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HAL | Enservco updates on Q1 financial expectations | Enservco ENSV 1 7 expects Q1 revenue of 21 1M 53 Y Y vs a consensus of 20 85M Net Income and Adjusted EBITDA also anticipated to show strong Y Y growth Management reiterates expectations for continued growth momentum in 2018 as higher activity levels are driving increased demand in all core service areas as well as new year round water transfer business Press Release Now read |
HAL | Halliburton revenue jumps on higher North American demand | By Yashaswini Swamynathan and Liz Hampton Reuters Oilfield services provider Halliburton Co N HAL reported a 34 percent jump in first quarter revenue on Monday as North American companies boosted oil and gas production amid rising oil prices The jump in revenue came despite a 312 million writedown on Halliburton s remaining assets in Venezuela and a hit to earnings related to the impact of cold weather earlier in the quarter Halliburton expects normalized margins of around 20 percent in North America by the end of this year supported by ongoing tightness in the hydraulic fracturing market Chief Executive Jeff Miller said on Monday We believe the pressure pumping market is undersupplied and will remain tight Miller said pointing to high fracking equipment utilization rates and service intensity that is degrading existing equipment Some 3 3 million of additional hydraulic horsepower is expected to be added to the U S pressure pumping fleet this year according to consultancy Rystad Energy The additions have stoked concerns among investors that companies could overbuild equipment Halliburton s revenue from North America jumped nearly 58 percent to 3 52 billion in the three months ended March 31 while revenue from international operations rose 9 percent Total revenue jumped to 5 74 billion from 4 28 billion Its shares were trading at roughly 51 13 on Monday morning off about 1 6 percent as part of a broader decline in energy stocks U S crude futures CLc1 were trading around 67 40 down about 1 45 percent Adjusting for items Halliburton posted a profit of 41 cents per share in the latest reported quarter in line with analysts estimates according to Thomson Reuters I B E S Halliburton in February warned it expected a 10 cents per share hit to first quarter earnings due to delays in deliveries of sand used in fracking Net income attributable to Halliburton shareholders was 46 million or 5 cents per share in the three months ended March 31 The company posted a loss of 32 million or 4 cents per share to shareholders in the same quarter a year earlier The company said it continues to see tightness in the U S labor market and in supply chain segments such as rail and trucking Higher prices will be needed to absorb the impacts of wage inflation Miller said during the company s earnings call on Monday
Halliburton on Monday also said it would remain in Venezuela which has been plagued with political and economic turmoil but carefully manage its exposure in the OPEC member country |
HAL | What The HAL | Some industries are cyclical in nature And there is not a darned thing you or they can do about it Within those industries there are individual companies that are leaders i e well run companies that tend to out earn other companies in that given industry and whose stock tends to outperform other companies in that industry
Unfortunately for them even they cannot avoid the cyclical nature of the business they are in Take Halliburton Company NYSE HAL for example Halliburton is one of the world s largest providers of products and services to the energy industry And they do a good job of it Which is nice It does not however release them from the binds of being a leader in a cyclical industry
A Turning Point at Hand
A quick glance at Figure 1 clearly illustrates the boom bust nature of the performance of HAL stock
Figure 1 Halliburton HAL Courtesy AIQ TradingExpert
Which raises an interesting question is there a way to time any of these massive swings Well here is where things get a little murky If you are talking about picking timing tops and bottoms with uncanny accuracy well while there are plenty of ads out there claiming to be able to do just that in reality that is not really a thing Still there may be a way to highlight a point in time where
Things are really over done to the downside and
For a person who is not going to get crazy and bet the ranch and who understands how a stop loss order works and is willing to use one
there is at least one interesting possibility
It s involves a little known indicator that is based on a more well known another indicator that was developed by legendary trader Larry Williams roughly 15 or more years ago William s indicator is referred to as VixFix and attempts to replicate a VIX like indicator for any market The formula is pretty simple as follows the code is from AIQ Expert Design Studio
hivalclose is hival close 22
vixfix is hivalclose low hivalclose 100 50
In English it is the highest close in the last 22 periods minus the current period low which is then divided by the highest close in the last 22 periods The result then gets multiplied by 100 and 50 is added
Figure 2 displays a monthly chart of HAL with William s VixFix in the lower clip In a nutshell when price declines VixFix rises and vice versa
Figure 2 HAL Monthly with William s VixFix Courtesy AIQ TradingExpert
Now let s go one more step as follows by creating an exponentially smoothed version as follows the code is from AIQ Expert Design Studio
hivalclose is hival close 22
vixfix is hivalclose low hivalclose 100 50
vixfixaverage is Expavg vixfix 3
Vixfixaverageave is Expavg vixfixaverage 7
I refer to this as Vixfixaverageave Note to myself get a better name because it essentially takes an average of an average In English OK sort of first Vixfix is calculated then a 3 period exponential average of Vixfix is calculated vixfixaverage and then a 7 period exponential average of vixfixaverage is calculated to arrive at Vixfixaverageave got that
Anyway this indicator appears on the monthly chart for HAL that appears in Figure 3
Figure 3 HAL with Vixaverageave Courtesy AIQ TradingExpert
So here is the idea
When Vixfixaverageave for HAL exceeds 96 it is time to start looking for a buying opportunity
OK that last sentence is not nearly as satisfying as one that reads the instant the indicator reaches 96 it is an automatic buy signal and you can t lose But it is more accurate Previous instances of a 96 reading for Vixfixaverageave for HAL appear in Figure 4
Figure 4 HAL with previous buy zone readings from Vixfixaverageave Courtesy AIQ TradingExpert
Note that in previous instances the actual bottom in price action occurred somewhere between the time the indicator first broke above 96 and the time the indicator topped out So to reiterate Vixfixaverageave is NOT a precision timing tool per se But it may be useful in highlighting extremes
This is potentially relevant because with one week left in May the monthly Vixfixaverageave value is presently above 96 This is NOT a call to action If price rallies in the next week Vixfixaverageave may still drop back below 96 by month end Likewise even if it is above 96 at the end of May as discussed above and as highlighted in Figure 4 when the actual bottom might occur is impossible to know
Let me be clear this article is NOT purporting to say that now is the time to buy HAL Figure 5 displays the largest gain the largest drawdown and the 12 month gain or loss following months when Vixfixaverageave for HAL first topped 96 As you can see there is alot of variation and volatility
Figure 5 Previous 1st reading above 96 for HAL Vixfixaverageave
So HAL may be months and or many points away from an actual bottom But the main point is that the current action of Vixfixaverageave suggests that now is the time to start paying attention |
HAL | Halliburton HAL Gains As Market Dips What You Should Know | Halliburton HAL closed at 21 60 in the latest trading session marking a 1 46 move from the prior day This move outpaced the S P 500 s daily loss of 0 28 Meanwhile the Dow gained 0 02 and the Nasdaq a tech heavy index lost 1 61
Coming into today shares of the provider of drilling services to oil and gas operators had lost 20 08 in the past month In that same time the Oils Energy sector lost 8 01 while the S P 500 lost 6 3
Wall Street will be looking for positivity from HAL as it approaches its next earnings report date This is expected to be July 22 2019 The company is expected to report EPS of 0 29 down 50 from the prior year quarter Our most recent consensus estimate is calling for quarterly revenue of 5 97 billion down 2 84 from the year ago period
HAL s full year Zacks Consensus Estimates are calling for earnings of 1 39 per share and revenue of 24 37 billion These results would represent year over year changes of 26 84 and 1 55 respectively
Investors might also notice recent changes to analyst estimates for HAL These revisions help to show the ever changing nature of near term business trends As such positive estimate revisions reflect analyst optimism about the company s business and profitability
Our research shows that these estimate changes are directly correlated with near term stock prices To benefit from this we have developed the Zacks Rank a proprietary model which takes these estimate changes into account and provides an actionable rating system
Ranging from 1 Strong Buy to 5 Strong Sell the Zacks Rank system has a proven outside audited track record of outperformance with 1 stocks returning an average of 25 annually since 1988 The Zacks Consensus EPS estimate has moved 0 93 higher within the past month HAL is holding a Zacks Rank of 3 Hold right now
In terms of valuation HAL is currently trading at a Forward P E ratio of 15 3 For comparison its industry has an average Forward P E of 15 93 which means HAL is trading at a discount to the group
Investors should also note that HAL has a PEG ratio of 1 15 right now The PEG ratio is similar to the widely used P E ratio but this metric also takes the company s expected earnings growth rate into account HAL s industry had an average PEG ratio of 1 5 as of yesterday s close
The Oil and Gas Field Services industry is part of the Oils Energy sector This industry currently has a Zacks Industry Rank of 144 which puts it in the bottom 44 of all 250 industries
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
You can find more information on all of these metrics and much more on Zacks com |
HAL | Halliburton HAL Gains But Lags Market What You Should Know | Halliburton HAL closed at 21 63 in the latest trading session marking a 0 37 move from the prior day The stock lagged the S P 500 s daily gain of 1 05 Elsewhere the Dow gained 1 02 while the tech heavy Nasdaq added 1 66
Heading into today shares of the provider of drilling services to oil and gas operators had lost 16 78 over the past month lagging the Oils Energy sector s loss of 1 5 and the S P 500 s loss of 0 08 in that time
Investors will be hoping for strength from HAL as it approaches its next earnings release which is expected to be July 22 2019 In that report analysts expect HAL to post earnings of 0 29 per share This would mark a year over year decline of 50 Meanwhile the Zacks Consensus Estimate for revenue is projecting net sales of 5 97 billion down 2 84 from the year ago period
For the full year our Zacks Consensus Estimates are projecting earnings of 1 39 per share and revenue of 24 37 billion which would represent changes of 26 84 and 1 55 respectively from the prior year
Investors should also note any recent changes to analyst estimates for HAL These revisions typically reflect the latest short term business trends which can change frequently As such positive estimate revisions reflect analyst optimism about the company s business and profitability
Research indicates that these estimate revisions are directly correlated with near term share price momentum Investors can capitalize on this by using the Zacks Rank This model considers these estimate changes and provides a simple actionable rating system
Ranging from 1 Strong Buy to 5 Strong Sell the Zacks Rank system has a proven outside audited track record of outperformance with 1 stocks returning an average of 25 annually since 1988 Over the past month the Zacks Consensus EPS estimate has moved 0 26 lower HAL is currently sporting a Zacks Rank of 3 Hold
Looking at its valuation HAL is holding a Forward P E ratio of 15 59 Its industry sports an average Forward P E of 16 83 so we one might conclude that HAL is trading at a discount comparatively
Investors should also note that HAL has a PEG ratio of 1 17 right now This metric is used similarly to the famous P E ratio but the PEG ratio also takes into account the stock s expected earnings growth rate Oil and Gas Field Services stocks are on average holding a PEG ratio of 1 7 based on yesterday s closing prices
The Oil and Gas Field Services industry is part of the Oils Energy sector This group has a Zacks Industry Rank of 144 putting it in the bottom 44 of all 250 industries
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
Make sure to utilize Zacks Com to follow all of these stock moving metrics and more in the coming trading sessions |
C | Glencore To Slide Into Wall Street Banks Commodities Space | Although the US Federal Reserve has little influence directly over Goldman Sachs Group Inc GS and Morgan Stanley MS recent pressure from the Fed may be having some effect
Reuters reports that the planned sale of TransMontaigne the oil terminal business that Morgan Stanley bought in 2006 serves as evidence that the Fed may be privately encouraging the firm to reject purchases made after the 1997 cut off date Yet the bank retains three power plants it built after this date in Nevada Alabama and Georgia plus a sizable trading book in natural gas and electricity
Neither Goldman nor Morgan Stanley are likely to give ground where it doesn t suit them though they are making a lot of money off of physical commodities industrial metals being no exception and their preferred status over the likes of Citigroup Inc C and Merrill Lynch gives them the best of both worlds in order to compete as well as access to cheap funding and limited regulation
The biggest beneficiaries of the banks pull back from commodity trading however will be trading companies as we wrote last week Firms like Glencore Trafigura and the article mentions foreign banks like Brazil s BTG Pactual that are not subject to Fed regulation will aggressively move into the space left by US banks
Is this a good thing for the markets
Arguably not for consumers and producers for whom stability and transparency are paramount the more markets are influenced by less regulated players the more possibility there is for industry players to be the victims of market movements as a result of financial players activities
The more these move into less regulated areas the more opaque they will be Similarly a recent report that Glencore s Pacorini warehouse subsidiary has de listed 14 LME approved metals warehouses in the Dutch Port of Vlissingen is not a sign that the firm is moving out of warehousing but merely that it is positioning itself to store metal off warrant increasing the scope for the firm s involvement in the dark side of the aluminum market s rising inventory story
Is the Fed powerless to act in view of the former investment bank s exemptions No but it will probably have to limit activities by use of higher capital requirements to safeguard against potential losses or liabilities from catastrophic events like an oil tanker accident Reuters says That will force banks to set aside more capital or cap commodity related revenue
So watch this space the story has some way to run yet
by Stuart Burns |
C | GBP USD Uptrend Continuation | The GBP USD has extended gains in this week and now already trading above 1 6600 region Personality of the latest bullish run is very sharp so it s impulse in progress thus part of an uptrend We adjusted the wave count and labeled a five wave decline from 1 6667 as wave c that was part of an expanded flat in wave B If that is the case then pair is now heading higher in wave C towards 1 6730 area Any short term set back may stop at 1 6510 1 6580 zone GBP USD Hourly AnalysisGBP USD 4 Hourly Chart title GBP USD 4 Hourly Chart width 600 height 587 |
C | Could 2014 Be Like 1929 | There has been a lot written about how the current stock market pattern looks like 1929 especially since highlighted it in a column Most of the commentary is overly alarmist One of the most balanced perspectives on the issue comes from Cullen Roche of The most important point here is that McClellan isn t expecting a 1929 style market crash but a far more muted decline my emphasis in bold
This chart first appeared late last year when I post Tom s material here at Pragcap on occasion and find it to be of consistently high quality I didn t post that original piece because I thought some people might misinterpret the 1929 chart and believe that it was fear mongering That s exactly what happened And after a bit of controversy followed the original post Tom which explained the chart in more detail It was a very useful explanation that cleared up much of the confusion But the confusion has continued today primarily because some other people have picked up on the chart and used it to imply that we could be on the verge of that 40 crash The thing is Tom never implied this He was simply pointing out that the market pattern was similar In other words the chart below very clearly shows that the potential downside risk to the Dow is about the 14 000 level Therefore the downside risk according to Tom s analysis is 12 5 NOT 40
Analyzing market analogs
Let me make my position clear There is little basis to expect a stock market crash and I place a low level of importance in the usefulness of market analogs But history does rhyme and I am open to the possibility that the 1929 pattern can repeat itself with a 10 15 downdraft in stock prices Tom McClellan offered the following caveat about analogs in a emphasis added
I attracted a lot of attention and a lot of derision when I wrote about the resemblance of the current market s price pattern to that which occurred back in 1929 This week s chart updates that relationship and we can see that the relationship has not broken correlation yet For as long as the correlation continues it is interesting and potentially useful But anyone who endeavors to employ such an analytical tool should understand that all such pattern analog relationships break correlation eventually so they should always be viewed with skepticism alongside the fascination we have for the pattern correlation and its potential message about the future
He went on to justify his use of pattern recognition as part of the technical analyst s toolkit
Why do price pattern analogs ever work at all My answer is that human populations tend to fall into similar and repeating patterns of human emotional response and this gets reflected in repeating patterns of price action This is the entire basis for classical bar chart pattern analysis Even though 2 different triangles might look different in some ways or 2 different head and shoulders structures the driving psychology behind the formation of such structures is largely the same and tends to result in similar outcomes
I would tend to agree with these comments Technical analysis is a form of behavioral finance and that s why patterns can repeat themselves see my previous post Technical analysis as behavioral finance McClellan went on and defended the difference in the magnitude of the decline in the 1929 analog in this way
L et me offer a case history to illustrate how price magnitude is not really the important factor in governing the way that prices behave and whether or not an analog is valid Most modern traders have at least heard of the big crash of 1987 but few remember the little micro crash of 1994 The total price damage in 1994 top to bottom was just 9 9 and yet the pattern itself strongly resembles what happened in 1987 The magnitude of the 1987 event was much greater both in terms of the volatility before the top and the severity of the actual crash And yet the dance steps look an awful lot like what happened in 1994
With those caveats in mind I offer a couple of the most likely catalysts for a mini repeat of the 1929 pattern albeit of a much reduced magnitude
US growth scare
Rising China tail risk
By monitoring these fundamental triggers we can determine whether the pattern is continuing or breaking down
US growth scare
At the end of 2013 and the start of 2014 it seemed that the US economy was undergoing a growth acceleration However recent economic releases have thrown cold water on that notion as high frequency releases have generally come in below Street expectations This chart of the Citigroup US Economic Surprise Index shows how economic momentum has started to roll over though levels are not catastrophically negative
The loss of momentum is confirmed by of economic confidence and employment Note the downtick in February in the chart below
Last week s ugly retail sales number prompted Neil Dutta of Renaissance Macro to question the divergence between retail sales and retail employment via Which figure gives us the true picture of retail Something has to give here
Retail sales vs Retail employment
also highlighted a second worrying data point about retail sales which is nonstore retail sales which are mostly online sales which are not subject to weather effects fell 0 6 month month in January The disappointing data points prompted a number of Street economists and strategists to downgrade their US GDP growth forecast via
EPS estimates are falling
Could an economic growth scare trigger a 10 15 slide in stock prices One of the key metrics to watch is the direction in which consensus EPS estimates are being revised With most of Q4 Earnings Season complete reports that negative guidance is prompting the Street to lower EPS estimates which is worrisome for the bulls
Guidance has overwhelmingly been negative in recent quarters and the trend has largely remained in place in the Q4 reporting season as well As a result estimates for 2014 Q1 and beyond have been coming down as the earnings season has unfolded
Citi Research reports that negative earnings guidance has skyrocketed while positive guidance has collapsed via
Brian Gilmartin who keeps a close eye on earnings estimates more or less told the same story of falling estimates and expected growth rates emphasis added
Per Thomson Reuters the forward 4 quarter EPS estimate for the SP 500 slipped 0 25 this past week to 119 33 versus last week s 119 58 The p e ratio on the forward estimate rose to 15 4 x and the PEG ratio rose a smidge last week to 2 49 x The earnings yield on the SP 500 is 6 49 as of Friday 2 14 14 The growth rate of the forward 4 quarter estimate fell last week to 6 19 from the prior week s 6 38 With about 400 of the SP 500 having reported q4 13 financial results the 9 5 year over year growth rate for the index is the best growth rate since late 2011 Excluding Financials the earnings growth rate is closer to 6 However there is always something to be excluded from each quarter s earnings which reduces the growth rate in early 2012 some pundits were removing AAPL s results from the earnings growth rate and looking at the percentage change ex APPL Long AAPL We are keeping an eye on 2014 s full year SP earnings growth rate which currently stands at 9 2 vs the 10 8 on Jan 1 14 The only sector to see higher expected earnings growth for full year 2014 this week vs Jan 1 14 is Telecom which has seen expected full year growth expand from 13 5 to 15 9
Just one chart to watch
If you want one quick and dirty key indicator to watch I would focus on how cyclical stocks are performing relative to the market For now the Morgan Stanley Cyclical Index remains in a relative uptrend against the market but just barely
You can get a live update of this chart If the relative uptrend breaks down then the risk of a market downturn rises
Rising China tail risk
The other key risk to stock market stability is the re emergence of financial tail risk from China Just when the problems of a possible default of the 2010 China Credit Credit Equals Gold 1 Collective Trust Product was papered over with a backdoor rescue reported last week that two more wealth management products are in serious trouble
Two investment products worth nearly 1 3 billion yuan HK 1 66 billion that were distributed by China Construction Bank 0939 and Ping An Insurance 2318 are on the verge of default The first a high yield product that saw 289 million yuan raised from clients of China Construction Bank was created by Jilin Province Trust and backed by a loan to coal firm Shanxi Lianmeng Energy The second saw three funds backed by Beijing Roll in Investment Management fail to repay investors after maturity Capital plus interest on the product has reached one billion yuan 21cbh com reported
More alarming is a which indicates that a large portion of China s 1 8 trillion trust products may be headed for default this year
E pisodes like Credit Equals Gold and Opulent Blessing Project are just the beginning says Mike Werner senior analyst at Bernstein Research in a note today One reason is that more than 43 of the 10 9 trillion yuan 1 8 trillion worth of outstanding trust products come due in 2014 Trust companies manage client investments through such products providing an alternative credit source for companies that can t convince commercial banks to lend to them
Werner argues that rising interest rates on the interbank market reflect the Chinese government s crackdown on shadow a k a off balance sheet credit and have already taken their toll on the trust industry While assets managed by China s trust firms are up 46 from the end of 2012 that growth is less than the 73 year on year growth in Q2 2013 Rising rates will make it hard for bankrupt companies to find the cash to pay back investors he says
Many of these trust and wealth management products were issued or marketed by state owned banks and carried implicit guarantees by these same state owned banks The key issues are whether the government will allow defaults to occur and if so whether to rescue them through the backdoor see my previous posts How resilient is China and Stresses are starting to show up in my so called Chinese canaries which are mainland banks listed in HK While readings are not at the panic levels seen during the heights of the 2011 eurozone crisis risk levels do appear to be elevated
