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Mar 21, 2019

Oil Price Report | Oil prices slip but hold near 2019 peak as supplies tighten

Tom DiChristopher

Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images
Oil edged lower on Thursday but held near 2019 highs, supported by a sharp tightening of global stocks, OPEC production cuts and U.S. sanctions on key producers Iran and Venezuela.
International Brent crude oil futures were down 57 cents, or nearly 1 percent, at $67.93 a barrel around 12:10 p.m. ET (1610) GMT, having hit their highest since Nov. 13 at $68.69 earlier in the session.
U.S. West Texas Intermediate crude futures were down 36 cents at $59.87 per barrel. WTI reached its highest since Nov. 12 earlier in the day, at $60.39.
Crude prices have been pushed up by almost a third since the start of 2019 by supply cuts led by OPEC, as well as sanctions enacted against Iran and Venezuela by the United States.

The drop in production has led to a tightening in global inventories. Vienna-based consultancy JBC Energy estimated stocks had run down by a “solid” 40 million barrels since mid-January.
That followed a nearly 10-million-barrel fall in U.S. crude stocks last week, the largest drop since last July, boosted by strong export and refining demand, according to the U.S. government’s Energy Information Administration.
The rapid decline in inventories comes despite many refineries undergoing seasonal maintenance work ahead of peak summer demand.
However, global trade tensions remain a worry.
“Why are oil prices not rallying through the roof? We suspect the sword of Damocles hanging over the market is currently called U.S.-Chinese trade talks,” Tamas Varga, analyst at brokerage PVM, said in a note.
“Cautious bulls will become unreservedly bullish if or when an agreement is struck.”
Meanwhile, OPEC’s crude output slumped from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February. The U.S. sanctions are disrupting supply.
“With the driver of the OPEC bus, Saudi Arabia, showing no signs of wavering in the face of renewed pressure from Washington, we believe that OPEC is likely to extend the deal for the duration of 2019,” RBC said.
OPEC’s crude output fell from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February. U.S. sanctions are disrupting supply.
“Venezuelan exports to the U.S. have finally dried up, after the sanctions were placed on them by the U.S. administration earlier this year,” ANZ bank said.
Iranian oil shipments have slumped. The United States aims to cut Iran’s crude exports by about 20 percent to below 1 million bpd from May by requiring importing countries to reduce purchases to avoid U.S. sanctions.
The OPEC cuts and sanctions have also tightened supply within the United States.
U.S. crude production returned to its record of 12.1 million bpd last week, making America the world’s biggest producer.

Source: CNBC

Gold Price Report on March 21, 2019 | Gold off 3-week highs as US data lifts dollar; palladium peaks

Tom DiChristopher

Reusable: Gold coins 001
Gold prices pared gains on Thursday after hitting three-week highs earlier in the session as a set of better than expected U.S data lifted the dollar, while palladium notched a record peak on supply concerns.
Spot gold slipped 0.1 percent to $1,311.59 per ounce, having earlier hit $1,320.22, its highest since Feb. 28. The metal was set to snap five consecutive sessions of gains.
However, U.S. gold futures were trading 0.8 percent higher at $1,311.40 an ounce.
The number of Americans filing applications for unemployment benefits fell more than expected last week, and other data showed a measure of factory activity in the mid-Atlantic region rebounding sharply this month after heavy falls.
“The data was decent today with Philly Fed noticeably more robust and positive jobs data for the payrolls survey week,” said Tai Wong, head of base and precious metals derivatives trading at BMO, adding that caused a momentary dip in gold prices.
“Gold’s failure to extend gains above $1,320 has triggered some liquidation from long options positions and also fueled algorithms sensing short term weakness.”
Against a basket of currencies, the dollar index rose to 96.32, up 0.6 percent on the day, making dollar-denominated gold more expensive for investors of other currencies.
“Overall trend in gold is higher, they (Fed) scaled down interest rates and thats been helping,” said Bill O’Neill, partner at Logic Advisors said, adding that bullion would likely work its way up to $1,350 an ounce.
The U.S. central bank on Wednesday stunned markets by abandoning all plans to raise rates this year, a signal its three-year campaign to normalize policy might be at an end.
Higher interest rates raise the opportunity costs of holding gold, which earns nothing and costs money to store and insure.
Palladium touched an all-time high of $1,620.5 an ounce in the session, and was currently down 0.1 percent at$1,601.25.
Analysts attribute this to concerns of a supply crunch in the autocatalyst metal. A possible temporary export ban on precious metal scrap from Russia and hopes of economic stimulus from China has also helped lift prices.
“There is a big deficit of palladium production this year. Until auto-companies switch over to platinum, palladium prices are going to be pretty strong,” Logic Advisors’ O’Neill said.
Meanwhile, platinum prices rose 1.4 percent to $871.17 per ounce, and touched a three-week high of $875.15. Silver inched up 0.1 percent to $15.47.

