Iran Deal All But Done

In trading during this holiday-shortened week, markets were up and down. They finally settled back down in the black, but only after big losses on Wednesday that ate up nearly all of Tuesday’s rally. Despite the mid-week momentum, markets ended trading on Friday essentially flat. The falling bond rates we saw at the end of the week could be a leading indicator that trading will open down on Monday morning.

In overseas trading this week, markets were all over the place. Japan had a huge 1,500 point rally that catapulted the Nikkei out of the doldrums. In Hong Kong, the Hang Seng -- which is China’s de facto exchange -- snapped a losing streak and posted a net gain for the week of over 3%.
Whether or not that means this latest collapse is over with remains to be seen, but they had a good week which helped to reverse some losses and consolidate gains for the strongest of their companies.

The European exchanges were generally flat, due mostly to an immigrant crisis that’s currently taking place in the already-battered EU. Germany, which is bearing the brunt of the trouble, managed to eke out barely 1% in gains this week. Markets there had a big mid-week roller coaster, racking up gains only to give them back. The story was much the same in London, although the UK fared slightly better with gains of over 1.25%.

The Iran Deal is All But Done

The President has yet to sign off on the lifting sanctions, but the Iran deal looks to be all but done. Dissenters don’t have the Congressional votes to override a veto so, barring some last-minute political maneuvering, the deal looks like it will go forward.

This could have major implications outside of the political realm, since Iranian oil is set to be sold legitimately on the world stage for the first time in over a decade. This could have big implications for the already-battered price of crude oil. Iran is a major producer, but the sanctions have forced them to sell their oil on the black market to countries like Russia and North Korea.

Now that Iran will be able to bring their oil to market legitimately, what’s in store for the price of crude? Probably a drop, although it won’t be right away. The country’s oil producing infrastructure is in need of major upgrades, some of which might be put in place by American companies as the sanctions lift.

Once the country is exporting their oil at capacity, then the downward pressure could start. Look for prices to be even more depressed this winter, and the cost at the pump to remain low. Oil has rallied slightly, back to the $45 support point, but this latest downturn has shown us that there isn’t much support below that. Once oil starts to fall, nobody knows where it will end up.

Food Commodities Flat Ahead of Harvest

In most places in rural America, the soybeans, corn, and wheat harvest is just barely beginning. Commodities prices for these products are low -- with the exception of corn, which is middling at best. This year’s harvest is set to put less money in the pockets of our farmers, and make things even harder for them during the next planting season.

The news isn’t all bad, though. For consumers, these low commodities prices mean that staples at the store cost less. Consumers should look for falling prices of cereal, baked goods, snacks, and anything that contains a large amount of corn -- which could be just about anything at all, these days.

Corn syrup prices are set to fall on an industrial level as well, and although that’s tough on farmers, and the resulting price drops can be hard on your waistline, low commodity prices during harvest means that grocery shopping will be easier on your wallet.
Published on Sep 12, 2015
By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2016. Content published with author's permission.

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