As with the possible US growth scare trigger there is one easily accessible key chart to watch Focus on how DSUM which are yuan denominated bonds issued in HK are performing against US Treasuries IEF This ETF pair is currently testing its relative uptrend just as the CYC vs SPX relative chart above
You can get a live update of this chart to monitor the risk of rising Chinese financial turmoil which could cause trouble for global financial markets
How to play along at home
In conclusion I do not believe that we are on the verge of a 1929 style market meltdown However market patterns can repeat themselves and we could see a 10 15 hiccup in stock prices in the near term I have outlined two likely causes of such a downdraft namely a US growth scare and rising Chinese tail risk For now the charts show that the markets remain on the precipice on these two key triggers For readers who want to play along at home just watch these two charts CYC vs SPX and DSUM vs IEF to see if the pattern could repeat itself As things stand now the bears shouldn t get overly excited about the prospect of a steep drop off in stock prices Unless the two key indicators decisively break their relative uptrends in an unambiguous fashion I am inclined to give the bull case the benefit of the doubt Disclosure Cam Hui is a portfolio manager at Qwest The opinions and any recommendations expressed in the blog are those of the author and do not reflect the opinions and recommendations of Qwest Qwest reviews Mr Hui s blog to ensure it is connected with Mr Hui s obligation to deal fairly honestly and in good faith with the blog s readers None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this blog constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions Past performance is not indicative of future results Either Qwest or I may hold or control long or short positions in the securities or instruments mentioned |
C | U S European Stock ETFs Will Take Their Cues From Japanese Stimulus | The S P 500 and the Dow may be toiling to reclaim the glory of all time record peaks On the other hand nearly 200 ETFs have already recovered 52 week highs terminating the notion of a lengthy stock market correction The list of winners includes some of the biggest names from 2013 including a Powershares DJ Pharmaceuticals PJP b iShares Medical Devices IHI c First Trust Internet FDN d Guggenheim Global Solar Energy TAN and e PowerShares NASDAQ 100 QQQ
I have favored technology and health care for quite some time in client portfolios Granted I may be paying a premium for the privilege of ownership Yet the less volatile drawdowns for tech and health care over the last twelve months reinforce the case for over weighting them In contrast backing away from consumer oriented sectors is more easily justifiable Retail sales data as well as retailer earnings have been anemic Employers barely hired in December or January Meanwhile homebuilder confidence suffered its largest one month drop ever in February
For all the discussion about the effect of Federal Reserve tapering on emerging market currencies for all the worry surrounding stagnant growth in the euro zone and sub par growth in China Japanese economic policy may trump everything For one thing if Japan s leaders do not inspire confidence those who have borrowed the country s yen to invest in riskier assets e g small European companies US biotech stars etc would be forced to sell and pay back their loans Not only would risky assets lose value but the yen would appreciate and the export dependent Japanese economy would suffer Second the world s third largest economy has not been successful in generating wage inflation or appreciable increases in spending If something does not change additional declines in Japanese stocks could spill over into other developed world stocks
At present Japan may be at the epicenter of stock market volatility Investors are growing impatient with the country s weak economic data Similarly the yen s perceived strength is indicative of future struggles in the exporting of goods It follows that the only thing that may quiet the crowd would be a combination of yen depreciation and additional monetary stimulus Note More monetary stimulus would be adding to an existing asset purchase program that is 3x larger than the quantitative easing QE program of the United States when adjusted for GDP
Perhaps fortunately the Bank of Japan BOJ introduced several steps yesterday to encourage banks to lend Banks are sitting on monstrous reserves whether it is a fear of lending or limited borrower demand or both The action heightened investor expectations for additional bond purchasing by the Bank of Japan in the future and sent the yen lower In fact February s drop in the yen via funds like CurrencyShares Yen Trust FXY played a key role in minimizing January s sell off in U S and European stocks
Critics suggest that the impact of doubling the scope of two separate lending initiatives will be inconsequential What critics may be missing however is reaction by traders of the currency and of Japanese equities Specifically the Bank of Japan had not been expected to do anything at its recent gathering instead it announced two new efforts The fact that the yen has continued to drop in February and that Japanese stocks rocketed on the announcement suggest that more aggressive stimulus by the BOJ is probable In the short and immediate term investors love monetary stimulus
WisdomTree Hedged Japan Equity DXJ forfeited nearly 11 8 in value at its lowest ebb in 2014 DXJ has since popped 6 4 off of the bottom providing support for the notion that central banks are quite adept at inflating asset prices It is true that U S and European stocks completely decoupled from emerging market equities in 2013 In an era of unprecedented currency and interest rate manipulation though stock markets in the U S and Europe will not be able to divorce themselves from what happens in Japan What happens in Japan matters to developed country stocks the world over
It follows that faith in Japanese QE is every bit as important as the faith the investing community has placed in Yellen s Fed and Carney s Bank of England The price direction up down and fund flow in out for WisdomTree Hedged Japan Equity DXJ may very well foreshadow how U S and European stocks will fare in the months ahead
Disclosure Gary Gordon MS CFP is the president of Pacific Park Financial Inc a Registered Investment Adviser with the SEC Gary Gordon Pacific Park Financial Inc and or its clients may hold positions in the ETFs mutual funds and or any investment asset mentioned above The commentary does not constitute individualized investment advice The opinions offered herein are not personalized recommendations to buy sell or hold securities At times issuers of exchange traded products compensate Pacific Park Financial Inc or its subsidiaries for advertising at the ETF Expert web site ETF Expert content is created independently of any advertising relationships |
C | Stocks End Lower As Investors Digest FOMC Minutes | Upcoming US Events for Today
Consumer Price Index for January will be released at 8 30am The market expects a month over month increase of 0 1 versus an increase of 0 3 previous Less Food and Energy the index is expected to increase by 0 2 versus an increase of 0 1 previous
Weekly Jobless Claims will be released at 8 30am The market expects Initial Claims to show 335K versus 339K previous
Flash Manufacturing PMI for February will be released at 8 58am The market expects 53 5 versus 53 7 previous
Philadelphia Fed Survey for February will be released at 10 00am The market expects 8 0 versus 9 4 previous
Leading Indicators for January will be released at 10 00am The market expects a month over month increase of 0 2 versus an increase of 0 1 previous
Weekly Crude Inventories will be released at 11 00am
Upcoming International Events for Today
German PPI for January will be released at 2 00am EST The market expects a year over year decline of 0 9 versus a decline of 0 5 previous
German Flash Manufacturing PMI for February will be released at 3 30am EST The market expects 56 3 consistent with the previous report Flash PMI Services is expected to show 53 5 versus 53 6 previous
Euro Zone Flash Manufacturing PMI for February will be released at 4 00am EST The market expects 53 9 consistent with the previous report Flash PMI Services is expected to show 52 0 versus 51 9 previous
Great Britain Industrial Trends Survey for February will be released at 6 00am EST The market expects 6 5 versus 2 previous
Euro Zone Consumer Confidence for February will be released at 10 00am EST The market expects 11 0 versus 11 7 previous
Recap of Yesterday s economic Events
The Markets
Stocks ended lower on Wednesday as investors digested the FOMC minutes from the latest meeting The intention of the central bank is to continue to trim bond purchases in a predictable manner barring any shocks to the economy this year The Fed however refrained from mentioning the recent string of weaker than expected economic reports housing starts being the latest leading investors to doubt the commitment of the Fed to maintain appropriate levels of accommodation during adverse conditions Economic data has been consistently missing expectations over recent weeks leading to speculation that the taper will be tapered as the Fed will be forced to pause their plan of cutting back on bond purchases until the data stabilizes Weather is still being used as the excuse for the recent weakness in economic reports The trend of economic misses has pulled down on the Citigroup Economic Surprise Index typically a headwind to equity prices in a non QE environment
For the most part equity benchmarks around the globe remain just below resistance presented by the January highs It remains apparent that a catalyst may be required to fuel a breakout Without a breakout some very clear topping patterns would be derived either a double top or head and shoulders likely leading to the start of the widely discussed correction that continues to be debated However it still remains premature to speculate that a lower high has been derived but stay on your toes in case it does Seasonal tendencies for equity markets around the globe remain positive through to April and May
While broad equity benchmarks are hinting at potential topping patterns one sector is suggesting a substantial bottoming pattern With rates on the rise throughout 2013 REITs came under pressure failing to participate in the broad market rally The Dow Jones US Real Estate Index is now showing the appearance of an intermediate term reverse head and shoulders bottoming pattern a breakout above the neckline of the pattern around 265 would target last May s high around 295 or around 12 higher than present levels Outperformance of the sector versus the market has been apparent since the year began REITs have two periods of seasonal strength the first occurs in the Spring from March through to May and the second occurs in the Summer from July through to September
Seasonal charts of companies reporting earnings today
Sentiment on Wednesday as gauged by the put call ratio ended bullish at 0 90
S P 500 Index
TSE Composite
Horizons Seasonal Rotation ETF TSX HAC
Closing Market Value 14 24 down 0 35
Closing NAV Unit 14 23 down 0 52
Performance |
C | China ETF Bashers Cannot See The Forest For The Trees | The case against investing in China ETFs goes a little something like this The world s second largest economy grew at its slowest level in 14 years 7 7 Local government debt has surged 67 since 2010 Meanwhile home prices from Beijing to Shanghai have more than doubled over the last 10 years such that real estate is in danger of an imminent collapse
Granted the trends toward slower growth higher debt levels and inflated home prices are troubling Yet the Chinese government continues to manage the bruises and bumps associated with its emergence as a global economic superpower
For example in transitioning away from a Made in China dependency on exports China is experiencing remarkable growth in consumption The latest reading 111 on consumer confidence hit an all time record Additionally early in 2013 China expressed determination to promote GDP above 7 5 The economy grew at 7 7 last year
Compare some of the statistics between the U S and China Investors ignore deceleration in jobs and economic output when it occurs stateside yet they fret when GDP in China slows from 7 8 to 7 7 Retailers in America have been struggling to post positive sales numbers In contrast retail sales grew 13 6 in 2013 over on the mainland Wage growth Phenomenal in China Wages in the U S They have struggled to keep pace with the mildest cost of living increases
On the surface then one might think that a fund like the Global X China Consumer ETF CHIQ could outperform SPDR Select Sector Consumer Discretionary XLY on a year over year basis The exact opposite has turned out to be the reality
The fact that China ETFs have had a remarkably difficult ride lately the fact that investors have dismissed the China story as last decade s phenomenon is important for a trend follower like myself I may believe in the resilience of Asia I may be swayed by attractive valuations of exchange traded funds in the region Nevertheless I do not disregard the critical nature of technical price movement
Until recently the only China ETFs to reward investors for the risks being taken were tied to technology The short list of technology driven China ETFs includes a PowerShares Golden Dragon Halter PGJ b Guggenheim China Technology CQQQ and c Global X China Technology QQQC In contrast a broad market China believer has been whipsawed more frequently than he she dares to count
On the flip side the technical and fundamental pictures for funds like the SPDR S P China ETF GXC are clearly improving Technically each of the last three breaches of the 200 day moving average on the downside occurred at a higher price than its previous breach What s more the dips below the 200 day have been relatively short lived Fundamentally three years of futility places GXC s forward P E at 10 dividend yield at 2 4 and P B at 1 5 Contrast that with the S P 500 s SPDR Trust SPY with a forward P E at 16 dividend yield at 1 8 and P B at 2 5
I am not suggesting that it is time for everyone to hop back aboard the Orient Express At present most of my clients do not have much in the way of exposure to emerging market equities That said I can see the forest for the trees I am continuing to monitor the signs for the inevitable resurgence in appetite for market based securities of Chinese corporations
Perhaps the most intriguing possibility DB X Trackers Harvest CSI 300 China A Shares Fund ASHR This fund is the only U S listed ETF that invests directly in China A Shares shares of companies incorporated on the mainland and trading on the Shenzhen and or Shanghai exchanges It is believed that ASHR provides more access to domestically focused companies than the internationally focused H Shares found in SPDR China GXC or iShares FTSE China 25 FXI At present ASHR is demostrating greater upside momentum than the competition
Disclosure Gary Gordon MS CFP is the president of Pacific Park Financial Inc a Registered Investment Adviser with the SEC Gary Gordon Pacific Park Financial Inc and or its clients may hold positions in the ETFs mutual funds and or any investment asset mentioned above The commentary does not constitute individualized investment advice The opinions offered herein are not personalized recommendations to buy sell or hold securities At times issuers of exchange traded products compensate Pacific Park Financial Inc or its subsidiaries for advertising at the ETF Expert web site ETF Expert content is created independently of any advertising relationships |
C | Intraday Review DAX And EUR USD | The Japanese yen is moving up this morning as futures contracts on US indices hit resistance At the same time we can see mixed picture on the USD which is now down against the EUR GBP and JPY but up against the commodity currencies Below we have a chart of German Dax again which is moving slightly down from the highs after only three wave rally from 9500 For now that s not a big deal but break of the channel line and fall beneath 9600 will put prices down in to wave c of a flat correction German Dax 1 Hour Analysis The EUR USD has been very slow lately and on the intraday chart we can see the reason why We are tracking a triangle in progress that may send prices up to 1 3800 in this week Ideally we will see waves d and e in the next 24 hours but bias remains bullish as long as 1 3680 holds EUR USD 1 Hour AnalysisEUR USD Hour Chart title EUR USD Hour Chart width 555 height 545 |
C | Talking Forex GBP USD Trades In Positive Territory | EUR USD The EUR USD initially managed to benefit from the broad based USD weakness stemming from a continuation of concerns in China Furthermore against the grain of the negative slew of releases from the Eurozone the EU Commission raised their forecast for Euro area economy growth to 1 2 from 1 1 in 2014 and thus was supportive of bullish sentiment for the pair A further cause of increased risk appetite for the Eurozone was signified by the strong demand for the latest ESM bond launch however some of these gains in the EUR USD were largely capped by the downward momentum observed in the EUR GBP Thus resulted from the GBP supportive comments made by BoE s McCafferty In the latter stages of the session the pair fell sharply into negative territory as USD strength soared amid talk of touted squaring of long USD JPY and related crosses EUR JPY GBP JPY which resulted in consequent resurgence by the USD index and pushed the EUR USD in to negative territory However amid thin volumes and a lack of fundamental news behind the move the pair moved back in to positive territory as the broader macro trends were unbroken GBP USD The pair managed to trade in positive territory throughout most of the session after commentary from BoE s McCafferty who said if GBP rises more the BoE would need to consider its strength when setting further monetary policy and would consider slightly earlier rate rise if inflation pressure bigger than expected This saw upside for the pair with GBP strength likely attributed to the fact that McCafferty appears to be somewhat content with the current level of GBP and only if it moves higher from here will it then be a factor into making policy in his opinion Amid a lack of influential tier 1 data from the UK further upward momentum for the pair was provided by the GBP USD testing offers at 1 6720 and markets taking note of FX settlements related to the Vodafone Verizon Wireless deal with Citigroup seeing USD 5 1bln of FX trades having to be settled by the close today However in a similar nature to that of the EUR USD in the latter half of the session the entirety of the pairs gains were sharply erased following the aforementioned squaring of the USD JPY long positions before paring the move entirely USD JPY As was the case yesterday the pair was dragged lower amid a flight to quality which saw JPY benefit from safe haven flows Cautious sentiment stemming from concerns over the slowdown in China meant that USD JPY gathered momentum to the downside and saw Uthe SD JPY test and move below the 21DMA In the latter half of the session the pair failed to break below the key psychological 102 00 level as a result of JPY cross related selling with movements in EUR USD and GBP USD helping to keep the pair buoyant but still in negative territory |
C | Where Will Copper ETFs Go From Here | The commodity ETF space had seen some all stars to start the year thanks mainly to soft stock markets and the excessive under valuation in the natural resource world Some metals like gold and silver surged on their safe haven investment status while some soft commodity ETFs like cocoa have added double digits on a supply crunch However significant weakness has been seen in the industrial metals space such as with copper in the year to date frame All three exchange traded pure plays on copper haven t seen gains so far this year Notably copper exchange traded products lost around 16 last year
Behind the Slump
The prime reason for this severe slump may be the manufacturing slowdown in the world s second largest economy China The country is the biggest consumer of copper and other industrial metals in the world and thus easily regulates the price movement of these industrial metals As per a gauge for activity in China s manufacturing sector fell to a six month low in January as export orders and output remained sluggish Prior to this China s official nonmanufacturing Purchasing Managers Index to 54 6 in December from 56 0 in November The slowdown came in the wake of the government s effort to tighten up the 6 trillion shadow banking system and a rise in interbank borrowing costs Monetary tightening signals decelerating growth in industrial sector which in turn cripples the demand for copper The data has been lackluster in the other end of the world the U S as well Cold weather has frozen the factory output in the U S causing the January readings to plunge to the lowest in years Notably U S is the second largest global copper user trailing China a nation that uses about 40 of global copper A demand supply imbalance is also there to hurt the prices of copper The expects the copper market to see oversupply at least through 2015 and 2016 Thanks to all these issues iPath DJ UBS Copper TR Sub Index ETN JJC iPath Pure Beta Copper ETN CUPM and United States Copper Index Fund CPER have lost about 4 25 3 87 and 5 20 YTD respectively underlining the downward trend in the copper market
Any Hope for Turnaround
While some analysts remain cautiously optimistic on the journey of the red metal in 2014 some anticipate that the prices of copper will take a middle of the road approach and some are downright bearish on the commodity
As per the copper will likely rebound in 2014 on the strength in the U S construction and utility sector Apart from that higher use of copper will also be seen in the production of smartphones and the recovering housing industry in the U S While China is presently grappling with slowing growth the nation s utility sector is going to see huge investment As per Barclays the State Grid Corporation of China SGCC which fulfils about 80 of power requirement in China aims to enhance its annual investment by 13 to more than 60 billion Provided Chinese utilities comprises more than of Chinese total copper consumption SSGC s massive lift in capital investment will well explain the potential spike in copper prices in 2014 The space might see near term supply crunch but definitely not long term thanks to a recent strike in copper processing facility in Chile which has one of the largest capacities in the world temporary closure in a Philippines facility ravaged by the super storm Haiyan planned maintenance in BHP Billiton facility in Australia a ban on copper concentration export in Indonesia and lower production in China However some analysts expect the red metal to remain in 2014 Analysts from the likes of BofA Merrill Lynch and INTL FCStone have a neutral view on this industrial metal on growing supplies and moderate demand Though UBS AG increased its near term copper price estimate it believes copper prices this year will remain lower year over year
Our Take
In a nutshell even if copper recoils in 2014 on some short term positive blips the long term trend is surely sluggish due to unfavorable demand supply scenario The relative strength Index for the largest copper ETN JJC is presently 42 5 indicating that the product is neither in the oversold nor in the overbought territory Its short term moving average is below the long term average This suggests bearishness for this ETN If the U S economy comes up with sound manufacturing and other data in the coming months which is in fact most likely the Fed will likely speed up the QE tapering then This will build worries over continued dollar strength and may mar commodity investing In the post taper world key emerging markets will also fail to grow at robust rates Thanks to these factors we have a Zacks ETF Rank 5 Strong Sell for all three exchange traded products that focus on copper and we are looking for more losses in the space in the months to come as well |
BMY | Oncology players in the red on Celgene deal | A wide range of oncology companies are under modest pressure after deal hungry Bristol Myers Squibb NYSE BMY announced its 74B bid for Celgene NASDAQ CELG thereby removing a top candidate from the list of potential suitors Selected tickers NLNK 9 CRVS 9 4 NKTR 6 8 BLCM 4 8 CLDX 4 8 AFMD 2 2 JNCE 4 1 EDIT 3 4 LOXO 3 8 FPRX 3 6 LABU 5 8 BPMC 4 PBYI 4 5 CLLS 2 CYCC 1 9 BLUE 1 8 Previously Bristol Myers Squibb to acquire Celgene for 74B Jan 3 Now read |
BMY | EyePoint Pharma readies two product launches shares up 2 | EyePoint Pharmaceuticals EYPT 2 1 plans to launch two products this quarter DEXYCU dexamethasone intraocular suspension 9 for the treatment of postoperative inflammation in the eye and YUTIQ fluocinolone acetonide intravitreal implant 0 18 mg for the long term treatment of non infectious posterior segment uveitis CEO Nancy Lurker says manufacturing has been scaled up and commercial infrastructure established to support the launches Now read |
BMY | Celgene Bristol Myers set 2 2 billion termination fee for their mega deal | Reuters Celgene Corp O CELG and Bristol Myers Squibb Co N BMY will have to pay 2 2 billion if either of the drugmakers walks away from their 74 billion merger announced on Thursday according to a regulatory filing The deal which is worth 95 billion including Celgene s debt is the largest pharmaceutical deal ever and brings together two of the world s largest cancer drug businesses Celgene s top executives including its chief executive officer and chief financial officer are entitled to severance benefits if they resigned with good reason or are terminated without cause within two years of the deal closing according to the filing with the U S securities regulator on Friday The severance benefits include a cash severance payment equal to 2 5 times the officer s annual base salary and annual cash incentive opportunity Celgene said Celgene CEO Mark Alles will be eligible for a severance benefit that would be three times his annual salary and cash incentive opportunity The company is yet to disclose his 2018 compensation
