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The silvery-white metal has rallied 65% since the start of August.
A metal key to filtering car emissions is one of the best-performing investments this year, boosted by greater environmental scrutiny of auto makers and signs of a supply crunch.
Prices of palladium—a critical component of the catalytic
converters used in gasoline cars—have surged 29% so far this year,
extending a rally that started in August to 65%.
The silvery-white metal recently became more expensive than gold
for the first time since 2001 and also trades more than $700 above its
close relative platinum. Gold and platinum have largely traded sideways
in recent months. Palladium has also outpaced the stock market, with the
S&P 500 up 13% this year.
Despite some calls that the rally is overextended, auto makers have
come under greater regulatory scrutiny to meet emissions standards.
That’s caused investors to wager demand will continue to be strong,
Palladium hit fresh highs after Fiat Chrysler said last week it
is recalling nearly 863,000 vehicles in the U.S. because some didn’t
meet federal emissions standards.
Catalytic converters are among the components
to be replaced as part of the recall. Analysts at Capital Economics
estimate the replacements could require about 100,000 ounces of
palladium, or roughly 1% of annual global consumption.
“There’s such a desperate need for it,” said Tai Wong, head of base and
precious metals derivatives trading at Bank of Montreal. “It’s a market
that is in a fairly significant deficit with no real good
Production out of key suppliers like Russia and South Africa isn’t
expected to keep up with demand. It is also difficult for analysts to
identify obvious supply sources because palladium is a byproduct of
other metals such as platinum and nickel.
Adding to the bullish mood: news reports last week said that Russia’s
Trade and Industry Ministry is considering suspending exports of
recycled precious metals scrap for six months starting in May—a move
that could potentially exacerbate the supply deficit for palladium.
Palladium demand exceeded supply for the sixth consecutive year in 2018, according to Johnson Matthey.
Some investors have said the high cost of palladium could lead the auto industry to consider substituting other metals.
But many analysts say the tiny amount of palladium used in gasoline
engines makes paying more for the metal more practical than a new
process that involves a substitute.
“It’s only a relatively small fraction of the cost of the entire
vehicle, so you just pass the cost through [to customers],” Mr. Wong
The ratio of bullish bets to bearish bets on U.S. crude-oil futures by
hedge funds and other speculative investors rose to its highest level
since October during the week ended March 12, according to Commodity
Futures Trading Commission data. Oil has rebounded 30% this year after last quarter's rout.
A Goldman Sachs basket of shares of companies with lower labor costs
has risen 2.2 percentage points more than the S&P 500 this year, the
firm said in a recent note. Labor costs account for 5% of sales of the typical company in the group, compared to 14% for the S&P 500.
On this day in 1792, Wall Street crashed for the first time ever, on
"Black Monday," as 6% Treasury bonds lost 10% of their value and shares
in the Bank of the United States dropped 12%. Speculator William Duer, a
friend of Alexander Hamilton, had borrowed too much money and was about
to be thrown in debtors' prison, spreading panic through the
cobblestone streets of downtown Manhattan.
U.S. factory orders for January are expected to rise 0.4% from the prior month. They will be released at 10 a.m. ET.
President Trump holds a joint press conference with Brazil President Jair Bolsonaro at 1:45 p.m.
The Federal Reserve begins a two-day policy meeting.
A Chicago Board Options Exchange trading pit. PHOTO: KIICHIRO SATO/ASSOCIATED PRESS
Cboe has abandoned bitcoin futures. Cboe Global Markets has pulled the plug on bitcoin futures, the latest sign that mainstream financial firms are losing their enthusiasm for cryptocurrencies.
Can a Facebook post make your insurance cost more? With insurers likely to add social media to the data they review before issuing policies, it might be wise to post pictures from the gym—but not happy hour.
Companies call for oversight of the firms that advise shareholders. Companies want proxy-advisory firms to face government oversight of their activities, a wish securities regulators are expected to act on as early as this spring.
Goldman Sachs implemented its own “Rooney rule” in a push for diversity. Managers at Goldman Sachs Group will be required to interview two diverse candidates for any open job, a push the firm hopes will change its heavily white, male workforce.
Bank back-office workhorses are merging to keep up in the technology race. A global shake-up in the humdrum business of payments has set off a merger frenzy among the giant but obscure companies that connect banks, merchants and consumers.
Somebody call a sturgeon! Caviar prices are flatlining. Caviar prices are sinking as fish eggs cultivated in China are flooding the global market for what used to be a rare delicacy.
Startups aim to overhaul trading in Treasury bonds. Treasurys trading went electronic more than a decade ago, but the market remains bifurcated. Now, some new platforms aim to reshape the $15 trillion U.S. Treasurys market, letting investors shop around for better prices.
OPEC and Russia deepened their output cuts but disagreed on their duration. Riyadh and Moscow are split on whether crude curbs should last beyond June.
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What We've Heard on the Street
“As Lyft begins pitching itself to investors in earnest this week, only
a certain type need apply: those with ample patience and a strong
Walt Disney: Ultimate Fighting Championship has struck a seven-year agreement
with ESPN for the rights to sell and stream its pay-per-view bouts
exclusively on its ESPN+ streaming service, The Wall Street Journal
Blackstone: The private-equity firm is nearing a deal
to acquire cleaning- and emergency-restoration services provider
Servpro Industries for more than $1 billion, including debt, the Journal
reported late in Monday’s session.
Monday’s 1.7% rally, shares of the e-commerce company have climbed in
five of the past six sessions to their highest level since early
cloud-based software provider rose 4.6% Monday, its largest one-day
rally in two months, after Goldman Sachs upgraded shares to buy from
Tilray: The cannabis company said quarterly sales rose more than expected, though profits missed targets.
health savings-account custodian gave downbeat profit projections for
the current fiscal year, though it topped expectations in the latest