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I Hear Him... April 19th, 2019 by John Gross

Last year at this time, things were looking pretty good. The Big Bull they call Big Red was travelling north.

He crossed the $3.00 latitudinal line in March of 2018, and by mid-April had made it to $3.15, with his sight set on reaching $3.50 by mid-summer.

Regrettably though, in early June, Big Red heard the first shots fired in the trade war, prompting him to do an about face and head back down to safer ground.

The poor guy spent the rest of 2018 hiding out, but recently we’ve heard some rustling in the market, the sounds of which are reminiscent of Big Red starting to snort again.

Coincidently, we are getting a few other curious signals from the market, prompting us to keep a closer ear to the ground, eye to the sky, and nose to the grindstone, as our radar scans around for more information.

On April 1st, the April / May spread stood at a +40 point contango; went to -0- on the 12th, and into an 80 point backwardation on the 17th. The following day, the back went a bit further out with Apr / Jun at - 45 points and Apr / Jul at -10 points.

Also, the Cash to 3s in London was in a backwardation during most of March; moved to a $20 contango on April 8th, but narrowed to just +$8 on Thursday.

So, what is the market trying to tell us?

We’re not entirely certain yet, but it sounds like, looks like, and feels like Big Red wants to get back on the northern trail.


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