If the termination or resignation is not connected to the deal closing the severance payment would be 1 5 times the officer s salary or two times in Alles case and would include cash incentive opportunity Celgene said |
BMY | Mirati up 7 on clinical collaboration with BMY in lung cancer | Mirati Therapeutics MRTX 6 7 is up on below average volume on the heels of its clinical collaboration with Bristol Myers Squibb BMY 3 5 evaluating the combination of sitravatinib and Opdivo nivolumab for the second line treatment of patients with non small cell lung cancer NSCLC who have progressed after platinum based chemo and a checkpoint inhibitor A Phase 3 study should launch in H1 Mirati will conduct the trial while BMY will supply product Now read |
JPM | Asian shares higher as China GDP retail sales aid sentiment | Investing com Shares in Shanghai edged higher on Friday with solid GDP and retail sales data aiding sentiment along with a slightly stronger yuan
The Shanghai Composite rose 0 09 while the the People s Bank of China set the yuan central parity rate against the dollar stronger at 6 6805 on Friday compared with 6 6846 on Thursday
GDP figures out of China showed a 6 7 gain in the second quarter ended June year on year period beating the 6 6 rise seen and also rose 1 8 quarter on quarter better than the 1 6 increase expected
Also in China fixed asset investment rose 9 0 less than the 9 4 year on year gain seen in June while industrial production gained 6 2 better than 5 9 seen in the same period and retail sales rose 10 6 a tad better than 10 0 seen
The S P ASX 200 also gained 0 68 with China the country s top trading partner and the Nikkei 225 rose 1 16
Overnight U S stocks rose sharply remaining in record territory for the fourth consecutive session on the back of stellar quarterly results from JPMorgan Chase Co NYSE NYSE JPM which kicked off the second quarter earnings season for major banks by topping analysts earnings and revenues forecasts on Thursday
JPMorgan the world s largest bank ended the second quarter with revenues of 25 2 billion amid a stellar period among its Fixed Income division over the last three months For the quarter FICC revenue soared 35 to 3 96 billion while sales from equities trading rose by 1 5 on the period boosting the company s overall bottom line Consequently JPMorgan finished with adjusted EPS of 1 55 beating analysts EPS forecasts of 1 46 by a wide margin
The Dow Jones Industrial Average added 134 29 or 0 73 to 18 506 41 while the S P 500 Composite index gained 11 32 or 0 53 to 2 163 75 each falling back slightly after hitting fresh all time record highs The Dow traded as high as 18 537 33 on Thursday hitting a record intraday high for the third straight session At the same time the S P 500 peaked at 2 168 during the session marking the fourth consecutive day that the broader index reached an all time intraday high Both indices ended the day at all time closing highs
On the S P 500 nine of 10 sectors closed in the green as stocks in the Basic Materials Financials and Technology industries led Stocks in the Utility sector lagged closing the day as the lone industry in the red Meanwhile the NASDAQ Composite index rose by 28 33 or 0 57 to 5 034 06 moving back into positive territory for the calendar year |
JPM | U S retail sales industrial output data suggest strong Q2 GDP growth | By Lucia Mutikani WASHINGTON Reuters U S retail sales rose more than expected in June as Americans bought motor vehicles and a variety of other goods bolstering views that economic growth picked up in the second quarter Those expectations were further reinforced by other data on Friday showing that industrial production recorded its biggest increase in 11 months in June driven by a surge in motor vehicle assembly With domestic demand strengthening inflation is also steadily rising The bullish data and a rally on Wall Street could allow the Federal Reserve to raise interest rates later this year but much will depend on policymakers assessment of the impact on the U S economy of Britain s June 23 vote to leave the European Union In normal times this would be enough for the Fed to continue raising interest rates said Harm Bandholz chief U S economist at UniCredit Research in New York But Fed officials want to wait and see if and how Brexit affects the outlook for the U S economy before pulling the trigger again The Commerce Department said retail sales rose 0 6 percent last month after gaining 0 2 percent in May It was the third straight month of increases and lifted sales 2 7 percent from a year ago Excluding automobiles gasoline building materials and food services retail sales shot up 0 5 percent after a similar gain in May These so called core retail sales correspond most closely with the consumer spending component in the gross domestic product report Economists had forecast overall retail sales rising only 0 1 percent and core sales gaining 0 3 percent last month The better than expected rise in core retail sales last month suggested consumer spending increased by at least a 4 5 percent annualized rate in the second quarter which would be the fastest since 2006 according to economists While this sort of growth will be hard to emulate in the third quarter most of the positive fundamentals supporting the consumer remain in place particularly the healthy state of the labor market said Michael Feroli an economist at JPMorgan NYSE JPM in New York The Atlanta Fed raised its second quarter GDP growth estimate by one tenth of a percentage point to a 2 4 percent rate The economy grew at a 1 1 percent pace in the January March quarter In a separate report the Fed said industrial output increased 0 6 percent last month reversing May s 0 3 percent drop Manufacturing output rose 0 4 percent amid broad increases in production including a 5 9 percent surge in auto assembly Warm weather spurred utilities output also another boost to second quarter consumer spending Mining production gained for a second straight month as an increase in coal output and a rise in oil well drilling and servicing more than offset declines in oil and gas extraction and non metallic mineral mining INFLATION RISING Friday s reports helped to offset disappointing financial results from big U S banks hoisting Wall Street to fresh highs The dollar rose versus a basket of currencies while prices for U S government debt fell The strong domestic demand is gradually translating to higher consumer prices In a third report the Labor Department said its Consumer Price Index rose 0 2 percent last month after a similar gain in May The so called core CPI which strips out food and energy costs also rose 0 2 percent in June increasing by the same margin for three consecutive months That raised the year on year core CPI gain to 2 3 percent from 2 2 percent in May This increase is higher than the average annual rate of 1 9 percent over the past 10 years The Federal Reserve has a 2 percent inflation target and tracks an inflation measure which is currently at 1 6 percent Looking ahead to the second half further stability in commodity prices and fading import price deflation should continue to show up in the form of firmer prices for consumer goods said Sam Bullard a senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina Concerns about persistently low inflation contributed to the U S central bank keeping interest rates unchanged last month The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade A fourth report showed consumer sentiment fell in early July as high income households worried about the impact of Brexit on stock prices Share prices have however since rebounded and are trading at record highs This together with rising wages and higher savings should keep consumer spending supported this year Retail sales in June were buoyed by purchases of building materials and garden equipment which jumped 3 9 percent the largest increase since April 2010
Online retail sales rose 1 1 percent while receipts at sporting goods and hobby stores shot up 0 8 percent There were also boosts from furniture and auto sales as well a purchases of grooming products But Americans cut back on apparel purchases and spending at restaurants and bars Reporting Lucia Mutikani Additional reporting by David Lawder Editing by Andrea Ricci |
JPM | Peru President elect reveals technocrat filled cabinet | By Marco Aquino LIMA Reuters Peru s President elect Pedro Pablo Kuczynski listed his incoming ministers on Friday in a cabinet stacked with technocrats but thin on experienced politicians who might help him broker deals with an opposition controlled Congress The 77 year old former investment banker who was prime minister under ex president Alejandro Toledo shrugged off concerns that his first cabinet lacked savvy political operators and said it would aim to deliver results We re turning the page What we want is modern politics based on qualified people Kuczynski a centrist said in his first press conference since beating his run off rival Keiko Fujimori by just tens of thousands of votes last month Taking few questions Kuczynski said he deliberately did not tap any of his party s 18 lawmakers elect for the 19 member cabinet because he needs them in Congress where Fujimori s right wing populist party will hold a solid majority with 73 seats This is a team with the capacity for dialogue and agreement and commitment to Peru said Kuczynski s incoming prime minister Fernando Zavala a 45 year old former finance minister who was most recently the chief executive for beer company SABMiller s local unit Zavala whom Kuczynski announced as his pick for prime minister on Sunday said the team would work to meet demands for safer streets more jobs and less corruption Kuczynski takes office July 28 replacing outgoing President Ollanta Humala a former military officer who shed allies throughout a five year term that will likely end with the lowest approval rating of any recent leader Kuczynski previously announced that Alfredo Thorne a former director at JPMorgan Chase NYSE JPM would be his finance minister The incoming cabinet will have five women and several trained economists including consultant Gonzalo Tamayo as energy and mines minister and academic Elsa Galarza as environment minister Reuters reported Tuesday that Kuczynski would appoint the two Career diplomat Ricardo Luna a former ambassador to the United States and the United Nations will be foreign relations minister Martin Vizcarra Kuczynski s vice president and a former governor of a mining region will be transportation and communications minister Fujimori daughter of imprisoned former authoritarian leader Alberto Fujimori has yet to meet with Kuczynski who has said that she has rebuffed his efforts to reach her by phone The frosty relationship between the two could thwart Kuczynski s plan to ask Congress to give him powers to legislate his economic reforms including proposals to ease taxes and roll out new infrastructure projects |
JPM | Brexit widens chasm between Wall Street and Europe s investment banks | By Anjuli Davies and Olivia Oran LONDON NEW YORK Reuters Market ructions caused by Britain s decision to leave the European Union are set to widen the gulf between Wall Street and European investment banks potentially leaving the continent without its own global champion The Brexit vote has pushed shares in Deutsche Bank DE DBKGn and Credit Suisse S CSGN to record lows and triggered a string of analyst downgrades highlighting expectations that Europe s already struggling investment banks will be pushed further to the sidelines by their U S counterparts In our view the uncertainty created post Brexit if it leads to long term negative impact on profitability could result in further restructuring in Tier Two investment banks JPMorgan NYSE JPM analysts wrote in a note on July 11 downgrading their estimates for European banks in favor of their U S rivals Brexit is seen as a negative for banks on both sides of the Atlantic because the uncertainty could subdue dealmaking and trading activity And banks may also face the cost of relocating some London based businesses and staff to other EU cities But European banks will find it tougher as Brexit comes on top of post financial crisis structural overhauls that their U S counterparts have largely completed Since Britain s vote to leave the European Union some headhunters on Wall Street have reported getting more calls from investment bankers at European groups asking about jobs at their U S rivals People I ve been in discussion with since the middle of last year have all of a sudden started saying you were right I should be more open minded I don t want to be the last guy here to turn the lights off Is it too late in the year to move Gary Goldstein founder and CEO of executive search firm Whitney Partners in New York said Europe s banks were already on the back foot before the vote focused on cost cutting and shoring up capital while more strongly capitalized U S banks have been able to go out to win new business We have been getting a number of calls from senior bankers at the European institutions in the U S Kevin P Mahoney at Bay Street Advisors LLC said The concerns range from the European banks inability to lend and thus compete on deals going forward to the quickly eroding value of their stock awards and overall compensation GLOBALLY RELEVANT Some senior executives worried about the risks of Wall Street dominating the region argue that Europe needs its own investment banks to service companies at home and abroad and help to spur economic growth It is in the interests of Europe at large to have a strong globally relevant bank in Europe Alasdair Warren head of corporate and investment banking EMEA at Deutsche Bank told Reuters If the only globally relevant banks of scale are North American it s not politically or socially good for Europe But of course all institutions irrespective of geography need to be globally competitive Barclays L BARC chief executive Jes Staley said earlier this year that the region risked tipping over into American dominance which could leave Europe s capital markets entirely dependent on firms based elsewhere European companies could also play a role in supporting their home banks In a research paper in March think tank Bruegel said companies could help to bolster the continent s investment banks We recommend that the big European corporates should cherish the few remaining European investment banks by giving them at least one place in otherwise U S dominated banking syndicates the paper said That could help to avoid complete dependence on U S investment banks WALL STREET VS THE REST In 2007 the eight biggest European banks FICC fixed income currencies and commodities revenue was 48 billion compared with the 38 billion generated by the five biggest U S banks according to data from analytics firm Tricumen Last year European banks revenue was 26 billion while U S banks was 43 billion In eight years there has been a 22 billion fall in FICC revenue at European banks and a 5 billion increase at U S banks Europe s 26 percent advantage has turned into a 40 percent deficit European banks total fee revenue from bond issuance equity capital markets and mergers and acquisitions M A fell from 17 billion to 13 billion between 2007 and 2015 while U S banks fees remained unchanged at 23 billion I would expect European banks to lose more market share to the U S banks Darko Kapoor a partner at Tricumen said The Wall Street banks potentially face some big Brexit costs The five largest U S banks employ around 40 000 people in London more than in the rest of Europe combined taking advantage of the EU passporting regime that allows them to offer services across the bloc If they have to set up new continental European outposts this could be extremely costly It could cost 50 000 pounds 66 215 per person on average to relocate an employee to the EU according to consultancy Crossbridge taking into account the costs of hiring and redundancy new building rent and other infrastructure and contingency costs U S investment banks have 20 percent more EMEA Europe Middle East and Africa staff in Britain than their European counterparts according to industry analytics firm Coalition
Most banks U S and European have put in place a hiring freeze and are following a wait and watch approach Some banks that had launched restructuring before Brexit are looking at accelerating those programs Coalition said |
HAL | Patterson UTI says employees missing after Oklahoma rig explosion | Patterson UTI Energy NASDAQ PTEN says some of its employees are missing after a gas explosion occurred early today at a drilling site in eastern Oklahoma local officials say the number of missing workers is five out of 22 at the site The blast occurred during oil and gas drilling using a rig provided by PTEN and fires continue to rage at the site which was being operated by Red Mountain Energy Boots Coots Halliburton s NYSE HAL well control and prevention service reportedly was called in to control the fire and well Now read |
HAL | Halliburton HAL Down 17 9 Since Last Earnings Report Can It Rebound | It has been about a month since the last earnings report for Halliburton HAL Shares have lost about 17 9 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is Halliburton due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important drivers Halliburton Q1 Earnings In Line Sales Top EstimatesHalliburton reported in line first quarter profit on robust international activity offsetting pricing pressure in the North American business The oilfield services company saw its adjusted net income excluding impairments and other charges come in at 23 cents per share same as the Zacks Consensus Estimate However the bottom line was below the adjusted earnings of 41 cents in the year earlier quarter Adjusted net income reported by Halliburton was 201 million well below the 358 million for the same period last year Meanwhile revenues of 5 7 billion were approximately flat with the year ago quarter and scraped past the Zacks Consensus Estimate by 3 5 North American revenues were down 6 9 year over year to 3 3 billion Revenues from Halliburton s international operations rose 11 from the year ago period to 2 5 billion Management s OutlookThe world s biggest provider of hydraulic fracking noted that North American activity levels in the first quarter improved slightly year over year but encountered pricing pressure throughout the period Importantly Halliburton suggested that the worst is over for the domestic market as far as pricing weakness is concerned Meanwhile Halliburton is witnessing broad based steady recovery in its international business The company anticipates its international revenue to grow at a high single digit rate in 2019 with further improvement next year In response to the changing market dynamics the company is looking to continue its disciplined approach to capital spending improve efficiency develop sophisticated technologies and generate strong cash flow from operations Segmental PerformanceOperating income from the Completion and Production segment was 368 million 26 4 below the year ago level of 500 million The division s performance was affected by pricing declines in U S land stimulation services However the segment operating income bettered our consensus estimate of 335 million The outperformance was largely the result of strong domestic artificial lift and cementing activity increased stimulation activity in Latin America and higher completion tool sales in Middle East Asia and Latin America Meanwhile Drilling and Evaluation unit profit fell from 188 million in the first quarter of 2018 to 123 million in the corresponding period of 2019 The segment income was also below the Zacks Consensus Estimate of 146 million The underperformance was on account of costs associated with the mobilization of a number of overseas drilling projects lower project management activity and weak pricing in the Middle East Balance SheetHalliburton s capital expenditure in the first quarter was 437 million As of Mar 31 2019 the company had approximately 1 4 billion in cash cash equivalents and 10 3 billion in long term debt representing a debt to capitalization ratio of 51 7
How Have Estimates Been Moving Since Then
In the past month investors have witnessed an upward trend in fresh estimates
VGM Scores
At this time Halliburton has a poor Growth Score of F however its Momentum Score is doing a lot better with a C Charting a somewhat similar path the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising Notably Halliburton has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
C | Improving Picture For Stocks | Economy Robust Enough
Markets have countless moving parts which means trying to figure out why the market does what it does is difficult at best Investors always look for clean explanations of why markets move up or down The simple truth is markets often move in head scratching ways For example we would expect that a worse than expected labor report arriving during a period of Fed tapering would result in lower stock prices That is not what happened Friday
U S stocks rose with the Standard Poor s 500 Index capping its best two day rally since October amid optimism economic growth is robust enough to weather stimulus cuts even as data showed weaker than forecast hiring The broader data beyond just this one jobs report tells us the economic recovery is intact and the economy s growth rate is continuing to strengthen Darrell Cronk the New York based regional chief investment officer at Wells Fargo Private Bank said by phone I just don t think the market is looking at it and saying that this one number changes the overall trajectory of what the Fed is trying to do
Aggregate Tolerance For Risk Improving
In an October 2013 we provided a hypothetical example of how the market values securities Since it can help us understand Friday s head scratching gains in stocks we will revisit it now Let s assume we run a controlled market experiment where
We give 1 000 investors an annual report to read for company XYZ
All 1 000 are asked to read the report and then value the stock
Stock XYZ can only be traded or owned by these 1 000 investors
The Market Does Not Care What We Think
If I am one of the 1 000 investors in the experiment how relevant is my personal opinion in terms of how the price of stock XYZ is set in the marketplace In simplified terms my personal take on the value of XYZ impacts the price by roughly 0 10 1 1000 Stated in a politically correct manner 99 9 of the factors impacting the price of XYZ have nothing to do with my personal analysis forecast or opinion about XYZ or the global macro environment for that matter Said in a more direct manner the market does not care what I think about where XYZ is headed or what it is worth It sounds harsh but that is the way markets work Does that mean fundamentals don t matter Absolutely positively not the concept simply defines how fundamentals impact asset prices
If we expand the XYZ analogy to the real world it gets even more humbling Facebook FB trades 65 000 000 shares on a typical day It closed Friday at 64 32 If we assume the average FB trade is for 10 000 worth of stock that means the average number of shares traded per individual transaction is 155 10 000 64 32 A back of the napkin estimate of the number of people that trade Facebook every day comes to 419 354 65M shares per day 155 shares per individual transaction Therefore if I am trading Facebook the impact of my personal opinion research forecast on the price of the stock is 1 divided by 419 354 or 0 00023 The admittedly crude analysis tells us 99 977 of Facebook s value is impacted by external factors that are in no way impacted by what I think or what I think will happen next
We Don t Have To Agree With The Markets To Profit
The takeaway from the example above is that the aggregate opinion of all investors sets asset prices and our personal opinion has little to no impact This means the way to balance risk and reward is to monitor the aggregate opinion of future outcomes related to the economy Fed policy earnings etc When the aggregate opinion is bullish the odds favor higher stock prices When the aggregate opinion is bearish the odds favor lower stock prices We can monitor the aggregate opinion using stock charts
A Still Mixed But Improving Picture For Stocks
What are the markets telling us after Friday s labor report The daily chart of the S P 500 below looks complex but the concepts are easy to follow if you look at each letter in isolation
Point A The blue and red moving averages are trying to flatten out and turn up as they did in the early stages of the October 2013 rally in stocks compare A and B
Point C Investor conviction was strong enough after the employment report to push the S P 500 above two areas of possible resistance 1 775 1 781
Point E If the S P 500 can clear 1 808 and the green 50 day moving average next week it will provide more evidence of an improving perception of the economy and growth oriented assets
Point D The pink 200 day moving average is used to monitor the market s long term trend The slope remains positive which continues to favor higher stock prices
Investment Implications
Before we discuss how the chart above impacted our allocation it may be helpful to review the four tenets of investment success we covered on
Think in probabilities
Develop an IF THEN system
Monitor the big picture
Remain highly flexible
The charts above tell us a the probability of a bear market kicking off from a risk tolerance profile similar to what we have today is relatively low b the odds of further downside in stocks are dropping and c the odds of additional upside in stocks are improving A relatively low bear market probability does not mean a zero probability Therefore if the chart above continues to improve we will continue to incrementally increase our exposure to stocks SPY and decrease our exposure to cash Before the close Friday we added to our position in technology stocks QQQ The incremental increase in stock exposure brought our portfolios back in line with the market s current profile Since hurdles remain 50 day and 1 808 on S P 500 we still have some bonds TLT in the mix