Source: CNBC

Europe Markets Closing Report | European stocks mixed amid Fed, BOE rate decisions; Deutsche Bank slips over 3%

Sam Meredith ,Ryan Browne

European stocks are enjoying mixed fortunes Thursday, after the U.S. Federal Reserve’s abandonment of all plans to raise interest rates this year.
The pan-European Stoxx 600 was barely below the flatline during late afternoon deals, with sectors and major bourses pointing in different directions. London’s FTSE 100 was among the standout indexes in the black, rising over 0.8 percent amid a slide in the British pound.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7353.1862.170.85440363785
Stocks initially turned south on the back of the Fed’s decision to pause rate hikes for the year amid signs of an economic downturn. The U.S. central bank also said it would halt the decline of its balance sheet in September. But equities began to pare losses as markets stateside rose, buoyed by an uptick in Apple shares.
In the U.K., the Bank of England (BOE) held interest rates steady on Thursday, as widely expected. The decision comes amid intensifying uncertainty over Britain’s departure date from the European Union.
In terms of sectors, Europe’s banking index slipped more than 1 percent. Germany’s two largest banks were among the worst performers, amid concerns a Deutsche Bank and Commerzbank merger could pressure Deutsche to further shrink or even dispose of its U.S. business. Shares of both banks were down over 3 percent.
Looking at individual stocks, Britain’s Merlin Entertainments tumbled close to the bottom of the index. Shares of the company fell more than 6 percent after Berenberg cut its stock recommendation to “sell” from “hold.”
Brexit chaos
British Prime Minister Theresa May told the public on Wednesday that she is “on their side” amid Brexit negotiations, laying the blame for the country’s delayed exit squarely with Parliament.
The embattled prime minister said British citizens were “tired of infighting and political games” and it was “high time” U.K. lawmakers decided on the next steps.
Earlier on Wednesday, May had written to European Council President Donald Tusk to formally request to delay Brexit until June 30. Until the law is changed, Britain is scheduled to leave the EU next Friday.
President Donald Trump warned on Wednesday that Washington would be prepared to leave tariffs on Chinese goods for a “substantial period ” to ensure Beijing’s compliance with any trade deal. Trade talks between the world’s two largest economies are expected to resume next week.

Source: CNBC

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Market Insider | Stocks making the biggest moves premarket: Biogen, Boeing, Walmart, Apple, Clorox & more

Peter Schacknow

Check out the companies making headlines before the bell:

