US Trade Gap at its Lowest in Nearly Three Years

Minneapolis, MN | October 5, 2023 | HedgeTalk Newsletter | By: John Trefethen, Director & Co-Founder

Table of Contents:

Market Moving Headlines
Interest Rates
Currencies
Commodities
Concept of the Week: Risk versus Speculation
Quote of the Week

Market Moving Headlines

Initial jobless claims in the US remain close to a 7-month low.
US trade gap at its lowest in nearly three years.
US 10-year note eases off of a 16-year high.
US Natgas prices top $3-MMBtu.
US crude oil stocks down for 3rd consecutive week.
Euro remains below $1.05.
US factory orders increased more than expected.
US ISM Services PMI remains strong.
Oil prices extend decline to a 3-week low.
Private businesses in the US hired 89K workers in September 2023. The least since January 2021.

Interest Rates

Currencies

Commodities

Concept of the Week: Measuring Commodity Price Risk

Measuring commodity price risk involves assessing the potential impact of changes in commodity prices on a company’s financial performance. There are various ways to measure commodity price risk, including:

Sensitivity Analysis: This involves analyzing the impact of changes in commodity prices on a company's financial performance, such as revenue, cost of goods sold, and profit margins. By examining the sensitivity of financial performance to commodity price changes, companies can better understand the potential impact of commodity price fluctuations on their operations.
Value at Risk (VaR) Analysis: This involves calculating the potential loss in the value of a company's commodity portfolio over a specified time period based on a certain level of confidence. VaR analysis provides a quantitative measure of the potential downside risk of commodity price changes.
Stress Testing: This involves simulating extreme scenarios of commodity price changes and assessing the potential impact on a company's financial performance. By stress testing different scenarios, companies can identify potential vulnerabilities and develop contingency plans to manage commodity price risk.
Scenario Analysis: This involves analyzing the impact of different scenarios of commodity price changes on a company's financial performance. Scenario analysis helps companies better understand the potential impact of different commodity price scenarios and develop strategies to manage commodity price risk.

These are just a few ways to measure commodity price risk. The specific approach will depend on the type of commodity, the nature of the company's operations, and the level of risk exposure. It is important for companies to regularly monitor and assess commodity price risk to effectively manage their exposures and protect their financial performance.

Quote of the Week

“Certainty is the mother of confidence, and confidence is the key to success.” – Arthur Ashe

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