Fed s Low Rate Pledge Still Backs Equities
The worse than expected non farm payrolls report also helped improve perceptions that the Fed will continue to provide low rates From
Policymakers are in the midst of phasing out their massive bond buying program but worry that the U S economic recovery could stall if financial conditions tighten too soon To ensure that stimulus still flows they plan to lean ever more heavily on their promise to investors that a rate hike is far in the future
The buckets below speak to opportunity costs for our limited investment capital If we monitor the market s pricing mechanism with an open mind we can greatly increase our odds of allocating in a reasonable manner The market s pricing mechanism called for a shift toward the stock bucket Friday We will see what next week brings |
C | The Rise Of The Pound Is A Risk To The Economy Announced The Optionova | Based on the market data The Bank of England has satisfied expectations and didn t change the interest rate at the level 0 5 and also held volumes of the asset s purchase program in the amount of 375 billion dollars
From protocols of Monetary Policy Committee it has transpired that whole voting on the interest rate the decision was made unanimously Also all members of MPC were aligned to leave targets unchanged
Members of the regulator expressed confidence in existence of reductive processes in the British economy but they announced anxieties that will cause a further rise of the pound
According to the opinion of the Bank of England the driving forces in recovery of economy are consumption and stockpiling Also the necessary term is growth of investment Along with this there some signs of the growth consumption slowing Also wondering of MPC members is set by the lack of productivity growth
Regarding to the forecasts of the Bank of England GDP growth in the fourth quarter will be 0 9 to the beginning of 2014 inflation can reduce to the target value
The Pound through the eyes of traders
The analysts of the Binary Options Broker Optionova agree that the wave C C level H2 from the reference point 81 350 is over The actual correction crosstab of this wave C C on Forex market is with borders 81 350 and 80 180 The new reference point on Forex Market can be named level 80 180 Up from this reference point is formed the wave A B with borders going through levels 80 180 and 80 580
By movement down aren t broken the slopping channel SC with figures 79 020 79 650 and pivot 80 036 for which it is possible to form the wave C
For movement up it is necessary to form a fractal zigzag reactance turn FZT
Goals up are the next levels
80 627 38
80 765 50 till the level is possible to form the 4th wave
80 903 62
81 074 76 SC with figures 81 485 and 81 350
To continue the movement down it is necessary to form a dog of Elder of the new wave C down with the breakdown of pivot 80 036 and the next forming of the latent FZT |
C | Gold Oil Resistance Ahead | Gold is at the new highs already after breaking out of a triangle yesterday We believe that price is now in wave c of a second zigzag that may form a top in 1290 1300 area Keep in mind that despite higher highs and higher lows we think that move from 1181 is corrective thus temporary move so we need to be aware of a bearish turning point in this week GOLD 4h Elliott Wave Analysis Crude oil is trading nicely since Friday now above 100 per barrel that has been expected after a triangle formation placed in wave iv We are tracking wave v now final leg in wave A that may complete a five wave move from the low around 100 70 101 00 figure That said be aware of a corrective retracement in this week down in wave B OIL 4h Elliott Wave Analysis |
C | Pound Strengthens Problems For British Economy Ahead | The recent data coming out of the United Kingdom has prompted the Bank of England to stay its course and not change its current monetary policies Interest rates are kept at the current 0 5 percent and its asset purchasing program stays intact as well
According to the minutes from the meeting at the Bank of England the decision to keep interest rates unchanged and to continue with the current monetary policies was unanimous All voting members voted in keeping the status quo
The members of the BOE expressed confidence in the British economy but they also announced that there are anxieties that can cause a further rise of the pound
The Bank of England believes that the driving forces in the recovery of the economy are consumption and stockpiling Also the necessary term is growth of investment Along with this there are some signs that the growth of consumption slowing Something else that has the members of the BOE wondering is the lack of productivity growth According to the forecasts of the Bank of England GDP growth in the fourth quarter of this year will be 0 9
The view of traders on the Pound
According to the contributing traders at the Binary Options Broker Optionova the wave of C C at the level H2 starting at 81 350 is over The actual correction crosstab of this wave C C are the boundaries of the 81 350 and the 80 180 levels
The new reference point can be named the level 80 180 Up from this reference point a wave A B with borders is formed which goes through the 80 180 and the 80 580 levels
If the slopping channel SC with figures 79 020 79 650 and pivot 80 036 are not broken then there is a possibility for a C Wave to form
We may also see a fractal zigzag retracement with a bullish move
The upside targets are
80 627 38
80 765 50
80 903 62
81 074 76
In order for the downtrend to continue it is necessary to see a bearish candlestick at the recent C wave along with a breakout to the down side of the pivot point at the 80 037 level |
C | USD JPY Temporary Recovery | USD JPY found a support at the end of last week around 100 74 from where pair recovered for around 200 pips so we suspect that pair completed first five wave decline from 105 34 labeled as leading diagonal As such we believe that pair is in bearish mode but before downtrend may resume we expect a three wave pullback ideally up to 103 30 60 resistance area We see pair now moving sideways in irregular wave b that may test 101 40 60 zone and then send price up in wave c USD JPY 4h Elliott Wave Analysis USD JPY Elliott wave title USD JPY Elliott wave height 602 width 600 |
C | How Much Of Your Portfolio Should Be In Gold And Silver | In a couple of interviews I ve done recently I have been asked how much of one s portfolio should be dedicated to gold and silver Within this I am asked how would I divide my money between gold silver and the alternative ways one can hold them
As someone who is relatively new to investing and the concept of saving anything student loans shopping addiction etc I like to look for approaches that have stood the test of time but are adaptable to the changing economy
This is why I am a big fan of Harry Browne s Permanent Portfolio Formed in 1982 the Permanent Portfolio seeks to provide a sound structure and disciplined approach to asset allocation
When I have written about the Permanent Portfolio in the past I have explained that the portfolio is split into four equal asset classes
25 Gold
25 Bonds
25 Equities
25 Cash
As Tim Price advocator of the Permanent Portfolio said recently the essence of successful asset diversification is to deploy one s valuable capital across asset classes that each hedge partly or wholly against a different type of financial fate
In the near future we will look into the success of the Permanent Portfolio across the decades and for different investors However at the moment I d like to look at the role gold and silver play in the portfolio
I was looking over the asset allocation of the original fund PRPFX and was delighted to see that it is physical gold and silver in which the fund is invested Not only is it gold and silver bars but gold coins as well
In a few weeks The Real Asset Company will be launching a new coin offering through the UK s Royal Mint The decision to offer coins was an easy one given how often customers expressed a desire to allocate some of their portfolio to coins
Our decision to offer coins was confirmed when we ran a poll on the matter a few months ago we asked readers and clients what percentage of their bullion portfolio was allocated to gold and silver coins The majority of respondents told us that they allocated between 76 100 of their precious metals portfolio to coins
This may seem over the top but one look at the permanent portfolio allocations in 2013 suggests that it should look at an allocation of at least 50 of coins to bullion
The top three allocations of the portfolio are as follows
Gold Coins 13 65
Gold Bullion 7 44
Silver Bullion 5 10
The total gold silver allocation in the portfolio comes to over 26 It fascinates me to see that 50 of this allocation is to gold coins and that this this is the largest single allocation of the whole portfolio
As regular readers will know the Permanent Portfolio has proven to do exactly what it claims to Compared to 70 30 funds or portfolios that focus entirely on just on asset class the permanent approach has acted as a sensible calm approach to wealth preservation
Since inception the portfolio has delivered average annual total returns of 6 51 before taxes In the last ten years the average annual total returns before taxes for the Permanent Portfolio have been 7 95 This is in stark contrast to the Citigroup 3 Month U S Treasury Bill Index 1 59 and the Standard and Poor s 500 Composite Stock Index 7 41
It makes me feel even better to know that over 25 of this is thanks to my two favourite metals and that The Real Asset Company will soon be able to cater for your entire bullion portfolio |
C | Swing Trading Watch List VMC OAS HP NQ C | Another solid day in the Splash Zone despite a market that simply could not find its footing
On top of selling BAS yesterday for a 15 6 gain I booked the profits in BHI at 59 90 for a 5 1 gain in six trading sessions and a profit of 1 024
Here s tonight s trade setups for tomorrow s market
Long Vulcan Materials VMC
Long Oasis Petroleum OAS
Long Helmerich Payne HP
Long NetQin Mobile NQ
Short Citigroup C |
C | Gold Recovery Faces Resistance | Gold is at the new highs after breaking out of a triangle at the start of the week We see price now moving up in wave c of a second zigzag that may form a top in current 1290 1300 area Keep in mind that despite higher highs and higher lows we think that move from 1181 is corrective thus temporary recovery so we need to be aware of a bearish turning point in coming days An impulsive fall back 1254 will suggest that highs are in GOLD 4h Elliott Wave Analysis |
C | 5 Swing Trades To Watch | Long Vulcan Materials VMC
Long Oasis Petroleum OAS
Long Helmerich Payne HP
Long NetQin Mobile NQ
Short Citigroup C |
BMY | Special Report After a child s dire diagnosis hope and uncertainty at the frontiers of medicine | By Michele Gershberg NEW YORK Reuters I wish I didn t have this hand anymore my 4 year old son said as he woke one winter morning Why my love Because it s no good he said pulling at the nearly lifeless fingers of his left hand with its stronger partner Already weary from fear and worry over Natan s cascade of symptoms I was pained to hear him describe how his body was betraying him It was March 2017 Over the previous year the signs had mounted that something was wrong First Natan s voice weakened He repeatedly fell ill with lung infections Each passing week seemed to bring a new warning He choked when eating or drinking His left foot dragged He would trip and fall at play His eyes moved rapidly from side to side When we spoke to our bright boy it was harder to connect as if a heavy fog had settled between him and the world Now Natan was days away from a delicate surgery to remove part of the tumor that doctors had eventually found growing weed like from his spinal cord It had invaded his brainstem and beyond slowly suffocating the nerves that control breathing swallowing and movement Left unchecked it could kill him But even if successful the surgery would be only a stop gap measure a starting point in a process that would propel our family to the forward edges of medical science There the genomics revolution as it s known has made it possible to understand and confront what drives some cancers and other diseases With tissue taken from the tumor doctors told us they would determine whether it was caused by a rare genetic mutation which could radically change the course of his treatment Just a few years earlier that course would have been grimly straightforward more than a year of chemotherapy that might stop the tumor from growing Patients like Natan might need to repeat this punishing treatment several times in childhood and face a life of increasing impairment as the mass robbed them of their ability to breathe or walk on their own Now we were told there was a slim chance Natan could beat back the tumor by merely swallowing a pill twice a day with few if any side effects In the 15 years since scientists completed the first map of a person s genome the sequence of DNA molecules that are the unique genetic blueprint of every individual the process has become steadily faster and cheaper With the information such testing yields on tumor cells researchers are developing drugs to target one by one specific disease causing genetic abnormalities prolonging and improving the lives of tens of thousands of people whose illnesses were once a death sentence And they ve only just begun Forty years ago we didn t understand the cancer and we didn t understand the drugs said Dr Richard Schilsky chief medical officer at the American Society of Clinical Oncology Now we are actually able to study a patient s cancer gain some insight into what is driving it and in some cases identify well established effective therapies that can target those drivers That s a huge difference These advances also bring new risks to patients already dealing with a devastating diagnosis who may be encouraged to consider costly new treatments with little evidence of their effectiveness or safety It is a subject of debate in the cancer community How to temper the hope for a few against the likelihood that most patients will still not find an answer in these therapies The majority of people do not benefit but some do and that s what s driving the field forward Schilsky said In Natan s case we learned that in a clinical trial one of the newer targeted therapies approved to treat aggressive adult cancers had worked wonders on a small group of children with similar slow growing tumors If DNA sequencing turned up the relevant mutation the experts told us Natan would be a candidate for the drug I was not about to unquestioningly embrace a treatment on scant evidence and one whose long term effects weren t known As U S health editor for Reuters News for several years I had worked on articles chronicling the promise and disappointments of so called precision medicine I knew to question claims about new drugs that melted away tumors The professional was now personal so I and my equally skeptical husband set out to learn as much as we could about the options for Natan We consulted with family and friends in the medical field and tapped referral networks in our Jewish community We interviewed experts and read what research we could find It was exhausting especially on top of the emotional and physical toll of caring for a sick child but we had no choice Our little boy s survival was at stake THE ILLNESS Natan was a healthy baby and toddler active and mischievous at play with his older brother Our only complaint was that he frequently woke during the night but in those years there was always a reasonable explanation feeding teething growth spurts Our first real panic struck in the spring of 2016 Natan then 3 woke one Sunday with a runny nose but he otherwise seemed fine I left for the gym Within that hour he spiked a high fever and when I returned my husband was holding him over the bathroom sink splashing cold water on his face He went limp like he wasn t breathing he said I ve called an ambulance After a few days in hospital being treated for pneumonia Natan bounced back The speed of his deterioration worried us yet it seemed similar enough to other parents stories about scary but treatable respiratory illnesses in young children and our own preschool bouts with pneumonia and bronchitis Soon we began to wonder why his sleep was still so disrupted and why his voice had begun to sound soft and hoarse The first doctor visits turned up nothing unusual When anyone recommended more in depth tests such as a sleep study my husband and I wary of unnecessary medical interventions would ask what practical difference the information could make Within months it became clear that we needed more answers When Natan returned to preschool in September his voice was barely audible to his teachers He would sometimes appear to choke while eating or drinking An ear infection gave way to a sinus infection which gave way to bronchitis When he finished a course of antibiotics he was soon back at his pediatrician s office or the emergency room struggling to breathe There s no reason a neurologically normal child should sound like that a pulmonologist said after listening to just a few breaths From Thanksgiving on the tests began to pile up as did the medications Natan needed daily The list of complaints on his chart grew longer after each visit noisy breathing sleep disorder breathing chronic bronchitis asthma He was hospitalized again for pneumonia at Christmas Nothing we were doing was making him better and that helplessness fed our anxiety Natan now cried many mornings before school I m sick he would say even if his vital signs seemed normal At work I was haunted by the feeling that his teacher or babysitter would call at any minute to say he had stopped breathing When I picked him up from class I noticed his heavy gait how he stumbled forward while walking and how his eyes seemed dulled Each new specialist brought in on Natan s case identified another symptom now more suggestive of a neurological disorder the rapid involuntary eye movements the weakness on the left side of his body But we still had no explanation What is the diagnosis my husband demanded at each medical visit THE DIAGNOSIS In late February 2017 the two of us sat in the hospital cafeteria waiting to hear when Natan had roused from the anesthesia for an MRI scan We tried to keep our worst fears in check When this is over we should take the boys to the beach for a month It s the best medicine my husband said I looked at the clock The call from the nurses station hadn t come in though more than enough time had passed and I was antsy Let s go upstairs I said Then my cellphone rang It was the neurologist who ordered the MRI The scan showed something unusual a large infiltrating lesion centered in the medulla oblongata the structure at the lower end of the brainstem that controls breathing and other involuntary functions The thickest part was packed tightly into the cervical spine with tentacles snaking up into the midbrain and cerebellum which regulates balance and motor coordination What does that mean I asked You need to speak to a neuro oncologist she said adding that she was trying to get us an appointment within a few days There s no sign of fluid building up in the brain so you can take your son home Are you telling me that my son has a massive brain tumor but should go home now I asked We refused to leave until someone who could interpret the scan spoke to us An hour later an expert on pediatric brain tumors told us Natan s lesion was probably a rare slow growing type appearing in about 100 cases a year in the United States Natan may even have been born with it and only now was it large enough to crush the nerves running through his 4 year old s brainstem a structure about the size of an adult thumb that connects the brain and the spinal cord These dying nerves were losing their ability to regulate Natan s walking and fine motor movements his breathing swallowing and sleep rhythms At least you now have a diagnosis that explains everything the doctor said It can take some families much longer to arrive at this point I WANT THIS TUMOR OUT Like many people facing a crisis we called on every resource we had at our disposal We were fortunate to have access to excellent doctors and world renowned hospitals close to home The health insurance provided through my employer covered nearly all our expenses Two weeks after we received the diagnosis Natan endured a six hour operation at NewYork Presbyterian Weill Cornell Medical Center Dr Mark Souweidane director of pediatric neurological surgery at Weill Cornell and Memorial Sloan Kettering Cancer Center removed about 20 percent of the tumor most of it in the cervical spine Venturing farther into the brainstem where the tumor was harder to distinguish from healthy tissue would have been too dangerous Within days pathology tests confirmed the tumor type a slow growing ganglioglioma a mix of cells that include components of the central nervous system and supporting tissue The good news was that such low grade gliomas are not malignant meaning that unlike aggressive cancers they do not grow rapidly and generally do not spread to other organs In many cases they stop growing completely when patients reach their 20s But the large size and the location of the tumor had already significantly damaged Natan s ability to swallow and breathe That put him at risk of inhaling fluids and small pieces of food into his airways leading to deadly pneumonias or choking It would take two more months to get sequencing results conducted separately by Weill Cornell and Sloan Kettering where we sought a second confirmation of the genetic profile of the tumor In that time we focused on Natan s recovery from surgery with weeks spent in hospital and an acute rehabilitation center Removing part of the tumor helped improve some symptoms The rapid eye movements were nearly gone In daily therapy sessions Natan was learning to use his left hand again and walk without stumbling But we were noticing or confirming new problems hearing loss severe sleep apnea long bouts of hiccups that are a hallmark of brainstem tumors I tried to cling to the idea that somehow the surgery would be enough for a few months or years before the tumor progressed further I even hoped that it would just stop growing on its own as a few doctors had suggested and feared the new surprises he would face in treatment Even without major complications after surgery he was fragile physically and emotionally My husband was uneasy about waiting to see if the tumor grew further before starting some kind of therapy It feels like we re just sitting around waiting for a miracle to happen he said I want this tumor out The sequencing confirmed that a mutation known as BRAF V600E most often seen in adults with the deadly skin cancer melanoma was driving Natan s tumor I have something for you Dr Matthias Karajannis Sloan Kettering s chief of pediatric neuro oncology told us when we met to review the test results That something was a drug called dabrafenib sold by Novartis AG S NOVN under the brand name Tafinlar It has helped keep a significant percentage of melanoma patients alive after five years when used with a second drug Mekinist a great improvement on older therapies Karajannis recommended that we use Tafinlar to treat Natan While chemotherapy is the standard first treatment for low grade gliomas that cannot be removed surgically early evidence showed the new therapy could be much more effective In some cases he said the tumors just melted away MOVING TARGETS Roche s Herceptin or trastuzumab introduced in 1998 was the first so called targeted cancer therapy interfering with a growth promoting protein found in about 20 percent of breast cancer patients The drug has improved overall survival rates particularly among women with earlier stage cancers The next big breakthrough came in 2001 with the approval of Novartis s Gleevec or imatinib Gleevec turned the deadly blood cancer known as chronic myelogenous leukemia CML into a long term manageable illness For nearly all CML patients the diseased blood cells feature a fusion of two genes that are normally separate Gleevec blocks the activity of the fused genes and leaves healthy cells untouched a huge advance on potentially lethal chemotherapy which is toxic to both diseased and healthy cells With Gleevec s success the race was on to find other targeted therapies For each potential new drug that meant first identifying an aberrant gene that fueled a type of cancer and then devising a drug to counteract that aberration The reality is proving far more complex as researchers learn about the multiple influences at work in cancer cells Many of the targeted therapies approved since Gleevec help only a small percentage of patients with any one type of cancer and often only for a year or two before their tumor cells create new mutations to outrun the drug There was this feeling we were going to conquer cancer with these approaches said Dr David Hyman chief of early drug development at Sloan Kettering who leads research into new targeted therapies Now the medical community has recognized that cancer is a series of rare diseases each with its unique biological mechanisms Yet these new drug discoveries can be life changing for small groups of patients The U S Food and Drug Administration has approved more than 30 therapies that are prescribed based on genomic testing results Most of these treatments have been introduced to the U S market since 2012 For many patients unfortunately we don t find the magic bullet but it s also an area that s under a lot of development Karajannis said in an interview Just a few years ago we had no treatment options A study published in April in the journal JAMA Oncology estimated that 15 percent of the nearly 610 000 advanced cancer patients in the United States could be considered candidates for treatments informed by genomic sequencing and that close to 7 percent would probably show some benefit Pfizer s Xalkori and Roche s Alecensa for instance target mutations that occur in about five percent of non small cell lung cancer patients In late November newcomer Loxo Oncology received U S approval for Vitrakvi a pill shown to shrink a wide variety of tumors driven by TRK fusion a genetic anomaly found in fewer than one percent of all cancer patients Worldwide sales of such