Biogen — Biogen shares are tumbling after the drugmaker and Japanese partner Eisai discontinued late-stage trials of an Alzheimer’s treatment. That came after an independent data monitoring committee said the treatment was unlikely to meet its primary goal.
Conagra — The food producer beat estimates by 2 cents a share, with adjusted quarterly profit of 51 cents per share. Revenue was slightly below Street forecasts, however, and the company lowered its full-year organic sale outlook.
Darden Restaurants — The parent of Olive Garden, Longhorn Steakhouse, and other restaurant chains reported quarterly profit of $1.80 per share, 5 cents a share above estimates. Revenue and same-restaurant sales also beat forecasts, and Darden also increased its full-year outlook.
Lands’ End — The apparel retailer reported adjusted quarterly profit of 50 cents per share, above the 41 cents a share consensus estimate. Revenue also beat Wall Street forecasts. Comparable-store sales rose 9.1 percent, compared to a Refinitiv consensus estimate of a 2.0 percent increase.
Boeing — Boeing remains under pressure in the aftermath of the most recent 737 MAX crash, with NBC News confirming that the FBI has joined the investigation into the certification process for the jet. Boeing’s vice president for commercial plane marketing, Randy Tinseth, told a Bank of America/Merrill Lynch conference in London on Thursday that he expected the Federal Aviation Administration to certify updates to the jet’s flight control software, on board displays, flight manual, and training.
Levi Strauss — Levi Strauss will begin trading Thursday after the jeans maker’s initial public offering priced at $17 per share, above the expected range of $14 to $16. That gives the company a market value of $6.6 billion.
Micron Technology — Micron reported adjusted quarterly profit of $1.71 per share, 4 cents a share above estimates. The chipmaker’s revenue also topped Street forecasts. Micron’s revenue forecast for the current quarter was below estimates, however, and the company is also trimming its capital expenditures as well as idling some production lines amid what it calls a challenging market environment.
Walmart — Chief Technology Officer Jeremy King is leaving the retail giant, after leading a revamp of Walmart’s e-commerce platform. King had been with Walmart since 2011.
Williams-Sonoma — Williams-Sonoma earned an adjusted $2.10 per share for its latest quarter, beating the consensus estimate of $1.96 a share. The housewares retailer’s revenue also beat forecasts, although its same-store sales increase of 2.4 percent was slightly below analysts’ projections. The company announced a 5 cents a share dividend hike to 48 cents per share, and increased its stock buyback program by $500 million.
Guess — Guess missed estimates by 5 cents a share with adjusted quarterly profit of 70 cents per share, though the apparel maker’s revenue beat forecasts. Guess gave a weaker-than-expected forecast for the current quarter and full year.
Apple — The Wall Street Journal will be part of Apple’s new subscription news service, but The New York Times and Washington Post will not. That’s according to the Times, which said Apple has been asking publishers for about half the subscription revenue that the service generates.
Clorox — Clorox is suing rival household products maker Reckitt Benckiser, saying the British company is falsely claiming in ads that its Lysol products are superior to those made by Clorox.
Tootsie Roll Industries — The candy maker was ordered by a judge to temporarily stop using its packaging for its new Charms Mini Pops. Spangler Candy Co. had sued Tootsie Roll, saying that the Mini Pops packaging too closely resembles the packaging for its Dum Dums lollipops.
Herman Miller — Herman Miller reported adjusted quarterly profit of 64 cents per share, beating the consensus estimate of 60 cents a share. The office furniture maker’s revenue came in below forecasts. The company also gave a better-than-expected current-quarter and full-year earnings forecast.

Source: CNBC

Company News | Bear Market Rally’ Running Out of Steam as Insiders Sell Shares

By Matthew Johnston Updated Mar 21, 2019

It’s time to buy gold and dump stocks as the current stock market bubble is about to burst. That’s the view of Crescat Capital LLC, a Denver-based firm with a strong track record of outperforming the S&P 500 and whose Global Macro Fund returned 41% last year. The firm points to corporate insiders’ frenzied stock selling over the past two years as one of the major warning signs. These insiders heavily sold in 2017, in 2018, and now, “the third time should be the charm for the stubborn U.S. market,” predicts Crescat, according to Bloomberg.
The firm’s current hedge fund strategy is overwhelmingly long gold while shorting global stocks. “There is so much more ahead to profit from the short side of the market,” the firm wrote to clients. “The bear-market rally is running out of steam!”
Crescent Capital’s Bear Market Strategy
  • Buy gold, dump stocks
  • 75% of firm’s strategy
  • Sees recession looming
  • Warning signs are insider selling in 2017, 2018 and early 2019
Source: Bloomberg

What It Means for Investors

Calling the 13% rebound in the equities market just a bear-market rally is a clear indication that Crescat thinks economic fundamentals are pointing to the downside. Along with corporate insiders selling stocks, Crescat cites deteriorating economic data and the inversion of the yield curve as reasons to be concerned.
The current consensus is that the economy will enter into recession in either 2020 or 2021, Tavi Costa, global macro analyst at Crescat told Bloomberg. Among that consensus view are Nobel prize-winning economists Paul Krugmann and Robert Schiller, as well as financial commentator Gary Shilling and at least three-quarters of business economists. Tavi, however, thinks the downturn will happen even sooner. “We think [a recession] is a lot closer than that,” he said.
If and when a recession does occur, equities are likely to get hammered on falling earnings. Goldman Sachs, in a recent “Where to Invest Now” report, outlined the average peak-to-trough change in earnings per share (EPS) over the past seven recessions since 1970. The materials sector saw a 56% decline, while consumer discretionary, industrials, and energy all declined by 33%, 20%, and 19% respectively. Those declines were far worse than the S&P 500’s average EPS decline of 13%.

Looking Ahead

While the bulls are currently taking advantage of the market rebound, economic data that continues to deteriorate may affirm the bearish view and deflate the bubble. In that case, investors will want to be short. “Soon the buy-the-dip mentality and bull-market greed will turn to fear. Selling will beget more selling. That’s how bear markets work,” Crescat wrote to their clients.

Source: Investopedia