Three In A…No

The Peloton instructor is correct. No one can take your energy. However, they can make it more expensive. 🤔

That’s precisely what OPEC+ aims to do by cutting oil production by 2 million barrels per day. Analysts expected a 1 million barrel cut, but the ministry is looking to shore up prices despite calls from the U.S. and other western countries to support the global economy. 🛢️

Oil prices had already been rising in anticipation of the cut but continued their 15% rise in seven trading days. Meanwhile, the energy sector of the stock market rallied alongside oil prices, up 12% over the last five days. It remains this year’s best-performing sector across most timeframes.

Additionally, the European Union countries finally agreed on a controversial plan to place a price cap on Russian oil. The countries moved forward with the plan despite concerns that it would simply drive much-needed energy supplies away from the region. However, diplomats argue it, along with new sanctions, will punish Moscow for illegally annexing four regions in Ukraine.

We’ll have to see how this plays out as Europe prepares for a potentially ice-cold winter season. 🥶

Idaho-based food processing company Lamb Weston is one of the largest producers and processors of frozen french fries, waffle fries, and other frozen potato products. 🥔

Today it reported adjusted earnings per share well above analyst expectations of $0.50, at $0.75. Meanwhile, revenues of $1.13 billion matched consensus expectations.

In terms of result drivers, management said that sales volumes fell 5%. This was primarily due to softer casual dining and full-service restaurant traffic. However, its product mix and pricing helped offset that impact and helped reach its revenue estimates.

The company also noted that heat waves would likely result in a total potato crop at the lower end of its historical averages. It expects overall quality to remain good, though. 👍

The stock rose 4.18% today towards the mid-80s, where it failed to break through over the last few years. Traders will be watching to see if the market’s current preference for “consumer staples” companies like $LW can help push its shares to new highs. 💪

The two-day rally in stock markets around the world has many rushing to call a top in the year’s only safe-haven asset, the U.S. Dollar. In July, we wrote an extensive piece about why the Dollar is getting so much attention lately, which we recommend checking out. 📝

In this post, we’re simply going to point out that the trend in the U.S. Dollar Index, which most people use to track the Dollar’s performance, remains up. In technical analysis, an upward trend involves a data point making higher lows and higher highs, i.e., moving from the bottom left to the upper right of the chart.

And so far, the U.S. Dollar Index remains in a textbook uptrend. Below we obnoxiously use arrows to point out each successive higher high (red arrow) and higher low (green arrow) over the last fifteen months. Until prices break below their previous low of around 107.50 and fail to make a new high above 114, then many technical analysts say it’s hard to call a top.

So why does this all matter? Well, the U.S. Dollar’s 63-day (or quarterly) correlation with the S&P 500 has been strongly negative for most of the year. In other words, when the U.S. Dollar is rising, it reflects market participants’ preference for a safe asset over “riskier” assets like stocks. 🦺

As a result, many Wall Street Technicians suggest that a break in the U.S. Dollar Index’s uptrend would signal improving risk appetite and be a positive sign for the stock market. Correlations are always changing, but as it stands right now, the data looks supportive of their theory.

Friday’s nonfarm employment data is expected to cause an uptick in volatility. Rest assured, many will be watching this chart during that volatility to see if the Dollar’s trend is impacted. 👀