targeted treatments topped 28 billion last year according to research firm GlobalData Plc Within the small community of children with low grade gliomas the potential for a targeted approach emerged nearly a decade ago when two different BRAF abnormalities were identified in these tumors The BRAF V600E mutation appears in about 10 percent of the 1 000 U S children diagnosed with low grade gliomas each year The research coincided with the development of Tafinlar originally approved in 2013 for melanoma patients with the same BRAF mutation At a medical conference in Copenhagen in October 2016 just as we began to investigate Natan s symptoms Dr Mark Kieran then director of the pediatric brain tumor program at Dana Farber Cancer Institute and Boston Children s Hospital presented data on 32 children treated with Tafinlar All the children s tumors were positive for the BRAF V600E mutation and nearly three quarters of them saw their tumors shrink or stop growing on the drug In two cases the tumors disappeared while 11 patients tumors shrank by more than half The side effects were relatively minor rash fatigue fever Less than a year later we read about those results and wondered Could that be enough proof to use on our child THE DECISION My husband and I canvassed as many authoritative sources as possible We specifically wanted to hear more about treating children with a diagnosis identical to Natan s a brainstem ganglioglioma with a BRAF V600E mutation We reached out to several leading pediatric neuro oncologists Some had treated or followed closely a few dozen patients like Natan Others had direct clinical experience with a handful or none They told us that chemotherapy and the new drug were both viable options but they differed in what they emphasized Some seemed more supportive of chemotherapy They cited data collected over decades showing that 25 percent to 40 percent of low grade glioma patients saw their tumors stop growing after chemotherapy which usually entailed a year or more of weekly infusions of carboplatin and vincristine Even if the disease returned a majority of the children survived into adulthood the studies showed Chemotherapy s potential side effects while a patient was in treatment were harsh including neuropathy nerve damage that can cause both debilitating pain and numbness and the risk of bleeding or serious infection But there was no cognitive or other long term damage afterward The survival data lumped together many varieties of low grade gliomas including tumors cured by surgical removal Brainstem gangliogliomas like Natan s represented a very small subset Newer research and clinical experience suggested that chemotherapy was far less effective in children with brainstem tumors particularly those with a BRAF V600E mutation leading to repeat treatments and worse survival rates Do not trust this tumor said Dr Eric Bouffet head of neuro oncology at the Hospital for Sick Children SickKids in Toronto and a co author on the Tafinlar study Bouffet was familiar with many of the low grade glioma patients in Canada He and his colleagues continue to study their outcomes and track data from other medical centers around the world The BRAF mutation appears to make the tumors more aggressive Bouffet told us during a consultation by phone He told us about children like Natan whose brainstem tumors caused severe sleep apnea a sudden stop in breathing One little boy died in his sleep before he could receive therapy Bouffet said Tafinlar s side effects were much milder the specialists said and children using the medicine weren t missing school like chemo patients They could enjoy family vacations But its long term safety in children was and still is unknown and will take years to establish The medical literature was also scant One of the earliest published case studies from 2014 told the heartbreaking story of a 21 year old whose brainstem ganglioglioma had returned after multiple rounds of chemotherapy and radiation leaving him in a wheelchair His tumor shrank dramatically with Tafinlar and he began to walk again only to experience a fatal brain hemorrhage within weeks His doctors questioned whether the rapid retreat of such a large tumor had contributed to the bleeding A second report showed a hopeful outcome for an infant with a massive low grade glioma that shrank dramatically within two months of treatment saving her life When we consulted with Kieran on Natan s case he recommended that we consider chemotherapy first given its safety record and if that failed try Tafinlar Prior treatment with chemotherapy had also been a requirement for enrolling children in Novartis s clinical trial There was good reason for caution Even when drugs are tested on hundreds of patients safety problems can take years to identify Now regulators are more willing to approve targeted therapies particularly those treating advanced cancers based on testing in smaller groups of patients For someone with a few months to live and no other choices the risk may be worth it But was the trade off appropriate with a slow growing tumor We wanted to understand why Kieran who led the clinical trial of Tafinlar would not recommend using it from the start In June as soon as we thought Natan was up for the trip we took him to Boston After examining our son and nearly two hours of detailed discussion Kieran gave a nod to the new therapy In a recent interview he said that when we met he had just begun discussing therapies like Novartis s Tafinlar as a first line treatment with other families depending on the circumstances of the patient The conversation I would have had with a family five years earlier would have been completely different he said There is enough data now to consider a BRAF therapy appropriate right off the bat for patients like Natan provided that families recognize that the picture could change as more data emerges he said Not every patient has the luxury of waiting for that information You can t always say let s just wait for three years and see how the data goes Kieran said He recently left Dana Farber to lead pediatric cancer therapy development at Bristol Myers Squibb NYSE BMY Through all our research and our consultations with experts one detail stood out There was a chance that Tafinlar would actually shrink Natan s tumor an unlikely outcome with chemo If it did his symptoms could improve assuming the nerves had not already been irreparably damaged We needed to give him that chance THE TREATMENT Two weeks later a Sloan Kettering pharmacist showed me how to turn Tafinlar into a liquid for Natan to swallow safely In our kitchen I poured the capsule s white powder into lemonade flavored Kool Aid which Novartis says is the only drink that can dissolve this advanced medicine I tried hard not to spill any Our insurance covered nearly all of the cost but I was still keenly aware of the expense of replacing just one pill at nearly 100 retail In the first weeks we kept a close watch for unusual reactions One evening Natan nearly passed out for no obvious reason Another night his temperature spiked to 105 degrees It turned out to be a virus For a few days hives erupted all over his body Again a virus was suspected And we noticed something else After little more than a week Natan s voice nearly inaudible for months was resonating loudly At first we doubted that it was real But Natan was so pleased that he could now hear himself and talk over his brother that he would yell and sing spontaneously Over the summer testing confirmed that his hearing had returned His gait grew steadier and stronger With a twinkle in his eye Natan would take an extra deep breath for the nurse and watch the monitor as his oxygen levels ticked up from 99 percent to 100 He was taken off the respiratory medications and the antibiotics that had been a mainstay for nearly a year Natan s next MRI in October 2017 showed a result far beyond what we had allowed ourselves to hope Nearly all his detectable tumor was gone It looks almost like a normal brain Karajannis said My husband and I have asked ourselves whether we could have noticed the symptoms earlier and whether treatment at that stage would have spared Natan from the worst of his illness But given how quickly the science has developed we now think the opposite is true in our case Had we found the tumor earlier Natan would have most likely endured chemotherapy infusions and their harsh effects every week for more than a year with little real benefit The success of Natan s treatment provides no guarantees No one can say how long the medicine will work whether he should take the drug indefinitely or stop or whether doing either poses any risk The science is also moving on Novartis is beginning to test Tafinlar plus Mekinist the combination used to treat melanoma patients versus chemotherapy in children whose low grade gliomas exhibit BRAF V600E mutations to see if the combination works better and longer The drugmaker has also dropped the requirement that patients have prior treatment with chemotherapy to enroll A new generation of BRAF therapies from companies including Array BioPharma and AstraZeneca are in clinical trials Our hope is that if Tafinlar stops working for Natan at some point a new therapy will be there to take its place It s been more than a year since Natan started treatment He began to run again and jump and swim and climb He s now in first grade excited to get to school each day and see his friends Natan now swallows his capsule with a sip of water flashing a thumbs up each time He has traveled on vacation even overseas without mishap On our last trip he picked out a new T shirt for himself On the front it says Never give up Edited by John Blanton |
BMY | Preclinical data show dosing sensitivity of Aduro s STING candidate | Results from a preclinical study just published in Cell Reports underscore the importance of identifying the optimal dose of Aduro Biotech s ADRO 2 1 STING activator ADU S100 in solid tumors In mouse models high doses of ADU S100 effectively cleared injected tumors but may compromise the durability of the anti tumor effect while lower doses demonstrated optimal CD8 T cell responses needed for systemic and sustained anti tumor immunity Lower doses were also effective when combined with checkpoint inhibitor therapy ADU S100 is currently being evaluated in a Phase 1 study as monotherapy and in combination with Bristol Myers Squibb s BMY 2 9 Yervoy ipilimumab and in a Phase 1b study with Novartis NVS 1 8 anti PD 1 antibody spartalizumab Previously Investors underwhelmed with Aduro s early stage data on STING candidate shares down 11 Nov 9 Now read |
BMY | Taisho said to near 1 6 billion deal for Bristol Myers s UPSA Bloomberg | Reuters Japanese healthcare firm Taisho Pharmaceutical Holdings Co Ltd T 4581 is said to be close to a 1 6 billion deal for Bristol Myers Squibb Co s N BMY French over the counter drugs business UPSA Bloomberg reported on Sunday citing sources familiar with the matter An agreement for the consumer health business could be announced as soon as this week according to the report Bristol Myers Squibb said in an email to Reuters that it does not comment on rumors and speculation adding that the company is still considering options for the strategic review of UPSA that was announced in June A Taisho spokesman said the company could not comment on the report German drugmaker Stada D STAGn and Italian healthcare company Angelini were among the final bidders for Bristol Myers UPSA unit according to a Reuters report in November |
BMY | Bristol Myers gets 1 6 billion offer for French consumer health unit | Reuters Bristol Myers Squibb Co N BMY received an offer from Japanese healthcare firm Taisho Pharmaceutical Holdings Co Ltd T 4581 to buy the company s French over the counter drugs business UPSA for 1 6 billion the companies said on Wednesday Bristol Myers said it estimates the potential deal would be approximately 0 04 dilutive to 2019 earnings The offer by Taisho which has its presence in anti inflammatory analgesic cold and flu and hair growth segments in Japan and Southeast Asia is structured in the form of a put option agreement the companies said Upon exercise of the put option Taisho would acquire UPSA as well as Bristol Myers Squibb s assets and liabilities relating to the UPSA product portfolio the companies said UPSA s portfolio covers a wide range of therapeutic areas such as pain cough and cold vitamins and supplements gastrointestinal and sleep Deutsche Bank DE DBKGn Securities Inc and Jefferies LLC acted as exclusive financial advisors to Bristol Myers Squibb Kirkland Ellis LLP Freshfields Bruckhaus Deringer LLP and Baker McKenzie acted as its legal advisers The offer comes at a time when drugmakers are trying to survive a contraction in the Japanese drug market due to government led price cuts and promotion of generic drugs Sales of the Japanese drugmaker s over the counter drugs in foreign markets was worth 8 8 billion yen in April September down 7 9 percent on year according to its results
Taisho could not be immediately reached for comment |
JPM | JP Morgan shares rise after Q2 earnings top estimates | Investing com JP Morgan Chase NYSE JPM the largest U S bank reported stronger than expected second quarter earnings and revenue ahead of Thursday s opening bell sending its shares higher in pre market trade
JP Morgan said adjusted earnings per share came in at 1 55 in the three months ended June 30 up from 1 54 a share a year earlier and above expectations for adjusted earnings of 1 43 a share
The bank s revenue totaled 25 2 billion in the April to June quarter beating estimates for revenue of 24 5 billion
Traders will now turn their attention to the bank s conference call due to start at 8 30AM ET
Following the release of the report shares in JPM rose 1 53 or 2 42 in pre market trade to trade at 64 69 from Wednesday s closing price of 63 16
Meanwhile U S equity markets pointed to sharp gains at the open The Dow futures pointed to a rise of 0 75 the S P 500 futures tacked on 0 7 while the Nasdaq 100 futures inched up 0 65 |
JPM | JP Morgan shares rise after Q2 earnings top estimates | Investing com JP Morgan Chase NYSE JPM shares rise after Q2 earnings beat estimates JP Morgan s shares were up 1 80 at 64 30 at 7 20 ET The U S s biggest bank said Q2 adjusted EPS was 1 55 up from 1 54 a year earlier Analysts expected adjusted earnings of 1 43 a share The bank s revenue totaled 25 2 bn in the quarter vs estimates of 24 5 bn |
JPM | U S stock index futures up as JP Morgan beats estimates | Investing com U S stock index futures were higher Thursday as global stocks continued to rally The Dow futures was up 0 80 at 09 00 ET The S P 500 futures added 0 76 The tech heavy Nasdaq 100 futures was 0 68 to the good JPMorgan NYSE JPM shares were higher in pre trade as Q2 EPS of 1 55 beat estimates Messaging app operator Line is due to make its debut in the NYSE on Thursday |
JPM | Gold falls sharply to 2 week lows as risk on sentiment remains high | Investing com Gold fell sharply in broad risk on trade as a JPMorgan driven NYSE JPM rally sent equities on Wall Street soaring to fresh record highs while investors departed from a bevy of safe haven assets following an unexpected decision from the Bank of England to hold its key interest rate steady
On the Comex division of the New York Mercantile Exchange Gold for August delivery traded between 1 320 00 and 1 347 85 before settling at 1 332 25 down 11 35 or 0 84 on the session Since hitting 28 month highs last week Gold has closed lower in five of the last six sessions while losing approximately 2 in value At session lows the front month contract for Gold tumbled to its lowest level for the month of July Nevertheless the precious metal has still surged roughly 25 on the calendar year since opening 2016 around 1 075 an ounce
Gold likely gained support at 1 323 50 the low from June 8 and was met with resistance at 1 391 40 the high from March 17 2014
On Thursday the Dow Jones Industrial Average and the S P 500 Composite surged to fresh all time highs after JP Morgan kicked off the second quarter earnings season for major banks by topping analysts earnings forecasts by a wide margin JP Morgan the world s largest bank reported adjusted earnings per share of 1 55 expected EPS 1 46 and revenue of 25 2 billion up more than 0 5 on both a quarterly and annual basis It came amid soaring revenues from the company s Fixed Income division which ended the quarter with 3 96 billion in revenues up 35 from the same period last year As a result the Dow remained on pace for its third straight record close while the S P was on pace to close at an all time high for the fourth consecutive session
Elsewhere initial U S jobless claims last week were unchanged at a seasonally adjusted total of 254 000 lingering near 43 year lows In April new jobless claims throughout the U S fell by 6 000 to 247 000 dropping to their lowest level since November 1973 Meanwhile the four week average on Thursday declined slightly to 259 000 falling roughly 10 000 below the one month mean from mid June
Also on Thursday the U S Labor Department reported that producer prices last month rose considerably building on increased pricing pressure from May s report The Bureau of Labor Statistics PPI FD rose by 0 5 in June slightly up from 0 4 gains a month earlier and above consensus estimates of 0 3 The Core PPI FD which strips out volatile food and energy prices jumped 0 3 on a monthly basis swinging to a gain after a slight decrease of 0 1 in May
During a series of public appearances since the Fed last met in late June a wide range of Federal Open Market Committee FOMC members have offered diverging comments on the timing of the U S central bank s next rate hike While delivering a speech in Houston on Wednesday Dallas Fed president Rob Kaplan indicated that the FOMC can remain accommodative as long as its dual mandate in terms of inflation and employment objectives are not met Shortly after Philadelphia Fed president Patrick Harker said the FOMC could raise short term interest rates as much as twice this year
Any rate hikes by the Fed this year are viewed as bearish for gold which struggles to compete with high yield bearing assets in rising rate environments
In the U K the Bank of England surprised markets by holding their key interest rate steady at 0 5 and leaving a comprehensive Quantitative Easing program unchanged Following the 8 1 vote Bank of England governor Mark Carney hinted that the BOE could approve fresh stimulus measures when meets again in August GBP USD jumped by more than 1 5 to an intraday high of 1 3463 its highest level in two weeks
The U S Dollar Index which measures the strength of the greenback versus a basket of six other major currencies fell more than 0 30 to an intra session low of 95 84 The index has fallen by more than 3 since early December
Dollar denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates
Silver for September delivery fell 0 091 or 0 45 to 20 322 an ounce Last week the front month contract for silver futures surged above 21 20 an ounce to hit fresh two year highs
Copper for September delivery inched up by 0 001 or 0 08 to 2 241 a pound |
HAL | Natural Gas Services misses by 0 01 misses on revenue | Natural Gas Services NYSE NGS Q3 EPS of 0 04 misses by 0 01 Revenue of 15 9M 1 7 Y Y misses by 2 21M Press ReleaseNow read |
HAL | Halliburton HAL Q1 Earnings In Line Revenue Beat Estimate | In Line Earnings World s No 2 oilfield services company Halliburton Company NYSE HAL reported first quarter adjusted net income per share of 23 cents same as the Zacks Consensus Estimate Estimate Revision Trend Surprise History Investors should note that the Zacks Consensus Estimate for the quarter has been unchanged in the last 7 days Nonetheless Halliburton have an impressive earnings surprise history The company beat matched estimates in three of the prior four quarters as shown in the chart below Overall the company has a positive earnings surprise of 2 79 in the trailing four quarters Halliburton Company Price and EPS Surprise Revenues Halliburton posted revenues of 5 7 billion which were approximately flat with the year ago quarter and scraped past the Zacks Consensus Estimate by 3 5 Key Stats Operating income from the Completion Production segment was 368 million lower than the year ago level of 500 million Our current consensus estimates called for a lower operating income of 335 million Halliburton s Drilling Evaluation unit profit deteriorated from 188 million in the first quarter of 2018 to 123 million this year The number was also below the Zacks Consensus Estimate of 146 million Zacks Rank Currently Halliburton carries a Zacks Rank 3 Hold You can see Check back later for our full write up on this Halliburton earnings report later Is Your Investment Advisor Fumbling Your Financial Future See how you can more effectively safeguard your retirement with a new Special Report 4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future |
C | 3 Banks To Watch | With the pullback in the indexes led by the banks there are not many interested in buying them But a look at the price action the last 3 days in some large banks may be telling a reversal
Here are 3 worth watching for a reversal
Citigroup C pulled back from the high at 55 and completed the bullish Shark harmonic What makes it interesting today is the last 3 days of candlesticks A long red candle followed by a gap and then a Spinning Top doji The gaps can be sign of exhaustion and the Spinning Top signals indecision often reversal The Relative Strength Index RSI is on the edge of being oversold and adds another layer of credence to a reversal If it gets back over 49 75 it has put in a tradeable low
JP Morgan JPM has that same pattern of candlesticks Three good sized red candles with gaps in between and then a small real body with longer shadows today The RSI on this is already turning higher Trading this against the 100 day Simple Moving Average SMA at 54 87 looks ok now and better on a move over yesterdays open at 56
Wells Fargo WFC may be the best of the 3 The same pattern of gapping moves lower and a small body candle with long shadows today I say it may be the best because the RSI is turning back higher on this one without ever moving below 50 On a tight stop against today s low or looser with a stop under both the Bollinger bands and the 50 day SMA perhaps 44 75 you could give this one a go now |
C | USD CAD Experienced Its Worst January In 42 Years | Canada s dollar had its worst start to a year since at least 1972 amid speculation the central bank may favor cutting interest rates and as a selloff in emerging markets sent investors to the haven of the U S dollar
The currency weakened past C 1 12 to the greenback for the first time since July 2009 as data showing a fifth month of economic growth failed to stem speculation the Bank of Canada will ease monetary policy The loonie as the currency is called has lost 1 5 percent since the central bank reduced its inflation forecast last week and cited the currency s strength as a headwind to non commodity exports
We ve been banging against the 1 12 level so often that market dynamics finally took us through Steven Englander global head of foreign exchange at Citigroup Inc said by phone from New York The Bank of Canada will continue to stress that in the world we re in a weaker Canadian dollar is part of the solution not part of the problem |
C | How Sustainable Is This Recovery | AM Analysis
Many investors are starting to question the sustainability of the economic recovery
After the savage sell off global bourses have experienced since the turn of the year many investors are starting to question the sustainability of the economic recovery Dominating the thoughts of market participants has been several factors including Chinese growth concerns tapering fears earnings and emerging market fears Unfortunately one of these key factors has been called into question before European indices even open sending the equity futures lower
The MSCI Asia Pacific Index has lost some 1 1 percent in value after a slowdown in Chinese manufacturing growth This is another blow in what is becoming a long line of missed forecasts and poor data The worrying Chinese data is having a negative effect broadly across the region with the Nikkei trading another 2 percent lower last night a full 10 percent lower than the 6 year high reached on December 30th 2013 This equates to the biggest monthly loss seen amongst developed economies
This Thursday marks the latest opportunity for Bank of England Governor to discuss interest rates in detail with a number of economists predicting Carney to put the process of raising interest rates into motion Currently set at 0 5 percent a number of banks are predicting the strongest growth since 2007 will prompt the U K to lift its benchmark rate in early 2015 This would be some 3 months before the data that Fed Chairman Yellen plans on raising rates Despite this on January 25th at the Davos World Economic Forum Carney stressed that There s no immediate need to raise rates and that any eventual increases will be gradual
Max Cohen
PM Analysis
UK markets rebounded this morning
UK markets rebounded this morning from manufacturing data that came in slightly worse than forecast The disappointment was short lived however as a survey showed new orders were flooding in this was welcome news for policy makers after mounting criticism on the recoveries reliance on consumer spending Despite missing forecasts PMI is still running at one of the highest levels on record and signify a good start for the UK economy to the New Year
US futures are hoping to bounce back after the largest January sell off since 2010 With manufacturing data released at 3pm investors appear bullish The recent route of emerging markets has investors split with some believing the worst has passed whilst the likes of Goldman and Citigroup believe dangerously low interest rates mean the end of the sell off is some way off With investors pulling over 6 billion from emerging markets last week alone the likes of Argentina and Turkey could be in freefall should they be proved right
Alex Conroy
Disclaimer
Spreadex provides an execution only service and the comments above do not constitute or should not be construed as constituting investment advice or recommendations or a record of our trading prices or an offer of or solicitation for a transaction in any financial instrument Any person placing trades based on their interpretations of the above comments does so entirely at their own risk |
