planting process.
US Soybean Crush Margin remains very high and therefore continues to support soybean meal prices
USDA is expecting a larger uptick in planted acres for Wheat and Rice but a large drop in planted acres for Cotton.
Moreover, the agency expects agricultural prices to mean revert all across the board.
Also - the USDA forecasts a larger trade deficit in the agricultural sector throughout 2023.
The agency also expects that China will remain the most important agricultural trade partner but that its significance shrinks.
Also interesting - here is how the USDA expects farming input costs will develop this year.
Last but not least - farm income is still set to fall from the record high of last year.
Where Stocks Are Headed in 2023 // Intermarkets #4
In this week’s episode, Jordan and I discuss where the broad US equity market is headed in 2023. To be quite frank - the upside seems very limited.
We’re breaking it down really easily. What market participants want to see is a FED pivot - or at least no new rate hikes as well as a continuation of the loosening of financial conditions. Those two factors alone would be in my opinion reason enough for asset prices to go up at this point in time.
But here comes the problem. Since 2020 the world has changed. From the GFC until Covid we had an economy that was running on QE. The problem with QE is that it is addictive - market participants want more and more of it in order to prop asset prices up. But as inflation remains way too elevated and seems to be stickier than the consensus estimated. The result is that there won't be any new liquidity injections in the US or Europe any time soon as inflation remains a major problem.
In my opinion, we have never had such a scenario in history. What one should invest in is a compromise between the 70s with the double dip inflation and the GFC in 2008 in order to be able to navigate through the equity markets accordingly.
Watch or hear it on Youtube Video or Spotify Podcast.
The Conference Board Index continues to signal a recession
The US Index remained on a downward trajectory, but its rate of decline moderated slightly in January, Nevertheless, the trajectory of the US LEI continues to signal a recession over the next 12 months.
Check this out as well
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This week look out for the following:
Durable Goods Orders and Pending Home Sales on Monday
CB Consumer Confidence and Richmond Manufacturing Index on Tuesday
ISM Manufacturing PMI on Wednesday
ISM Services PMI on Friday
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Till next Monday, Lukas
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