Currencies Start to Move- December 4th, 2020

The pandemic continues to be front page news with the potential for vaccinations to start this week. The FDA is to meet to decide the emergency use application for Pfizer’s vaccine on Dec. 10. The Operation Warp Speed group said they will be ready to have the vaccine for front line workers within 1-2 days after, potentially meaning December 12-15 to start vaccinations if the FDA decides quickly. A giant risk is if the FDA does not approve the vaccine. All the pre-selling by the FDA, both government parties, the Pfizer and BioNTech companies, suggest smooth sailing. This could be a sniper bullet that comes out of nowhere but it would be one hell of a turn, considering the UK has approved it. There is immense pressure to approve. Let’s hope this goes well, because a lot of lives depend on an early vaccine.

This week the bond charts and currency charts jumped on the commodity bull market bandwagon. The long end of the bond market saw prices drop; yields rise as money moved away. The currency markets also showed new breakouts on the commodity currencies (British Pound, Canadian Dollar, Aussie Dollar). This newsletter does not show the commodity charts. They are on this weeks’ video. I used a set of charts from the other three asset classes to confirm the commodity move. Bonds, currencies and commodity country equity markets.

OPEC held their meetings this week and added more drama to an already volatile oil price. In the end, they agreed to increase oil production by a ½ of 1% per month through the first quarter. That means 500,000 barrels a day coming back onstream. I am in the camp of $50 oil at year end (high COVID infections make this harder), $60 by April and a potential rosy scenario of even higher for the back half of the year 2021. I am not alone. Incoming Oil Bull Market. On the video I talked about CNQ and what $1/barrel/year means in terms of revenue, approximately 500 Million/$1. $10 price change is $5 Billion. I should have clarified that government royalties reduce that.

Summary: I am bullish and continue to be. While the much publicized, Fear and Greed Index on CNN’s site might register a high reading of 92, that does not mean the bull market run is ending. Merely that a lot of investors are optimistic. With three COVID vaccines all showing high efficacy in trials, it has only been 4 weeks with the good news. Hardly a reason to see the world markets sell off. The bears appear to be asleep. People shorting stocks like TSLA are taking the hard road until there is at least a signal of weakness.

Let’s jump into the charts. Click below to view the entire PDF.