C | GBP USD Bounces Off Support At 1 6250 | GBP USD for Wednesday February 5 2014
Over the last week the GBP USD has fallen sharply and experienced its worst one week fall this year which has resulted in moving to the six week low near the current support level at 1 6250 In the last 24 hours it has been able to rally a little from that support level to back above 1 63 Over the last couple of months the pound has established and traded within a trading range roughly around the key level of 1 6450 whilst moving down to support at 1 6250 and up to 1 66 Over the last few weeks or so the pound has moved very strongly pushing through resistance levels at 1 6450 and more recently at 1 66 however it has since returned those gains The 1 66 level has become quite significant as it had been looming large over the last month or so and a couple of weeks ago it moved through reaching a new multi year high close to 1 6670 Since that time however it has retraced strongly and moved back below the 1 66 level only to be rejected again over the last week before falling sharply again to below 1 6450
Several weeks ago it rallied again trying to break through the 1 6450 level before dropping back to a support level at 1 6350 In late November it did well to break through the long term resistance level at 1 6250 which had established itself as a level of significance over the last few months This level continues to play a role in providing support In early November the pound bounced strongly off the support level at 1 59 to return back to above 1 6250 Towards the end of October the GBP USD slowly drifted lower from the strong resistance level at 1 6250 and down to a three week low just around 1 5900 which was recently passed as the pound moved down towards 1 5850 only a week ago For the week or so before that the pound moved well from the key level at 1 60 back up to the significant level at 1 6250 only again for this level to stand tall and fend off buyers for several days
Throughout September the pound rallied well and surged higher to move back up strongly through numerous levels which was punctuated by a push through to its highest level for the year just above 1 6250 several weeks ago In the first week of October the pound was easing back towards 1 60 and 1 59 where it established a narrow trading range between before surging back to 1 6250 again
Investors are betting Bank of England Governor Mark Carney will lead the charge out of record low interest rates as central banks pivot from fighting stagnation to managing expansions Economists at Citigroup Inc and Nomura International Plc say the strongest growth since 2007 will prompt the U K to lift its benchmark from 0 5 percent as soon as this year Money market futures show an increase in early 2015 That s at least three months before the contracts indicate Federal Reserve Chairman Janet Yellen will raise the target for the federal funds rate European Central Bank President Mario Draghi and Bank of Japan Governor Haruhiko Kuroda are forecast to maintain or even ease monetary policy Carney and BOE officials will be looking at the domestic recovery and if that is strong enough then they will feel comfortable increasing rates before the Fed said Jonathan Ashworth an economist at Morgan Stanley in London and former U K Treasury official Tightening by the major developed central banks will be gradual and they will be aware of what everyone else is doing
GBP USD Daily chart title GBP USD Daily chart height 238 width 474 GBP USD 4 hourly chart title GBP USD 4 hourly chart height 222 width 474
GBP USD February 4 at 23 15 GMT 1 6325 H 1 6344 L 1 6257
GBP USD Technical
During the early hours of the Asian trading session on Wednesday the GBP USD is remaining very still between 1 6320 and 1 6330 after rallying higher from the support level at 1 6250 Current range Right above support at 1 63 at 1 6320
Further levels in both directions
Below 1 6300 1 6250 and 1 5900
Above 1 6600
OANDA s Open Position Ratios
GBP USD Open Position Ratios title GBP USD Open Position Ratios height 26 width 474
Shows the ratio of long vs short positions held for the GBP USD among all OANDA clients The left percentage blue shows long positions the right percentage orange shows short positions
The GBP USD long positions ratio continues to rise and move closer to 40 as the GBP USD falls sharply back down towards 1 63 Trader sentiment remains in favour of short positions
Economic Releases
00 01 UK BRC Shop price index Jan
08 58 EU Composite PMI Jan
08 58 EU Services PMI Jan
09 28 UK CIPS Markit Services PMI Jan
10 00 EU Retail Trade Dec
13 15 US ADP Employment Survey Jan
13 30 CA Building permits Dec
15 00 US ISM Non Manufacturing Jan |
C | GOLD New High Towards 1280 | Gold found a support in the last few trading days at the lower side of a corrective channel at 1237 where we see a completed three wave decline from the top now labeled as wave b As such we suspect that new highs are underway with wave c that may complete a second zigzag around 1280 Gold 4h Elliott Wave Analysis |
C | How An ETF Investor Can Approach This Stock Market | If an economic data point came in much weaker than expected last year the U S Federal Reserve s monetary stimulus offered reason enough to buy stocks Bad news served as good news At the same time when a data point exceeded expectations the resilience of the American economy also inspired equity purchases Good news served as good news In fact any news prompted additional risk taking in 2013 Flat corporate revenue It will improve Fed exit from quantitative easing QE They are reducing their bond acquisitions because they see a strong economic expansion ahead
Here in 2014 we re seeing a near perfect reversal in market reaction that is bad news is being treated with venomous selling while good news is being treated as an opportunity to get out at a higher price point Granted there have been flashes of buy the dip block orders from the institutional crowd For the most part however a large percentage of folks are selling first and choosing to evaluate the prospects of the bull market later
There are a variety of ways to deal with the current corrective activity Conventional wisdom might suggest that you simply stick with your original asset allocation and ignore the increasingly volatile environment Easier said than done and not necessarily shrewd I prefer an approach where one is insuring against a correction turning into something far more odious In other words I d rather pay a small premium to protect against the possibility of a calamitous outcome whether or not the calamity comes to fruition
Here are three ways that an ETF investor can lessen the impact of a severe down market shock
1 Short Term Hedging If you follow a variety of writers analysts and commentators you may have discovered what is often described as the intermediate trendline a k a 100 day moving average When one of the largest publicly traded funds like the SPDR S P 500 Trust SPY breaks below its 100 day one might be wise to prepare for additional selling in broad market U S stock ETFs
In tax deferred accounts one could choose to lighten up on some exposure to ETFs like iShares S P 500 IVV or SPDR Dow Jones Industrials DIA through the use of stop limit orders For those who do not wish to realize gains in taxable accounts and or who simply want to neutralize their long U S holdings without selling an Inverse ETF can serve as a useful hedge For example an investor who is long the S P 500 with a 20 allocation may wish to reduce the net long exposure to 15 He she might choose to buy a 5 allocation to ProShares Short S P 500 SH The goal here is not to gain from a bearish prognostication but rather an exercise in minimizing loss by hedging against further declines in large cap U S equities Remember Inverse ETFs are daily compounding trading tools not annual compounding assets It follows that the longest span in which I might use an Inverse ETF is approximately eight to ten weeks
2 Playing Defense If anyone owned a crystal ball he she could tell you precisely how to make mad money Without a crystal ball one is left to interpret incoming information and respond accordingly My interpretation since the first few weeks of 2014 is that increased S P 500 VIX volatility declining bond yields equity fund outflows and rate sensitive asset outperformance collectively flash a yellow warning sign Under those circumstances I am not looking to sell every asset but instead reduce the overall risks associated with participation
A defensive mindset does not mean your portfolio is going to gain ground if the broader equity markets hit a full blown 10 correction It certainly does not imply that you will profit if a bear tramples across the field Playing defense means losing less when market gyrations are making it difficult for an investor to sleep at night You won t gain as much if investors fall back in love with the riskiest stocks then again you will lose less if stocks continue drifting lower
I have shifted toward a more defensive posture by allocating more to short term high yield ETFs Muni ETFs Healthcare XLV Utilities XLU as well as Minimum Volatility ETFs such as iShares MSCI USA Minimum Volatility USMV For more specifics explore one or more of the features below
A In January 14th s 3 Trends That Might Shock The Risk On Mindset I discussed the flattening of the yield curve and using Bond ETFs that benefit from longer dated maturities
B In January 16th s Against The Herd Lower Rates Rather Than Higher Rates I explained why economic uncertainty during the tapering process would actually encourage investors to seek out safer havens including Muni ETFs
C In January 27th s Ride The Risk Off Trade Alongside Lower Interest Rates I talked about a shift towards traditionally safer equity ETFs like SPDR Select Health Care XLV SPDR Select Utilities XLU as well as iShares Telecom IYZ
3 Multi Asset ETFs If you believe like I do that the 10 year yield will be closer to 2 75 by year end as opposed to the economist average of 3 4 then you will probably be able to count on the income stream from multi asset income producers like First Trust Multi Asset MDIV Granted MDIV has demonstrated a potential for erratic price movement of its own Yet even when the 10 year spiked form 1 4 to 2 75 in 2013 MDIV s drawdown of 8 was offset by an index yield close to 6 5 and capital appreciation when rates later stabilized I would not expect MDIV to do much but offset losses if the 10 year yield does climb to 3 4 3 5 by year s end that said MDIV has the chance to repeat its performance of 10 annualized total return if 10 year yields remain contained below the 3 0 mark
Disclosure Gary Gordon MS CFP is the president of Pacific Park Financial Inc a Registered Investment Adviser with the SEC Gary Gordon Pacific Park Financial Inc and or its clients may hold positions in the ETFs mutual funds and or any investment asset mentioned above The commentary does not constitute individualized investment advice The opinions offered herein are not personalized recommendations to buy sell or hold securities At times issuers of exchange traded products compensate Pacific Park Financial Inc or its subsidiaries for advertising at the ETF Expert web site ETF Expert content is created independently of any advertising relationships |
C | China Absorbs Wheat Imports Skyrocket 5000 For December 2013 | Here s a percentage change you don t see often on Wall Street 5 319 1 percent That s the change from December 2012 to December 2013 in China s wheat imports measured in kilo tonnes according to a recent Citigroup Inc C note In real terms the change is also staggering That 5319 YoY increase was not a typo wrote Citigroup China commodities analyst Shawn Shen in an email to IBTimes Chinese wheat imports were 395 22 kt in December 2013 and 7 29 kt in December 2012 From 7 kilo tonnes to almost 400 kilo tonnes the startling one off statistic illustrates China s reliance on wheat imports in 2013 The country is already the world s biggest wheat consumer but it suffered from a smaller harvest in 2013 reported Bloomberg Bad weather spoiling domestic harvests in 2013 meant China could stand to beat out Egypt as the world s top wheat importer On an annual basis China s wheat imports rose from less than 1 million tonnes in 2009 to 5 5 million tonnes in 2013 according to data compiled by Thomson Reuters China s imports of barley corn and rice couldn t keep up
China Top 5 Grain Imports 2013 Thomson Reuters DataChina Top 5 Grain Imports 2006 2013 Thomson Reuters DataIn 2013 China imported by far the most wheat from the United States relative to any other country it imported from It bought 3 8 million tonnes of U S wheat relative to the second top partner Canada who sold China 866 000 tonnes December 2013 too pales in comparison to October 2013 In the latter month alone China imported 1 3 million tonnes of wheat according to the Citi note Thankfully world wheat production for the 2013 2014 season is projected to hit a new record according to the USDA s latest wheat outlook China led that increase in January 2014 up 1 million tonnes to 122 million China s Henan province is its biggest growing region For the year overall China increased wheat imports by 50 percent thanks to the record U S harvest in its second largest yearly import boost by commodity said Citi China consumed 122 5 million tonnes of wheat in 2011 on USDA estimates China domestically produces the vast majority of its wheat consumption Russia China India the European Union and the U S are among the world s top wheat producers The U S winter wheat crop has suffered from bitter temperatures as growers snow cover evaporated reported the USDA on Monday Wheat is used in flour noodles and livestock feed among other uses Citigroup China 2013 Imports Recap Jan 2014 Citigroup NoteChina has relied heavily on imports and production of raw materials to fuel its economic growth over the past decade Lately fears of a Chinese economic slowdown have spooked commodities investors |
C | Gold Eyeing New High | Gold found a support in the last few trading days at the lower side of a corrective channel at 1237 where we see a completed three wave decline from the top labeled as wave b As such we suspect that new highs are underway with wave c that may complete a second zigzag in 1280 1300 zone GOLD 4h Elliott Wave Analysis |
C | Dollar Can Strengthen On US News | Recent macroeconomics data say for the USA economy s recovery and in current conditions FRS will face difficulties while doing nothing In fact reduction of program QE 3 for 5 10 milliards dollars is included in prices and market participants are ready for such event but if together with the reduction of assets repurchase program is decreased a target level of unemployment to the 5 5 rate this can be appreciated by markets as this fact will postpone expectations of interest rates increase for almost 2 years
In any case by the program s reduction for at least 10 milliards US dollars we will see a light short termed correction at all stock markets and strengthening of dollar s index against all currencies Then we will watch reaction at the fixed income if the growth rate of return on American bonds will be resumed with renewed vigour this means that investors perceived results of FRS session not in a positive way and we need to be ready for the correction on stock markets as well
The US dollar rate through the eyes of professional Forex traders
Analysts of Broker Binary Options Optionova believe that a wave C C level H2 from the reference point 81 350 is completed
Actual crosstab correction of this wave and C C is with borders 81 350 and 80 180
New reference point can be named level 80 18 Up from the reference point is formed the wave A B with boundaries passing through 80 180 and 80 580 levels Downwards haven t broken the sloping channel NC with figures 79 020 79 650 and 80 036 pivot which still may be possible to wave formation in C
To go up is necessary to form fractal zigzag reversal FZR
Up goals in the Forex market are the following levels
80 627 38
80 765 50 till this level is possible forming of 4th wave
80 903 62
81 074 76 NC with figures 81 485 and 81 350
For continuation of down tendency is necessary to form dogs of Elder of a new wave C down with pivot breakdown and the next formation of latent FZR |
C | Is The Correction Over | As the equity markets rallied on Thursday and Friday I saw a number of analysts and commentators starting to jump on the bulls bandwagon as they asked the question Is the correction over To truly answer that question we have to first answer the question of why stock prices went down in the first place There are two popular reasons advanced for the decline in 2014
Emerging market meltdown fears possibly driven by the effects of a Fed taper or
A US growth slowdown
Neither of those reasons make a lot of fundamental sense I will write about what I believe to be the real reason for the decline and their implications later on in this post
A repeat of the Asian Crisis
In the past few weeks selected EM currencies came under attack by speculators As the decline in the Turkish Lira and other currencies went on fears of an EM crisis similar to the Asian Crisis began to emerge While there has been some stress in EM currencies and economies correctly pointed out that the foreign exchange reserve position of many EM countries are much improved compared to past crisis periods
Helping some of the emerging markets weather their storms should be the record amount of non gold international reserves that they hold IMF data show that collectively they held a record 7 8 trillion during November China s reserves account for about half of that sum However some of the more troubled emerging economies also held sizeable record or near record reserves at the end of last year Russia 470bn Brazil 356bn India 275bn Turkey 129bn South Africa 45bn and Argentina 28bn
In an amusing and more pointed commentary asked If there is a crisis where s the so called body
OUTSIDE SCREAMING Murder There s been a murder Mr Holmes Come quick Holmes stirs from the obituaries column in The Times walks over to the fire where after warming himself secures the guard and places his Meerschaum pipe on its rest on the mantlepiece HOLMES Watson bring me my coat it appears that there is a disturbance Outside in the street A crowd throngs around Holmes HOLMES Please can you all calm down what is the trouble CROWD There s been a MURDER well more than one murder its terrible It s down the Eeyems Mrs Turkey She s DEAD And Mr Rand And the Hungarian lass and the Russki kid HOLMES Come Watson best we pay a visit if for no reason other than to calm this over excitable lot Arriving on scene The Eeyems is a higgledy hotchpotch of narrow streets once populated by the poor but the arrival of an aspirational young has seen pretences of gentrification however the underlying squalor is never far away Holmes and Watson are let in to a dingy hovel by an attendent constable where an old woman is propped gasping against a table HOLMES Ah Mrs Turkey I see that you are breathing A good sign of a lack of death Watson would you be so kind Dr WATSON Her PMI is slightly weaker than the last reading but apart from a bit of bruising to the FX causing some rate shock she s not in too bad a way HOLMES Hmm so not DEAD then Watson Dr WATSON No sir Not Dead HOLMES Not a murder then No BYSTANDER But but she WILL die though and THEN it will be a murder HOLMES It will only be murder when I say it is a murder What makes you so sure that she will be murdered BYSTANDER Well look at her she s weak and feeble hasn t been able to defend herself against the last attackers so she s just bound to be murdered
and so on Was Mr Market so excitable to freak out on the mere possibility of an EM currency crisis These conditions were present during the equity market run up and bulls have shrugged off these kinds of concerns before US growth slowdown What about fears of a US growth slowdown The chart below of the Citigroup US Surprise Index in orange measures whether the latest macro economic releases have beaten or missed Street expectations A positive reading indicates that there were more beats than misses and a negative reading the opposite While the pace of beats have been coming down they remain positive So relax
If the economy is slowing down what about corporate earnings As pointed out with about 2 3 of companies having reported Q4 earnings the earnings beat rates are above the historical average
The revenue beat rates are coming in pretty well too
Stock prices are mainly driven by earnings interest rates and the growth outlook With the latest Earning Season s reports coming in at above average clip and 10 year interest rates falling what could investors be so worried about
A technical driven pullback The simplest explanation of the recent pullback is because of excessively bullish sentiment and an overbought condition in the market The fast money got into a crowded long position and when there were no buyers left and the momentum started to roll over the crowd seized on the excuse of the day EM crisis Fed taper US economic weakness etc to sell The excessively bullish sentiment has been well documented by many commentators such as and well summarized by in this analysis of the AAII sentiment survey which moved into an extremely crowded long reading in late December and early January and then pulled back
Has the stock market bottomed With bullish sentiment in full retreat is this a time for traders to plunge back into the long side of the stock market Not so fast An examination of longer term indicators suggest that a durable bottom may not be at hand yet While the AAII sentiment surveys are measures of opinion and intention the AAII Allocation Survey is a measure of investors actually did this is a case of watching what they do not just what they say The latest AAII Allocation Survey via shows that while equity allocations have ticked down they are nowhere near panic levels
Short term oversold but
An analysis of short and longer term market breadth indicators tell a more nuanced story than the more simple oversold bounce narrative While short term indicators suggest that a bounce is at hand longer term indicators are not necessarily showing the signs of full capitulation and more volatility is ahead Consider for example this chart of the percentage of stocks below their 50 day moving average shown in the top panel as an example of a short term breadth indicator SP 500 shown in the bottom panel I drew a blue horizontal line to indicate the level this indicator recently reached last week and dotted red vertical lines to show past instances when a similar level was breached in the last four years More often than not the levels reached last week are consistent with a short term bottom and bounce in stock prices
No signs of a durable bottom yet
By contrast the longer term measure of the percentage of stocks below their 200 day moving average does not show a similar picture of wildly oversold conditions as the 50 dma measure There are several notable features of this chart compared to the one above First of all there are fewer signals As well note the negative divergence condition of the breadth deterioration where the percentage of stocks below the 200 dma have been trending down in the past few weeks
More importantly when this indicator has reached similar readings in the past it has tended to continue to deteriorate indicating that further declines in breadth which were accompanied by market volatility were at hand The more important test for the bulls is how this breadth indicator when the market rallies If breadth continues to deteriorate then it may be a mark of an intermediate term top My conclusion is that too much technical damage has been sustained by the market for equities to simply rebound and rally to new highs immediately The chart of the SP 1500 advance decline line below has breached an uptrend line that stretched all the way back to late 2012 Such violations tend not to be resolved by a bounce back from an oversold condition and at a minimum a period of sideways consolidation is needed before stock prices can go higher
More volatility ahead My base case scenario calls for a short term rally and several weeks of volatility with the SPX bounded by the 200 day moving average below and the 50 day moving average above The chart below of another longer term breadth indicator percentage of stocks with bullish point and figure readings tell the story Given the recency of the breach of the 50 dma the most likely analogs of current market conditions occurred in the summers of 2011 and 2012 circled where stock prices bounced around in a volatile fashion until breadth measures began to improve again and stock prices began to rally again
These conditions are consistent with the scenario that I sketched out in December see My plan for 2014 where stock prices peak about mid year at which point it would likely present a great buying opportunity My base case scenario calls for stock prices to continue to grind upwards until mid 2014 at which point some unknown catalyst is likely send equities downwards Some time during Q2 and Q3 I would have to re evaluate the macro conditions and re position portfolios accordingly
For now my inner trader is getting ready for volatility and contemplating going short this market as the SPX approaches the 50 dma My inner investor is yawning and ignoring all of these short term fluctuations If he had some new cash he would regard the current weakness as a buying opportunity Disclosure Cam Hui is a portfolio manager at Qwest The opinions and any recommendations expressed in the blog are those of the author and do not reflect the opinions and recommendations of Qwest Qwest reviews Mr Hui s blog to ensure it is connected with Mr Hui s obligation to deal fairly honestly and in good faith with the blog s readers None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this blog constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions Past performance is not indicative of future results Either Qwest or I may hold or control long or short positions in the securities or instruments mentioned |
