China meets GDP expectations, equities rally

Financials: Mar. Bonds are currently 27 lower at 158’08, 10 Yr. notes 11 lower at 128’03.5 and 5 Yr. Notes 6.5 lower at 119’26.7. The lifting of some Iranian sanctions in response to adherence of mandated nuclear enrichment policies has put some pressure on energies over the last few days and has given the market (equities and bonds) a bit of a comfort zone to once again be in “risk on” mode. China’s 4th quarter GDP came in at 6.8% just below expectations of 6.9%. My last letter put resistance in Bonds in the 157’00 area where I would start looking to the short side of the market for short term trades. Obviously I have been beaten up a bit as the market sailed through this level trading as high as 159’24. Eurodollar spreads (long nearby/short deferred) have also worked against us as the trade has been discounting the possibility of 4 rate hikes this year and have now priced in only 2-3. I continue to hold long 5 Yr./short 10 Yr. spreads but will look to exit some time in the near future.

Grains: Mar. Corn is currently 4’4 higher at 367’4, Mar. Beans 8’0 higher at 887’0, Mar. Wheat 2’6 higher at 476’4 and Mar. KC Wheat 2’0 higher at 476’0. Last week the long KC/short Chi. Wheat spread closed above even money giving me reason to continue holding this spread. I will be a buyer in Corn under 358’0 as this market starts to look technically constructive. A close above 375’0 could generate a buy signal.

Cattle: Live and Feeder Cattle continue to slide as demaqnd remains slow and redmeat inventories continue to build. That being said, I will try the long side April LC should the market trade below 126.00 which would fill the chart gap left Dec. 21st.

Silver: Mar. Silver is currently 15 cents higher at 14.05 and Feb. Gold 4.00 lower at 1086.50. We continue to hold a small long position.

S&P's: Mar. S&P’s are currently 25.50 higher at 1900.50. Technically the market has held the August 24th 2015 low of 1831.25, making a recent low of 1849.50. The market has broken on slowing global economic news (particularly China) and has rallied this morning on newsthat China has met GDP expectations. I feel that such dramatic rallies proviude selling opportunites and will try the short side of the market in the 1903-1913.00 area.

Currencies: As of this writing the Mar4. Euro is currently 42 lower at 1.0816, the Yen 60 lower at 0.8495, the Pound 46 lowr at 1.4216 and the Dollar Index 36 higher at 99.38. We have “rolled” the Mar. Yen 85.00 calls into the Mar. 87.00 calls at 54 pounds taking our original investment off the table , so to speak. We remain short the Dollar Index which is against us at the present time.