Episode 12: Professional Trader Phillip Streible is Looking at Commodities to Breakout

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Andy Millette: I thought it.

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phil: I’m doing great

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Andy Millette: good. I just want to talk here briefly about the markets with you. We got a lot of action. coming in really, actually, today. tell me what your thoughts really on the energy market, specifically oil. We’ve had some movement off the bottom here in the last probably last week.

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Andy Millette: just tell me your thoughts. And what’s the cause of that? Where do you see this going into the rest of the year.

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phil: Yeah, that energy markets have been fantastic. any kind of pull back, you see, in crude well, below, $70 has been met with. Opec taken some more aggressive stance. We’ve seen Saudi Arabia recently cutting production voluntarily, and then also extending those production cuts out. There was a lot of rhetoric about cheap Russian oil kind of floating around in different countries like China and India.

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phil: What we haven’t seen is that Russia actually voluntarily cut 500,000 barrels per day, essentially putting a floor in on crude oil prices and then pushing crude off from there. I think that it’s been kind of a sleeper market, I think, anywhere in the low

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phil: the the high sixties to mid sixties, I think, is a great value zone, for you know, looking for a year end rally. We believe that prices could easily achieve 80 to $85, especially if you see the you know, recession fears go away, and we see more of a soft landing and a recovery.

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Andy Millette: Got it? Well, let me ask you, I guess, to, probably with the maybe this is a little more sick, cyclical, natural gas had an extreme sell off here in the past few months, and then it looks like it’s putting in a bottom.

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Andy Millette: But I’m here. And then, plus we got the colder winter months coming up. and not the too distant future. Where do you see that going

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phil: the summer? I was kinda surprised that with some of these hotter temperatures moving through the Midwest and across the country, you would have saw a little bit more? Demanded a little bit more of a pick up, but I think that globally, I think natural gas supplies are adequate. You know. I think, that the the the war in. You know, Russia and Ukraine. They’re not necessarily weaponizing natural gas like they did before. So we do expect prices to.

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Andy Millette: It’s some kind of rally into the back end of the year especially we get that colder winter. So I would look long term as far as positioning out in natural gas, so speaking of which also this is going in the right, in the face of a supposedly slowing economy. How that or how much it slows is really anyone’s guess, and also the fed

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Andy Millette: being aggressive and raising rates. How are those factors going to impact? the energy markets here, both natural gas and oil?

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phil: Yeah. So I mean, there’s like every every you know, coin has 2 sides. So we’re not quite certain, as far as you know, how long

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phil: what the impact of this this recession. We we do anticipate. Something will happen here. But the economy’s been quite resilient. The jobs the labor sector has been quite tight. You know, we seen robust wage growth we’ve seen. The consumer has just been quite durable. Now the creditness, the credit, worthiness of the consumer. The belts have really tightened up on them. We think that you know corporate spending is gonna come down.

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phil: and we think that they have the effects of, you know the the longer lasting inflation. The interest rates higher for longer is going to ultimately weigh in.

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phil: But as far as the way the markets are interpreting right now, you know, I mean, look at the way the equity markets of rally look at the way that the resiliency of crude all prices and energy prices. If they were really factoring in this hard landing, prices should be significantly lower. But also Opac has been providing that floor on the market. So I think we’re more in this sideways cycle to slightly higher prices.

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Andy Millette: Yeah, I find that interesting, too, is, I was in a moderately barrish camp leading into up into the summer. But again, just the economic data that we’re seeing

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Andy Millette: just it’s maybe confusing if you would. that’s led to some shoppiness. But it just has doesn’t see this, you know. Drop, if you would, a huge drop in the economic activity which I expected that it would. So I’m actually become moderately bullish

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Andy Millette: myself. So Talk to me a little bit about the industrial medals. assuming we do get some kind of slow down. I’m assuming they’re going to drop more. But they still haven’t, really.

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phil: I would say that you, you know, you would think so like something like the copper market should be a lot lower. And it it was kind of surprising that, you know, we’ve been holding in the 3 mid 3 70 s. For quite a while our clients. The way we positioning is we’re more focused on like China and China’s economy, which has definitely slowed down. Just so latest inflation data came out basically flat, showing almost deflationary pressures there.

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phil: Well, I think that China really wants to try and drive their their economy back higher. They, even Goldman Sachs recently wrote a report saying that China is in a slowdown. China came out and said that that was essentially fake news, that you know they they don’t want that perception that they are slowing down. So what they’re doing is they’re taking small shots and some stimulus measures

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phil: cutting some of you know. helping prop up the the the property sector cutting some of the the interest rates just to touch here, and we do anticipate more stimulus will come down the road. So we think that you know, China being 50% of copper copper demand, we think that prices are going to naturally head trend higher. Also, we do believe that the way

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phil: the big push on Ev vehicles the green energy revolution. We think that copper prices should continue to push higher. Our year end target is about 4 bucks. which would match the June high from over the summer. I don’t know if we’ll get back up to like 4, 25 anytime soon. But if my mining supply is unable to keep up with any kind of increase in demand.