BMY | Unique combination of Opdivo Yervoy shows encouraging action in Phase 1 2 bladder cancer study | Follow up data from a Phase 1 2 clinical trial CheckMate 032 evaluating Bristol Myers Squibb s NYSE BMY Opdivo nivolumab Yervoy ipilimumab in patients with platinum resistant metastatic urothelial carcinoma advanced form of bladder cancer showed a positive treatment effect The results were presented at ESMO in Munich At a minimum follow up of 7 9 months patients receiving 1 mg kg of Opdivo and 3 mg kg of Yervoy O1 Y3 showed an overall response rate ORR of 38 At a minimum follow up of 38 8 months patients receiving 3 mg kg of Opdivo and 1 mg kg of Yervoy O3 Y1 showed an ORR of 27 At a minimum follow up of 37 7 months patients receiving Opdivo alone showed an ORR of 26 Median progression free survival PFS and overall survival OS in the three arms were 4 9 months and 15 3 months 2 6 months and 7 4 months and 2 8 months and 9 9 months respectively No new safety signals were observed The data support the ongoing Phase 3 CheckMate 901 study in treatment naive bladder cancer patients ESMONow read |
BMY | Bristol Myers Squibb Q3 top line up 8 non GAAP EPS up 45 raises guidance | Bristol Myers Squibb BMY Q3 results Revenues 5 691M 8 3 Product Sales 5 433M 11 7 Alliance and other revenues 258M 34 2 Net Income 1 901M 125 0 Non GAAP Net Income 1 780M 44 8 EPS 1 16 127 5 Non GAAP EPS 1 09 45 3 Key product sales Eliquis 1 577M 28 Opdivo 1 793M 42 Orencia 675M 7 Sprycel 491M 4 Yervoy 382M 18 2018 Guidance EPS 3 05 3 15 from 2 68 2 78 non GAAP EPS 3 80 3 90 from 3 55 3 65 Shares are up 2 premarket Previously Bristol Myers Squibb beats by 0 18 misses on revenue Oct 25 Now read |
JPM | S P 500 hits record high on global risk appetite | By Sam Forgione NEW YORK Reuters The U S benchmark S P 500 stock index set a record intraday high on Monday in the wake of last week s strong monthly U S jobs report while European shares rose on reduced political uncertainty and U S Treasury yields edged off record lows The S P 500 SPX touched a record intraday high of 2 139 34 points on Monday Last Friday s jobs report showed the economy added the most jobs in eight months in June boosting confidence in the U S economy The gains on Monday were broad based with seven of the 10 major S P sectors higher Financials SPSY led the gainers with a 0 7 percent rise JPMorgan N JPM was up 1 4 percent and provided the biggest boost to the S P Wall Street had closed sharply higher on Friday with the S P ending just 5 points below its previous all time high of 2 134 72 A combination of electoral success for Japanese Prime Minister Shinzo Abe and the emergence of a sole candidate to succeed David Cameron as British prime minister reduced political uncertainty and helped European shares gain The anticipation of stimulus measures also boosted stocks while Japan s preparation for a new round of stimulus helped push Treasury yields higher Reaching a new high may see money moving from the sidelines of safety trades like Treasury bonds and gold back into the equity markets said Robert Pavlik chief market strategist at Boston Private Wealth The emphasis of the markets will be how fast and how long the S P remains above the record today U S Treasury yields rose on Japanese Prime Minister Abe s order for new stimulus which contributed to the boost in risky assets such as stocks and reduced demand for safe haven U S bonds Yields also rose as investors braced for 56 billion in new coupon bearing supply this week U S 30 year yields US30YT RR were last at 2 111 percent after hitting a record low of 2 089 in overnight trading Benchmark 10 year yields US10YT RR were last at 1 393 percent from a yield of 1 365 percent late Friday MSCI s all country world equity index MIWD00000PUS was last up 3 7 points or 0 92 percent at 404 69 The Dow Jones industrial average DJI was last up 81 25 points or 0 45 percent at 18 227 99 The S P 500 SPX was up 7 41 points or 0 35 percent at 2 137 31 The Nasdaq Composite IXIC was up 30 39 points or 0 61 percent at 4 987 15 The euro was last up 0 08 percent against the dollar at 1 1061 while Europe s broad FTSEurofirst 300 index FTEU3 was up 1 05 percent at 1 309 65 Brent crude LCOc1 was last up 8 cents or up 0 17 percent at 46 84 a barrel U S crude CLc1 was last up 8 cents or 0 18 percent at 45 49 per barrel Prices rebounded after falling earlier on Monday over signs that U S shale drillers have adapted to lower prices and on renewed indications of economic weakness in Asia where refiners are already trimming crude runs
The dollar was last up 1 9 percent against the safe haven yen at 102 41 yen |
JPM | Weak U S wholesale inventories seen weighing on second quarter GDP growth | By Lucia Mutikani
WASHINGTON Reuters U S wholesale inventories barely rose in May as automobile stocks recorded their biggest drop in more than 2 1 2 years suggesting inventory investment likely remained a drag on economic growth in the second quarter The Commerce Department said on Tuesday that wholesale inventories edged up 0 1 percent after increasing 0 7 percent in April Economists had forecast wholesale inventories rising 0 2 percent in May Inventories are a key component of gross domestic productchanges The component of wholesale inventories that goes intothe calculation of GDP wholesale stocks excluding autos increased 0 4 percent in May
Higher prices for commodities including petroleum largely accounted for the gain in ex autos wholesale inventories in May As such this will probably not provide a boost to second quarter GDP growth when adjusted for inflation
Following the data the Atlanta Federal Reserve trimmed its second quarter GDP growth estimate by one tenth of a percentage point to a 2 3 percent annualized rate
What has been reported suggests there was a sharp slowing in the pace of inventory accumulation between the first quarter and second quarter said Daniel Silver an economist at JPMorgan NYSE JPM in New York
According to Silver data so far suggested that the inflation adjusted change in inventories in the second quarter was between a 20 billion and 25 billion rate That implied inventories subtracted about one percentage point from GDP growth in the second quarter he said
A report last week showed factory inventories slipped in May Retail inventory data for May will be published on Friday Inventory investment cut just over two tenths of a percentage point from GDP growth in the first quarter helping to hold back the rise in output to a 1 1 percent annualized rate
Businesses accumulated record inventory in thefirst half of 2015 which outstripped demand Inventories have weighed on GDP growth since the third quarter of that year as businesses tried to unload the piles of unwanted merchandise
Still inventories remained high in the second half of 2015 and the first quarter of 2016
If our second quarter estimate of the inventory data is correct the inventory correction should be over by the start of the third quarter making inventories much more favorable for growth beginning in the third quarter said Silver
In May auto inventories fell 1 9 percent the biggest decline since September 2013 Wholesale stocks of petroleum increased 3 2 percent and farm products inventories soared 5 9 percent
Sales at wholesalers increased 0 5 percent in May adding to the prior month s 0 8 percent gain With sales rising for a third straight month it would take wholesalers 1 35 months to clear shelves down from 1 36 months in April |
JPM | Top 5 things to watch today | Investing com JPMorgan NYSE JPM to kick off U S bank earnings season BoE monetary policy committee rate decision due Global stocks mostly higher as rally continues Yen sinks on Bernanke s proposal for perpetual bond issuance Oil rebounds after plunging 4 overnight |
HAL | Earnings Preview Halliburton HAL Q1 Earnings Expected To Decline | Halliburton HAL is expected to deliver a year over year decline in earnings on lower revenues when it reports results for the quarter ended March 2019 This widely known consensus outlook gives a good sense of the company s earnings picture but how the actual results compare to these estimates is a powerful factor that could impact its near term stock price
The stock might move higher if these key numbers top expectations in the upcoming earnings report which is expected to be released on April 22 On the other hand if they miss the stock may move lower
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management s discussion of business conditions on the earnings call it s worth handicapping the probability of a positive EPS surprise
Zacks Consensus Estimate
This provider of drilling services to oil and gas operators is expected to post quarterly earnings of 0 23 per share in its upcoming report which represents a year over year change of 43 9
Revenues are expected to be 5 54 billion down 3 5 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 0 06 higher over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out This insight is at the core of our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for Halliburton
For Halliburton the Most Accurate Estimate is lower than the Zacks Consensus Estimate suggesting that analysts have recently become bearish on the company s earnings prospects This has resulted in an Earnings ESP of 0 82
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that Halliburton will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that Halliburton would post earnings of 0 37 per share when it actually produced earnings of 0 41 delivering a surprise of 10 81
Over the last four quarters the company has beaten consensus EPS estimates two times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
Halliburton doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
C | European stocks extend losses eyes on Spain DAX down 0 63 | Investing com European stocks extended losses on Monday after weak German business confidence data added to concerns over the worsening of the euro zone s debt crisis while investors awaited further indications on whether Spain is about to ask for a full scale sovereign bailout During European afternoon trade the EURO STOXX 50 tumbled 0 95 France s CAC 40 plumged 1 07 while Germany s DAX 30 dropped 0 63 Data showed earlier that German business confidence in September deteriorated to the lowest level since March 2010 amid ongoing concerns over euro zone s debt crisis In a report the German research institute Ifo said its Business Climate Index fell by 0 9 point to a seasonally adjusted 101 4 in September from a reading of 102 3 in August Analysts had expected the index to ease up by 0 2 points to 102 5 in September Markets were also jittery as Madrid is to present its draft budget for next year and announce structural reforms on Thursday while the results of bank stress tests are due on Friday In addition ratings agency Moody s is expected to complete a ratings review on Spain later this week Over the weekend Spain s economy minister said the country would not rush to seek external financial aid as pressure mounted on Spain to seek a bailout Financial stocks remained broadly lower as shares in Germany s Deutsche Bank and Commerzbank tumbled 1 60 and 4 51 while French lenders BNP Paribas and Societe Generale plummeted 1 34 and 1 36 respectively Peripheral lenders also posted sharp losses with Italian banks Unicredit and Intesa Sanpaolo plunging 1 45 and 2 07 while Spain s Banco Santander and BBVA plummeted 1 76 and 1 83 Meanwhile Syngenta trimmed gains but still added 0 20 after the agrochemicals giant increased its target for sales in 2020 by USD3 billion as it accelerates the introduction of new technology and benefits from a reorganization In London commodity heavy FTSE 100 slumped 0 50 weighed by losses in mining and oil stocks Mining giants Rio Tinto and BHP Billiton plunged 1 94 and 1 49 while steel producer Evraz lost 4 01 Separately Citigroup downgraded Rio Tinto to neutral from buy Oil giant Anglo American was also on the downside with shares plummeting 3 33 while rival group BP gained 0 36 amid ongoing reports that it may buy a stake in Russian state controlled peer Rosneft Elsewhere U K lenders continued to track their European counterparts lower Shares in HSBC Holdings fell 0 41 and Lloyds Banking tumbled 1 01 while Barclays and the Royal Bank of Scotland retreated 1 84 and 2 32 In the U S equity markets pointed to a lower open The Dow Jones Industrial Average futures pointed to a 0 36 fall S P 500 futures signaled a 0 38 decline while the Nasdaq 100 futures indicated a 0 30 loss Meanwhile concerns over Greece persisted as Athens prepared to present a package of spending cuts demand by international lenders to euro zone officials at the end of this week amid fears that the country s budget shortfall could be larger than expected |
C | Euro shares close sharply lower on German numbers Spain DAX off 0 52 | Investing com European stocks closed lower once again Monday as bearish German business confidence data added to concerns over the worsening of the euro zone s debt crisis while investors awaited further indications regarding the Spanish bailout At the close of European trade the EURO STOXX 50 tumbled 0 74 France s CAC 40 plumged 0 95 while Germany s DAX 30 gave back 0 52 Data revealed German business confidence in September deteriorated to the lowest level since March 2010 amid ongoing concerns over euro zone s debt crisis The German research institute Ifo reported its Business Climate Index fell by 0 9 point to a seasonally adjusted 101 4 in September from a reading of 102 3 in August Analysts had expected the index to ease up by 0 2 points to 102 5 in September Markets were also jittery as Madrid is to present its draft budget for next year and announce structural reforms on Thursday while the results of bank stress tests are due on Friday In addition ratings agency Moody s is expected to complete a ratings review on Spain later this week Over the weekend Spain s economy minister said the country would not rush to seek external financial aid as pressure mounted on Spain to seek a bailout Financial stocks remained broadly lower as shares in Germany s Deutsche Bank and Commerzbank tumbled 1 60 and 4 51 while French lenders BNP Paribas and Societe Generale plummeted 1 34 and 1 36 respectively Peripheral lenders also posted sharp losses with Italian banks Unicredit and Intesa Sanpaolo plunging 1 45 and 2 07 while Spain s Banco Santander and BBVA plummeted 1 76 and 1 83 Meanwhile Syngenta trimmed gains but still added 0 20 after the agrochemicals giant increased its target for sales in 2020 by USD3 billion as it accelerates the introduction of new technology and benefits from a reorganization In London commodity heavy FTSE 100 slumped 0 24 weighed by losses in mining and oil stocks Mining giants Rio Tinto and BHP Billiton plunged 1 94 and 1 49 while steel producer Evraz lost 4 01 Separately Citigroup downgraded Rio Tinto to neutral from buy Oil giant Anglo American was also on the downside with shares plummeting 3 33 while rival group BP gained 0 36 amid ongoing reports that it may buy a stake in Russian state controlled peer Rosneft Elsewhere U K lenders continued to track their European counterparts lower Shares in HSBC Holdings fell 0 41 and Lloyds Banking tumbled 1 01 while Barclays and the Royal Bank of Scotland retreated 1 84 and 2 32 In the U S equity markets traded off in midsession action The Dow Jones Industrial Average gave back 0 23 the S P 500 dropped 0 35 while the Nasdaq is posting a sharper loss of 0 71 Meanwhile concerns over Greece persisted as Athens prepared to present a package of spending cuts demand by international lenders to euro zone officials at the end of this week amid fears that the country s budget shortfall could be larger than expected Traders are awaiting the U S consumer confidence numbers and a talk by ECB President Mario Draghi on Tuesday |
C | Best Buy s Not So Merry Christmas Hits Markets | Stocks mostly declined Thursday pulling the S P 500 off its record Wednesday close following weak earnings from several sector bellwethers including a tumble for Best Buy BBY after the consumer electronics retailer said same store sales fell compared to year ago levels Financial stocks slumped after Citigroup s C Q4 earnings missed Wall Street expectations by 0 16 per share Defensive sectors eked out small gains with utility companies rising nearly 0 7 as a group while healthcare stocks posted narrow gains The Nasdaq Composite index recorded a small advance rising about 3 points Ahead of Thursday s opening bell the Bureau of Labor Statistics reported consumer prices rose 0 3 during December Excluding food and fuel the core index increased only 0 1 last month with both numbers matching expectations Initial jobless claims for the week ended Jan 11 also were largely in line with market expectations falling 2 000 to 326 000 new claims The prior week also was revised downward by 2 000 applicants to 328 000 first time claims Upside SurpriseThe Philadelphia Fed business conditions index produced an upside surprise however rising to a better than expected 9 4 reading this month from a 7 0 score in December But the National Association of Home Builders housing market index pointed to more slowing in the housing market dropping to a 56 0 reading and trailing the consensus view expecting a 57 5 reading Front month prices for natural gas futures gave up a large part of their earlier gains after government data Thursday reported a record drop in natural gas supplies last week although the decline wasn t quite as large as market experts were expecting Feburary natural rose 6 cents to settle at 3 38 per 1 million BTU after earlier brushing against an intra day high of 4 50 CommoditiesFebruary crude oil was down 21 cents at 93 96 per barrel Thursday February gold rose 90 cents to 1 239 90 per ounce while March silver fell 7 cents to settle at 20 06 per ounce March copper also declined 2 cents at finish at 3 34 per pound February crude oil fell cents to finish at per barrel Here s Where The Markets Stood At Day s EndDow Jones Industrial Average down 64 93 0 39 to 16 417 01S P 500 down 2 49 0 13 to 1 845 89 Nasdaq Composite Index up 3 81 0 09 to 4 218 69GLOBAL SENTIMENTHang Seng Index up 0 37 Shanghai China Composite Index up 0 02 FTSE 100 Index down 0 07 UPSIDE MOVERS SRPT Positive test results following 120 weeks for the company s Eteplirsen muscular dystrophy drug treatment YRCW Resumes talks with the International Brotherhood of Teamsters about a contract extension voted down by the union members last week RIBT Reaches multi year distribution and supply agreement with Hela Spice to sell its products in Canada DOWNSIDE MOVERS BBY Total revenue during the holiday season fell to 11 45 billion including a 0 9 decline for U S same store sales during December CLC Earns 0 65 per share in Q4 down from 0 72 per share during the same quarter last year and missing the Capital IQ consensus by 0 05 NUS Chinese authorities responding with investigation after a People s Daily newspaper report accused the company of operating an illegal pyramid scheme in the country After Hours Stock News From Copyright 2014 MT Newswires a Division of MidnightTrader Inc |
C | S P 500 Stable Despite Missed Earnings Expectation | US stocks fell yesterday following disappointing earnings from a few big names such as Citigroup and Best Buy pulling S P 500 from its latest record close 2 5 points lower This bearishness is highlighted when the better than expected Initial Jobless Claims failed to trigger any bullish response yesterday which leads one to wonder if stock prices would have been lower if not for the bullish economic number Hourly ChartThen again it should be noted that prices have been relatively stable when US stock market was opened The majority of yesterday s losses actually occurred during Asian and European hours where Futures have traded lower ever since Wednesday US session closed Interestingly Futures prices started to climb lower quickly when US stock market closed at 4pm EST This suggest that US traders are actually remaining rather calm and that the lower earnings actually did not drive Stocks lower and the previous assertion may need to be revised That doesn t mean that the bearish pressure in S P 500 is lifted for global risk off trends have proved to have a strong impact on US stock prices Also from a technical perspective prices have traded below the 1 845 and rising trendline opening a move towards 1 831 support Stochastic readings also favor continued bearish movement as Stoch curve has reversed underneath the 60 0 level where previous peaks were seen on Monday On a separate note bulls should be relief that sentiment of US traders remain bullish for now However should more earnings disappointment pile up as earning seasons continue it is likely that the bullish resolve of US traders will be broken and we could see sharper bearish pullbacks if global risk trends remain bearish Daily ChartDaily Chart agrees with this outlook with a lower bearish target around 1 815 and the rising Channel Top as another possible target Stochastic readings are still pointing higher though and a break of 1 850 cannot be ruled out entirely Nonetheless with readings close to Oversold region the likelihood of further bullish push is lower given the bearish global risk trends Hence a bearish pullback is more likely but we will need further confirmation e g Stoch reversing and push below 60 0 Should this happen it is likely that price would have been below 1 831 and further bearish acceleration can be expected in the short run |
C | ETFs Let You Invest With Your Head Rather Than Your Heart | If anyone would have told me in 2011 that the China neighbor theme would struggle for as long as it has I would have dismissed the argument outright I had lived in places like Taiwan Thailand and Hong Kong I had visited a stock exchange in the Philippines insurance institutions in Singapore as well as a textile facility in Indonesia I had experienced the indomitable work ethic throughout Southeast Asia firsthand Simply put it would have been impossible for me to accept a notion that a slowdown in China might reverberate for multiple years across the region
Fortunately I invest with my head rather than my heart The best example that I have is my largest 2010 holding iShares MSCI Malaysia EWM Not only did EWM triple the performance of the S P 500 but it did so with less beta risk
I expressed enormous enthusiasm for Malaysia throughout 2009 and 2010 In August of 2009 I highlighted Malaysia s 1 ranking in the world for access to credit in In November 2009 I discussed why emerging market investors could improve their diversification and performance by steering away from the natural resources powerhouses e g Russia Brazil etc in And throughout 2010 I pointed to the attractive valuation technical uptrend relative strength low beta risk and dividend yield of iShares MSCI Malaysia EWM
For the better part of two years Malaysia EWM remained one of my top choices for clients Moreover as a strong advocate of investing in regional partners to take advantage of China s growth as well as Japan s economic needs I believed strongly in Malaysia s positioning
Then came the U S debt downgrade After that the euro zone appeared to teeter on the brink of survival And all of a sudden stock exposure to emergers had become a liability
Perhaps obviously my heart still felt that Malaysia EWM was a strong contender for emerging market exposure Yet I am not nor have I ever been a buy n holder So when EWM fell below and stayed below its 200 day moving average when it simultaneously hit stop limit loss orders it was time to let go My approach to risk management for the past quarter century has always been to control the outcome of every investment by securing a big gain small gain or small loss I actively manage against experiencing a big loss
It is not that I predicted Malaysia s struggles in the years that followed My heart believed that Southeast Asia offered compelling opportunity However my head has always held firm to an investing principal of controlling what can be controlled Keep costs low mind the cash flow yield and celebrate liquidity ETFs make it possible to do all of these things
Malaysia EWM has still not reappeared on my wish list screen By unemotionally selling EWM in August of 2011 I had the world of different ETF assets to consider buying as well as an opportunity to ride out the euro zone crisis with a heavy dose of cash My heart might have wanted to see all of the ducks line up again for Malaysia in the years since technical uptrend relative strength economic growth fundamental value but they have not At least not yet
The questions many may have at this moment are So what are you currently invested in and What s on your wish list Some of those answers can be found in the feature Positioning Your Portfolio For 2014
Nevertheless it s worth noting that since the start of the year I have added iShares MSCI New Zealand ENZL to a number of client accounts for a combination of factors including but not limited to a improved economic growth b yen carry trade beneficiary c 4 annualized yield d technical uptrend and e sector diversification Similarly there are a number of yield oriented income investments in the muni and corporate credit space that I have added to a variety of portfolios here in 2014 including Blackrock Muni Assets MUA and Guggenheim BulletShares 2020 High Yield BSJK Bear in mind the rates can only go up argument has been largely one sided
Disclosure Gary Gordon MS CFP is the president of Pacific Park Financial Inc a Registered Investment Adviser with the SEC Gary Gordon Pacific Park Financial Inc and or its clients may hold positions in the ETFs mutual funds and or any investment asset mentioned above The commentary does not constitute individualized investment advice The opinions offered herein are not personalized recommendations to buy sell or hold securities At times issuers of exchange traded products compensate Pacific Park Financial Inc or its subsidiaries for advertising at the ETF Expert web site ETF Expert content is created independently of any advertising relationships |
C | GBP USD Weak Uptrend | GBP USD Daily Chart title GBP USD Daily Chart width 474 height 242
Short Term Trend weak uptrend Outlook GBP rallied to 1 6667 just abv the 1 6648 Fibonacci level and pulled back sharply So we now have a key reversal day from last Friday And that means that most likely wave c is complete And based on the weekly price pattern the huge Contracting Triangle from Jan 2009 low wave E should also be complete That all means one thing a big move down lies ahead The 1st level of potential support is seen at 1 6220 and break below there will be a strong confirmation of the bearish case On the upside only abv 1 6740 will negate
