**Russia is providing a special status for war-torn eastern Ukraine  as “a step in the right direction”. The Poroshenko government in Kiev cautioned that a drop in Russian natural gas supplies could hobble the EU this winter.

**Yesterday Obama drew a hard line on sending U.S. forces into “another ground war in Iraq,. This  pledge does not preclude small groups of commandos operating in the shadows of Iraqi army units under guise of providing advice.

Australian police halted an alleged ISIS plot to abduct and behead a member of the public!

**Voters in Scotland are deciding whether to seek independence – it looks as if the NO to independence should win out.

**China’s new-home prices fell in all but 2 cities monitored by the government in August, as tight credit damped demand despite local home-purchase restrictions were dropped. China is not immune to global economic slow downs!

US$ is moving higher as fueled by Janet Yellen’s FOMC comments where there will be no rate hikes- leaving the US $ organically stronger relative to the J¥ -where the $ is at 6 yr. highs relative to the ¥. The € is encumbered by the Scot vote, the ECBs Draghi’ s inactions which has led to modest TLTRO chatter which has spurred speculation of a potential QE program. The world it seems, is desperate to stimulate as the US economy swims in subterfuge of 2%+ growth.

Global Equities are higher everywhere save Hong Kong (-1.1%). The DJIA putti gin new highs again dragging up other indexes. Interests rates will remain low til mid 2015potentially through mid 2017. The real gist of yesterdays announcement was the Fed also provided an updated set of policy normalization (exit) principles and plans. I’m bullish and expect to see 2060 by year end.

US treasuries are lower as expected following the FOMC announcements yesterday. Market participants responded to the hawkish elements of the FOMC release with 14 members of the Fed now seeing the first hike appropriate in 2015 vs. 12 in June. That logic  fuels the $ and discounts the treasuries as it lifts equities! It may be tempting to buy a point lower.

Metals are being crushed in the overnight trade. All metals are lower! The spin of China opening a gold market to foreigners isn’t helping. Simply put the Fed once again crushed and smothered the gold bugs! Gold is at the Jan 2014 price levels. Once it pierces the $1200 level its back to Feb 2011 pricing. Base metals following Chinese housing, manufacturing, global manufacturing…..in the face of a stronger US$,its an all to bearish trade.

Energies are flat in the overnight trade. The threats to Libyan crude supplies are diminished and has led to lower Brent pricing. The WTI/Brent spread is at $5.80. Yesterdays EIA data showed a crude increase of 3.6M bbls -its 1st increase in 5 weeks. gasoline inventories are dropped 1.6M bbls.  The demand for gasoline is at 8.98 M bbls a day, its least demand since July. Distillates grew to 279,000 bbls to 127.8M bbls the highest level in 50 weeks. I missed buying this week rally and its very tempting to sell above $94 with a target blow $91. The Nat gas EIA data will be out this AM, I’ll update.

Grains are again a mixed bag in the overnight trade with corn & wheat lower, beans and meal higher, bean oil lower. The stronger US $ is keeping a lid on US purchases as it reach’s 4 yr. highs against most majors. Harvest yields from the southern US are coming in good to excellent with 200+ yields in corn and 60+ in soybean- both stellar numbers per ace.  Many funds have already shorted this leg down, with their net short as of last week the highest in 8 years, raising doubts as to where further selling will come- leaving as I say; the upside fore the next big move! We’ll likely dance lower, call it a rumba dance – small and tightly ranged- I’ll look to buy than!

Softs continue to be a mixed bag in the overnight trade. Sugar has seen fresh short covering in the Oct contract only as its up nearly 2%, OJ is potentially breaking out to the down side, finally joining sugar and lagging behind coffee. Cocoa needs to remain below $3,300 to keep me bearish on it. The short covering in sugar isn’t a surprise and will likely follow the coffee spin of last month. Sugar & cocoa are the 2 biggest winners of the week (so far) its all a rally to sell. The stronger US$ is more woe for cotton!

Respectfully yours,
Jim Moen

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