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Andy Millette: you’re gonna see prices put Punch through that for box. Got it? do you have any view of really long term? Let’s say so after we get over this economic we have more clarity with economics. And you know, and let’s say, the the market, the global market equity markets start really to take off. And the economy is improve.

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phil: What is your view on the copper market? Then I’m assuming it would be something substantially higher. I really think that copper is like copper and gold, I think, are your 2 best model plays, and you know I know we’ll get to gold in a in a minute. But the the copper market.

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phil: if you look at like lemme inventories right now, they’re like just a couple couple of drawdowns from Punch into like 17 year lows. And if you see that uptick in that demand. You could see how resilient, just on a Cpi print coming in lower than expected. You know the reaction function and the copper market jumping over 2, so prices could really turn into a snowball.

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Andy Millette: In fact, I really like any of these copper producers and copper as a long term play. Who knows? Even the penny might come back to a full value of a penny at some point. Right? let’s talk about the goal market and silver market the precious metals. I did an interview, maybe 2 weeks ago, when we thought we’re probably early, probably looking into August for things to start pricking up again

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Andy Millette: if you would. It looks like gold is putting in a floor around 1,919 and a half. If you would maybe silver around 22 But what do you see the golden silver markets doing through the rest of the 2,023,

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phil: so that on the gold market that 1,900 Co. Corresponds with the 2 and a moving average market, and bounced off that before. I think that when it starts to approach it. I think people look at it like long term value. There’s a lot of safety there. Us. Equity markets up substantially, you know, with the Nasdaq up 30, something percent the first half of the year. I think you got a couple of take a couple of chips off the table, start looking at things like bonds looking at silver, looking at

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phil: the gold market. So It’s really it was looking for a light at the end of the tunnel, as far as

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phil: the Federal Reserve, continuously raising interest rates. now that we’re starting to see the inflation data come down, we’ve seen some a little bit of weaker job growth. We’ve seen. you know we don’t. We don’t necessarily

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phil: believe in the Adp number. The Adp numbers get a little bit more volatile. The side utilizes. You know, the non farm payroll number, which has been a little bit more in line with the expectations, if not slightly weaker than expected. We did see a recent uptick in in in initial claims. So I think that definitely the floor on the back on the gold market has been put in place. I think that prices are now looking forward out like where we were expecting 2 more interest rate.

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phil: hikes. Now, with the new latest Cpi data. We gotta check the Fi Cme’s Fedwatch tool. See if that came down to just one, or if it even cut those expectations in half. So the light at the end of the tunnel. I think you start positioning and gold, and you gotta look at what is the next massive catalyst out there does that

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phil: does not necessarily the hard landing scenario play out, but more that you know that credit, credit, worthiness, credit is of these. the consumer of companies starts to tighten up. It impacts Gdp. And if you remember, back in 2,018 on the third quarter, that’s when Gdp at pay peaked, it started to come down. We also saw you know, that was the top of the corporate profit cycle, and that mark the bottom in the gold market

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phil: and the Federal Reserve. Ultimately they wanted to raise more but they ended up cutting 2, 3 more times, and that mark the bottom in the gold market at 1,050. And it went on, this massive run up to 2,000.

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Andy Millette: Yeah, about that. it. The question I have, or maybe not. Some questions. Just a hunch or observation I have is going into 24 is obviously an election year.

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Andy Millette: and you, as a student and trader of the markets

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phil: no knows what that means is probably going to be a lot lighter fed dealing with that. So yeah, what are your thoughts, and then comments, and that it should be good. Years come on to 24. So if you look at you know the current administration, what would their goals be, they would want to have a robust economy. They would have want to alleviate some of the strain, especially like.

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phil: you know they didn’t. They weren’t able to pass that some student debt relief things like that. They want to get rates back a little bit lower. We do believe that in that first quarter. You’re gonna see Gdp contract. We think that rates will naturally start to come down from there. And so I think that gold gets actually a tail in. And that’s how we get to like 2,500 in the next year. So I know that

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phil: with each, you know, candidate we’ve already experienced, you know former President trump already, before it tends to get a little bit volatile, and he tends to get a little bit more heated, so we’ll see more action in the more volatility, at least. in cross assets, kind of not only in the Us. But across the globe. But I do believe that you know gold is going to give you one of your best opportunities the same thing with that copper market.

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Andy Millette: Excellent! Well, I’m talking here with the Philip Streaml, who’s the chief markets as strategist for Blue Line features. how can people get in touch with you?

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phil: Yeah, the best way is to go to blue line futures.com and register for 3, 2 week trial of the morning express. We basically put out, you know, a playbook here on what’s going to happen on a day to day, and it has some of our bias in some of the actionable trade ideas in the precious metals and industrial metals markets. All right. Thank you so much. Great time. And yeah, we’ll have you on again here pretty soon. Appreciate it.

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phil: Thanks for having me, you better have a good day.