Need to Know: Where to look for the next bitcoin-like rally — if the sun shines right

The battering the markets have taken from oil isn’t doing much for its popularity — or that of any commodity. But there’s an out-of-this world reason why it’s worth taking another look.

Crude is down 4.5% for the week, failing miserably to climb out of a bear market. It’s brought down stocks, too, as supply panic (again) gripped investors.

Never fear — the oil doom and gloom will all be over soon, says veteran macro-economic analyst Yves Lamoureux. He argues the news flow is now so utterly bearish on oil, that it’s time for a complete reversal.

And that’s not all. The entire commodity sector is heading into a five-to-seven year bull market, with agricultural produce in particular ready to make a sharp move higher, the market observer says for our call of the day.

“We believe that we have arrived at the turning point again, where commodities will outshine an investment in stocks. The next bitcoin might as well be cocoa, oil or coffee,” says Lamoureux, who way back in February predicted the bitcoin rally.

His call on “soft” raw materials comes even after cocoa

CCU7, +1.21%

 slumped close to a 10-year low this week, and coffee

KCU7, +1.55%

 fell to levels not seen in more than a year.

So why the optimism? It comes down to something as unexpected as sunspots — dark spots on the surface of the sun that reappear on an 11-year cycle.

“The level is going down, and it creates less illumination, resulting in poor harvests,” Lamoureux explains in an email to MarketWatch. That means demand for agricultural produce is likely to outstrip supply, which usually pushes up prices.


Yves Lamoureux

Investing on the basis of sunspots might seem crazy, and the correlation has been questioned regularly (see here for an explainer). But Lamoureux is happy to cite British astronomer Wilhelm Herschel — the discoverer of Uranus — who observed back in 1801 hat when there were fewer sunspots, the price of wheat soared.

Key market gauges

Dow

ESU7, +0.02%

  and Nasdaq

ESU7, +0.02%

futures

YMU7, -0.16%

 are falling, but S&P futures

ESU7, +0.02%

are perking up a bit. That’s as crude

CLU7, +0.02%

 is still struggling to push back above $43 a barrel, swinging between gains and losses.

Europe

SXXP, -0.37%

 , however, is looking more downbeat this morning, following a mixed session in Asia

ADOW, +0.20%

Metals

GCU7, +0.00%

 are on the rise, but the dollar

DXY, -0.14%

 is pulling back against all other major currencies.

Read the latest in Market Snapshot

The chart

Airlines anyone? A few months ago when the United scandal raged on social media, investors duly shied away from shares in the industry. But it’s time to dive back into the sector, says J.C. Parets of the All Star Charts blog, who says the industry will take off as part of an inevitable rally in industrials.

“If you want to look inside of industrials to see what could possibly take the broader sector higher, look no further than airlines and railroads,” he said in a blog post.

“To me, this looks like an upside resolution in the AMEX Airline Index $XAL that is about to make a run towards those former all-time highs in the 1990s,” he added, pointing to this chart of the NYSE Arca Airline Index

XAL, +0.04%

 .


All Star Charts

The economy

We’ll get a snapshot of how well (or poor) the economy has done in June at 9:45 a.m. Eastern Time, when the flash manufacturing and services PMIs come out. Home sales for May at 10 a.m. will be closely watched, too.

A trio of Fed speakers are also likely to keep investors on their toes, with St. Louis Fed President James Bullard, Cleveland Fed President Loretta Mester and Fed governor Jerome Powell all speaking after the market opens.

See: MarketWatch’s economic calendar

The quote

“Nobody is perfect, but I fundamentally believe he can evolve into the leader Uber needs today and that he’s critical to its success” — Michael York, a product manager at ride-sharing service Uber, who started an employee petition to get Travis Kalanick back as chief executive.

Kalanick resigned earlier this week after a shareholder revolt.

The stat

15% — That’s how much the pound

GBPUSD, +0.3469%

 has lost in the year since the shock Brexit vote, getting no break as the uncertainty dragged on.

Read: Brexit’s impact on markets and the U.K., one year after the vote — in charts


The buzz

Bed Bath & Beyond

BBBY, +0.24%

is getting crushed after a disappointing earnings report.

Whirlpool Corp.

WHR, +0.70%

 is also getting a little squeezed. London police said it was a fridge of Whirlpool’s Hotpoint brand that started the deadly fire in Grenfell Tower last week. The police are also considering manslaughter charges following the blaze.

Tesla

TSLA, +1.65%

 is considering building a car factory in China to build electric vehicles for that market.

U.S. banks are “strong” and would be able to survive a severe recession, according to the Fed’s stress test of 34 of the nation’s biggest banks.

Biotech

IBB, +1.27%

and health care shares 

XLV, +1.04%

 are on track for their strongest weekly gain since November last year, after Republicans released a draft of their health-care overhaul bill.

It doesn’t pay to be president. Donald Trump’s net worth has dropped below the $3 billion mark, according to the most recent Bloomberg Billionaires Index.

And then there’s good news for EU citizens living in the U.K. — British Prime Minister Theresa May has offered permanent residency for the bloc’s citizens, post-Brexit.

Random reads

Tonight Danes burn witches on bonfires to mark midsummer

Israeli airline El Al can no longer ask female passengers to change seats

Sand — it’s actually rarer than you think

Qatar must meet 13 demands if it wants four other Arab states to lift sanctions

How to avoid sexual assault — taught by Bill Cosby

The U.S. has banned imports of Brazilian beef

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