Morgan Stanley Coffee Report Feb 9, 2016

Early relative strength was not to last as again the macro world leaned heavily against the discretionary coffee buyer.  Sentiment seemed to swing more friendly as + signs validated the wishes of many to stave off the approaching lows, however as has been the case for too long it would ultimately be impossible to overcome the systematic sellers of commodities as crude continues its freefall.  For two hours coffee languished in a 65 point range during what should be the prime commercial trading times, and it was notably during the 8am EST and pre-close hours that coffee suffered its largest declines yet best volume.  On timing alone the pattern is indicative of a sweeping distaste for commodities.  With Janet Yellen speaking tomorrow, macro risk will be elevated as the world awaits word whether the Fed will finally take into account the manifest impact towards individuals wealth, or if they will continue to shun pocketbook concerns and remain steadfast with their focus on the dual mandate of employment and inflation.  The dollar has lost 4.2% since Jan 29th in a remarkable fashion, and the Dow has lost 10.5% since the Fed’s Dec 16 announcement.  Ironically, the Dow had rallied for 3 days going into that meeting with the expectation of higher rates, an indication to our eyes the short lived nature of reaction to the Fed’s decisions, the shifting sentiment of traders, the impact of emerging market growth statistics, & the importance of outside factors such as ECB or PBOC rate maneuvering.  With global volatility at current levels, it is perhaps worth asking, should Yellen deliver the message Wall Street wants to hear, for how long will it meet its desired impact?