Play Turner’s Take Podcast Episode 236

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New Podcast

Today we talk about why the stock market valuation are so much higher than what their earnings suggest and why it is likely to continue.  We also dive into the energy, grain, and livestock markets.  There are some seasonal spreads in corn and soybeans that we like and we are still bullish on soybean oil, crude oil, and the deferred contracts for hogs and cattle.  Make sure you take a listen to this week’s Turner’s Take Podcast!

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Macro Markets

The stock market continues to rally we still like buying the dips.  We understand that valuations have run ahead of earnings but the market if forward thinking and believes better days are ahead.  The Fed has unlimited resources and like it or not, they are a supportive force in the stock market.  The Fed is now buying investment grade corporate bonds.  This is on top of keeping the short term interest rates low and their treasury and mortgage backed security purchases.  The 200 day moving average (green line) should be major support going forward.

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Emini S&P 500

Energy

This is a very interesting article on why crude oil prices are likely to average less than $60 during the next business cycle.  There is an argument between Russia, Saudi Arabia, and the other OPEC nations about what is a good price for crude.  Saudi Arabia wants prices in the $70s to pay their national budget but Russia and some other nations realize $50 to $60 is more in line for capturing market share.  There is a real difference of thought about margins vs market share.  The higher the price, the better the margins.  The lower the price the more market share the low cost providers gain.  Russia seems to want the market share and Saudi Arabia want the higher margins.

I still like Dec Crude Oil and I think we eventually fill the gap around $43.50.  Our long term targets for 2021 are changing. If Russia only needs crude oil to be $50 or higher and they are after market share, they could be the nation that drives price going forward.  I still like buying Dec Crude on the dips and our price target remains $43.50

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Dec Crude Oil

Ag

During the podcast I talked about three season spreads.  The first two were bear spreads.  Selling Sept Corn and buying Dec Corn was the first. The second was selling Sept KC Wheat and buying Dec KC Wheat. I also talked about the Aug vs Nov soybean bull spread.