Strategy Holding short from 1 6610 is favored Stop at 1 6750 |
C | Does Data Favor A US Economic Recovery | Recent macroeconomic data clearly favors the recovery of the U S economy and in the current environment it will be difficult for the Fed if nothing is done In fact the reduction program QE 3 5 10 billion is clearly laid down in prices and market participants are ready for such an event And if together with the reduction of asset repurchase program will be lowered and the target level of unemployment to reach 5 5 this can be completely welcomed by the markets since this fact postpone expectations of rising interest rates by almost 2 years
In any case a reducing program worth at least 10 billion short term we will see a small correction on all stock markets and the strengthening of the dollar index to all currencies Next we look for a reaction on the bond market if the growth yields on U S bonds resumed with renewed vigor it means that investors took the outcome of the Fed meeting is not very positive and should prepare for the correction and the stock markets
A complete wave at the C C level H2 from the reference point 81 350 Relevant grid correction of the wave a C C with borders 81 350 and 80 180
New reference point can be called level 80 180 Up from the reference point the wave A B with boundaries passing through 80 180 and 80 580 levels Not punched downwards sloping channel NC with parameters 79 020 79 650 and 80 036 pivot which still may be possible to wave formation C
To go up is necessary to form fractal zigzag reversal
Goals up in the Forex market are the following levels
80 627 38
80 765 50 up to this level the formation of the fourth wave
80 903 62
81 074 76 ships with 81 485 and 81 350 parameters
To continue the downward movement is necessary to form dog Elder and new wave a C down from 80 036 pivot breakdown and the subsequent formation of the latent fractal zigzag reversal |
JPM | JPMorgan may move thousands of staff out of UK report | Investing com JPMorgan NYSE JPM may move thousands of staff out of UK on Brexit Decision rests on if UK loses automatic right to sell financial services to the EU JPMorgan CEO Jamie Dimon told Italian daily Il Sole 24 Ore passporting right key Worst case scenario is having move some thousands of employees Dimon said UK has yet to begin talks on the conditions of its departure from the EU |
JPM | Global stocks and sterling bounce after Brexit bashing | By Marc Jones LONDON Reuters Share markets climbed on Thursday as upbeat U S economic data took some of the sting out of the Brexit scare while the Australian dollar dipped as the country s triple A credit rating came under threat The European market started firmer with the FTSE FTSE up 1 7 percent the CAC in Paris FCHI 1 9 percent higher and Germany s DAX GDAXI rising 1 3 percent U S S P futures ESc1 pointed to a 0 2 percent bounce In the currency market Brexit battered sterling also steadied at 1 2980 while the Aussie dollar fell as low as 0 7467 after Standard Poor s cut the country s rating outlook to negative from stable citing a need for fiscal repair The agency had warned it may act after inconclusive elections over the weekend suggested the next government would have a hard time getting reforms through to law However investors are less sensitive to ratings these days given so many countries were downgraded in the wake of the global financial crisis and the Aussie soon steadied at 0 7511 Likewise Australian bond futures barely budged as 10 year yields of 1 88 percent make the debt highly attractive compared to the negative yields of some of its peers Italy led a move higher in southern European bond yields meanwhile as the rising popularity of the anti establishment 5 Star Movement M5S and concerns about a banking sector saddled with bad debts rattled investors Polls showed this week that the M5S which has called for a referendum on euro zone membership and triumphed in local elections last month is now Italy s most popular party ahead of Prime Minister Matteo Renzi s Democrats Italian 10 year bond yields rose 3 basis points to 1 20 percent IT10YT TWEB pulling away from the German benchmark which was flat at minus 0 17 percent It all circles around Renzi being able to win this referendum with these legacy problems in the banks also coming back to haunt Italy Commerzbank DE CBKG strategist David Schnautz said RESILIENT Earlier in Asia the mood had been one of relief that Brexit fears had faded for the moment MSCI s broadest index of Asia Pacific shares outside Japan MIAPJ0000PUS rose 0 8 percent Japanese shares were restrained by a strong yen and the Nikkei N225 slipped 0 9 percent Still it was notable that while bond markets have been signaling recession equities had stayed fairly resilient The most optimistic interpretation is that markets believe a limited regional shock is going to result in a significantly easier stance for global monetary policy David Hensley an economist at JPMorgan NYSE JPM said in a note At ground zero the Bank of England has indicated it may soon cut rates There is widespread speculation the BOJ and ECB will ease a view we share More importantly JPMorgan believes the Bank of England will revive its quantitative easing process while the British government reverses course on austerity and loosens fiscal policy which could be a green light to fiscal expansion globally NO FED HIKE UNTIL 2019 Sentiment got a welcome lift from a survey showing activity in the giant U S service sector hit a seven month high in June as new orders surged and companies hired more That helped the Dow DJI rise 0 44 percent while the S P 500 SPX gained 0 54 percent and the Nasdaq IXIC 0 75 percent Minutes from the U S Federal Reserve s June policy meeting confirmed what was already suspected that officials were concerned ahead of the Brexit vote which subsequently erased 3 trillion from global equities over two days The British pound remained vulnerable at 1 2975 having slid almost 3 percent in the previous two sessions to carve out a 31 year trough of 1 2898 The safe haven yen was well bid at 100 73 per U S dollar while the euro held steady at 1 1090 Markets have assumed the uncertainty over Brexit and the resulting strength in the U S dollar has made it very unlikely the Fed will be able to hike rates again this year Fed fund futures for December 0 FF imply a rate of 38 5 basis points almost exactly where the effective rate is now Remarkably the market is not fully priced for a hike until the start of 2019 Treasuries have in turn enjoyed an historic rally that has taken yields to record lows right out to 30 years The benchmark 10 year note US10YT RR was paying just 1 37 percent some way below the rate of U S inflation Indeed analysts estimate over 10 trillion of government debt around the world offer only negative yields a nightmare for fund managers and insurance companies who have committed to future pension payments at positive rates In commodity markets oil prices recouped some lost ground on the better U S data and expectations for a sharp drop in crude stockpiles
NYMEX crude futures CLc1 were quoted 25 cents firmer at 47 68 a barrel while Brent LCOc1 added 23 cents to 49 03 |
JPM | Jobless claims hiring data brighten U S labor market view | By Lucia Mutikani WASHINGTON Reuters U S private payrolls increased more than expected in June as small businesses ramped up hiring and fewer Americans applied for unemployment benefits last week suggesting a rebound in job growth after May s paltry gains Thursday s reports underscored the economy s strength and supported views that the United States would weather the impact of last month s British referendum to leave the European Union The labor market does not seem to be faltering The apparent willingness of small business owners to bring on new workers is a clear sign that the economy is moving forward solidly said Joel Naroff chief economist at Naroff Economic Advisors in Holland Pennsylvania The ADP National Employment Report showed private employers hired 172 000 workers in June beating market expectations for a 159 000 gain Private payrolls rose 168 000 in May Last month small businesses hired 95 000 workers up from 84 000 in May The services sector added 208 000 jobs last month but manufacturing and construction lost a combined 26 000 positions The ADP report which is jointly developed with Moody s Analytics was published ahead of the government s more comprehensive employment report for June due on Friday Though the ADP report is not considered a reliable predictor of non farm payrolls because of differences in methodology economists say it on the margin suggested a pickup in overall employment growth The ADP report is not affected by strikes and therefore did not account for the return of 35 100 Verizon workers who were excluded from the non farm payrolls count in May while on a month long strike Those workers are expected to boost employment in June Adjusting for the strike the ADP report suggests that the employment report s private payroll count should be up 207 000 said Daniel Silver an economist at JPMorgan NYSE JPM in New York That said the ADP and the government s employment data do not always align very well REBOUND IN PAYROLLS EXPECTED According to a Reuters survey payrolls likely increased 175 000 last month Employment increased by only 38 000 jobs in May the smallest gain since September 2010 The unemployment rate is forecast rising to 4 8 percent in June from an 8 1 2 year low of 4 7 percent in May May s weak job gains and the pending Brexit referendum prompted the Federal Reserve to keep interest rates unchanged last month Even if payrolls rebound in June economists say the stunning Brexit vote made it unlikely that the U S central bank would hike rates before the end of the year Minutes of the Fed s June 14 15 meeting published on Wednesday showed U S central bank officials agreed that it was prudent to wait for additional data on the consequences of the UK vote The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade The upbeat labor market data helped to lift U S stocks The dollar was little changed against a basket of currencies while prices for U S Treasuries fell In a separate report the Labor Department said initial claims for state unemployment benefits declined 16 000 to a seasonally adjusted 254 000 for the week ended July 2 The drop left claims close to a 43 year low of 248 000 touched in mid April Economists polled by Reuters had forecast initial claims rising to 270 000 in the latest week Claims have now been below 300 000 a threshold associated with a healthy labor market for 70 straight weeks the longest stretch since 1973 The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility fell 2 500 to 264 750 last week Claims were low through June backing views that May s weak payroll gains were not a true reflection of the labor market While a third report from global outplacement consultancy Challenger Gray Christmas showed planned job cuts by U S based employers rose to 38 536 last month from 30 157 in May layoffs remained well below their 12 month average
The pace of job cutting has slowed significantly since the beginning of the year We may continue to see low job cut totals throughout the remainder of 2016 as employers take a wait and see stance on workforce levels said John Challenger chief executive officer at Challenger Gray Christmas |
JPM | Peru s president names beer company executive Zavala as prime minister | LIMA Reuters Peru s President elect Pedro Pablo Kuczynski confirmed on Sunday that Fernando Zavala the outgoing chief executive of the country s biggest beer company will be his prime minister after he takes office July 28 In an interview with local broadcaster RPP Kuczynski praised Zavala 45 as well qualified for the job after holding positions in the finance ministry the antitrust regulator and the private sector He has broad knowledge of what s going on in Peru and knows how public administration works Kuczynski said He s regarded as objective and I think his presence is going to be very positive Zavala said on Twitter that he was honored by the appointment and would strive to make Peru better Reuters reported on Friday that Kuczynski was planning to name Zavala as prime minister Zavala is leaving SABMiller s Peruvian subsidiary Union de Cervecerias Peruanas Backus Y Johnston as it undergoes an acquisition by Anheuser Busch Inbev One of Zavala s first challenges will be pushing Kuczynski s reforms through a Congress that will be dominated by opposition lawmakers most belonging to the right wing populist party of Kuczynski s defeated run off rival Keiko Fujimori Kuczynski has said that he has tried unsuccessfully to reach Fujimori by phone but told RPP that he expects to speak to her in the coming days There are signs of that he said Fujimori has said little in public since ceding defeat to Kuczynski last month after a divisive presidential race that many viewed as a referendum on the legacy of Fujimori s father former authoritarian president Alberto Fujimori Kuczynski a 77 year old former investment banker and prime minister won by only tens of thousands of votes The only other cabinet member that Kuczynski has announced is Alfredo Thorne appointing the former JPMorgan Chase NYSE JPM director as his finance minister |
HAL | Halliburton Q2 earnings boosted by higher U S drilling activity | Investing com U S oil services firm NYSE Halliburton s second quarter earnings were boosted by a pick up in U S drilling activity Halliburton reported basic diluted earnings per share from continuing operations in the June quarter of 0 03 compared with a loss of 3 73 per share in the same period a year earlier It reported a loss per share of 0 04 in the first quarter of this year Adjusted income per share from continuing operations on a diluted basis came at 0 23 compared with an estimate of 0 18 and 0 04 a year earlier Revenues in the period climbed to 4 96 billion from 3 84 billion a year earlier Revenues were forecast at 4 86 billion Our performance this quarter demonstrates that Halliburton is the execution company Executive Chairman Dave Lesar said North America revenue growth came in at 24 as the U S land rig count grew 21 Halliburton said it posted double digit margin growth in the quarter Halliburton shares were off 2 01 at 43 49 at 09 45 ET after an early high of 45 30 |
HAL | Halliburton turns red as U S shale firms tapping the brakes | Halliburton HAL 3 2 has turned sharply lower after its earnings conference call as Chairman Dave Lesar said rig count growth is showing signs of plateauing and North American customers are tapping the brakes HAL says its pressure pumping equipment is sold out in Q3 and it has been successful passing along supply cost increases to its customers but Q2 saw the first decline in years in average sand pumped per well HAL also expects margins in its completion and production division to increase by 225 325 basis points in Q3 However the company does not expect a near term rebound in the international markets for several reasons including the lengthy contracting cycles that will mute any near term pricing inflection and a lack of confidence in commodity prices in order to overcome the duration risk in their projects Now read |
HAL | Oil extends gains as Saudi Arabia pledges export cuts | Investing com Oil Tuesday extended gains after a pledge by Saudi Arabia to cut crude exports starting next month U S crude was up 75 cents or 1 62 at 47 09 at 08 00 ET Brent added 78 cents or 1 60 to 49 38 Saudi Energy Minister Khalid al Falih made the pledge to curb exports at an OPEC led producer meeting in Saint Petersburg on Monday OPEC and non OPEC producers may extend an accord to curb output by 1 8 million barrels a day beyond March Al Falih also urged adherents to the accord to boost compliance with the agreed cuts Nigeria which has been exempt from the accord may eventually join the agreement once it has restored its production levels Oil was also supported by remarks by U S oil services firm Halliburton NYSE HAL that the U S rig count is showing signs of plateauing Baker Hughes Friday reported a fall of one in the U S oil rig count last weekThe American Petroleum Institute is due to release its weekly stockpiles later in the session |
HAL | Texas bathroom bill dies in special legislative session | By Jon Herskovitz AUSTIN Texas Reuters Texas measures criticized as being discriminatory for limiting transgender people s access to bathrooms in schools and public buildings died on Tuesday as the House adjourned and ended its special legislative session Business leaders and civil rights groups had battled to defeat the bills saying they advanced bigotry would tarnish the state s image and damage its economy The measures were blocked by moderate House Republicans Adoption by Texas the most populous Republican dominated state could have fed momentum in other socially conservative states on the issue a flashpoint in the U S culture wars Finally Texans can breathe a temporary sigh of relief said JoDee Winterhof an official of the Human Rights Campaign that lobbied against the bills Texans don t want harmful anti transgender legislation Winterhof the campaign s senior vice president for policy and political affairs said in a statement Momentum for so called bathroom bills stalled this year when North Carolina partially repealed a similar law in March The original law prompted boycotts by athletic bodies and businesses that are estimated to have cost the state hundreds of millions of dollars Texas could have lost about 5 6 billion through 2026 if it had enacted such a measure said the Texas Association of Business the state s leading employer grouping The House wound up its duties without taking action on any of the bills and adjourned sine die a day ahead of the official end of the 30 day special session House Speaker Joe Straus a pro business Republican who controls the agenda in the chamber said the issue was not a priority Straus position was reinforced by a well financed campaign by major corporations including Texas based energy companies Halliburton NYSE HAL and ExxonMobil NYSE XOM Global Services which have said the bills would make it hard for them to recruit top talent The measure that advanced the farthest was Senate Bill 3 which passed easily on a party line vote in the Republican controlled Senate and then died in the House It would have required people to use restrooms showers and locker rooms in public schools and other state and local government facilities that match the sex on their birth certificate as opposed to their gender identity
Supporters including Republican Lieutenant Governor Dan Patrick a staunch social conservative say the proposed curbs promote public safety and protect vulnerable women and children |
HAL | Pullback in U S fracking sand use pressures producers | By Arathy S Nair and Nivedita Bhattacharjee Reuters U S shale oil companies are pulling back on the amount of sand they use to hydraulically fracture new wells responding to rising prices of the material that are driving up costs Investors worry a slowdown in sand use combined with new mining capacity coming online could lead to a glut of the material and bring down prices The worries have pressured shares of sand companies Sand prices soared in the last year as oil companies ramped up shale drilling and production But with crude LCoC1 CLC1 prices below where they started the year oil producers are employing new well designs and chemical agents that lessen the use of sand that represents around 12 percent of the cost of drilling and fracturing The price of frack sand is expected to rise 62 percent this year to average 47 a ton according to researcher IHS Markit That is expected to drive oilfield service price inflation to 15 percent over 2016 according to researchers at Wood Mackenzie Oilfield services provider Halliburton Co N HAL which buys sand for its drilling customers last month reported its first decline in average sand used per well saying customers wanted designs that consumed less of the material Average sand volumes for each foot of a well drilled fell slightly last quarter for the first time in a year said exploration and production consultancy Rystad Energy Volumes are expected to drop a further 2 5 percent per foot in the current quarter over last Rystad forecast As alternative strategies are optimized sand density will fall on a foot by foot basis dramatically in time said Dallas Salazar chief executive of energy consulting firm Atlas Consulting For a graphic showing frack sand use per well over time see LOGISTICS PROBLEMS Frack sand is mixed in a slurry and forced at high pressure into wells to free oil and gas trapped in rocks Any weakening of sand demand would collide with several sand producers plans to open new mines Companies including Unimin Corp U S Silica Holdings Inc N SLCA and Hi Crush Partners LP N HCLP are spending hundreds of millions of dollars on new mines to address an expected increase in demand On Thursday supplier Smart Sand O SND reported it shipped less frack sand in the second quarter than it did in the first Rival Fairmount Santrol Holdings Inc N FMSA forecast flat to slightly higher volumes this quarter over last In the last six weeks shares of U S Silica and Hi Crush are both off about 30 percent Smart Sand is off about 43 percent since June 30 Some shale producers add chemical diverters compounds that spread the slurry evenly in a well and can reduce the amount of sand required Anadarko Petroleum Corp N APC and Continental Resources Inc N CLR are reducing the distance between fractures to boost oil production The tighter spacing allows them to extract more crude with less sand In the Denver Julesburg Basin of Colorado Anadarko said the new well designs have increased oil and gas production by as much as 35 percent It is no secret we have experimented with less sand out there Bradley Holly Anadarko s head of U S onshore exploration and production told analysts last month Analysts and frack sand providers continue to forecast an overall rise in sand consumption as more wells are drilled and completed Smart Sand last week blamed its decline on operational and logistics problems The cases where people were scaling back sand usage that was probably due to logistics problems Duane Scardino Hi Crush s corporate development manager said in an interview this week It s hard for me to imagine what would be more cost effective than frack sand
Still Atlas Consulting s Salazar said of the major U S shale basins only two Haynesville and Eagle Ford are pumping in more sand per well |
HAL | Halliburton HAL Amends Raises Credit Facility By 500M | Halliburton Company NYSE HAL recently boosted its available credit facility by 500 million Per its recent SEC filing the company has superseded its previous five year credit facility of 3 billion with a new deal worth 3 5 billion The credit facility is expected to enable the company draw debt to cover general working capital requirements until March 2024 Notably as of Dec 31 2018 it had approximately 2 billion in cash cash equivalents and 10 4 billion in long term debt representing a debt to capitalization ratio of 52 2 compared with the industry average of 30 3 The credit facility can increase the company s financial flexibility Halliburton one of the largest oilfield service providers in the world intends to concentrate on cost cutting moves and increase efficiency to boost profit margin As the exploration and production companies are slashing their respective 2019 capital investment budget it becomes tougher for oilfield service providers to receive new contracts and generate more revenues To cope with the situation the company has reduced its 2019 capital spending guidance by 20 to 1 6 billion The spending will be primarily focused on technologies and capabilities which are capital intensive like the directional drilling platform and production business expansion Notably the profoundness of Halliburton s global oilfield service franchise is evident from the fact that the company generated combined free cash flow in excess of 1 billion in 2018 Halliburton s ample cash flows provide it with the flexibility to pursue growth oriented initiatives Historically the company has not been shy of making acquisitions to plug holes in its product or service portfolio and increase geographic footprint Price PerformanceHouston TX based Halliburtonhas gained 6 3 in the past three months compared with 38 rally of the it belongs to Zacks Rank and Stocks to ConsiderHalliburton presently carries a Zacks Rank 3 Hold Investors interested in the energy sector can opt for some better ranked stocks as given below Fort Lauderdale FL based Seacor Holdings Inc NYSE CKH is a transportation and logistics provider for energy companies Its bottom line for first quarter 2019 is expected to increase almost 118 year over year The stock currently has a Zacks Rank 2 Buy You can see Midland TX based ProPetro Holding Corp NYSE PUMP is an oil and gas equipment providing company For 2019 its bottom line is expected to grow 17 year over year The company currently holds a Zacks Rank 2 Archrock Inc NYSE AROC is a Houston TX based energy infrastructure company Its bottom line for 2019 is expected to increase 39 6 year over year It currently has a Zacks Rank 2 Zacks Top 10 Stocks for 2019In addition to the stocks discussed above would you like to know about our 10 finest buy and holds for the year Who wouldn t Our annual Top 10s have beaten the market with amazing regularity In 2018 while the market dropped 5 2 the portfolio scored well into double digits overall with individual stocks rising as high as 61 5 And from 2012 2017 while the market boomed 126 3 Zacks Top 10s reached an even more sensational 181 9 |
C | Earnings Galore C BBY YHOO CSX And More In Play | This morning the S P 500 Index e mini futures ES H4 are trading lower by 3 25 to 1838 25 per contract Earnings season is underway with many leading companies reporting Today some of the early market movers are Best Buy Co Inc BBY Citigroup Inc Yahoo Inc YHOO and many others There should be plenty of trading opportunities in the early part of the trading session |
C | Are The Stock Market Bulls Toast | The stock market bulls may just be toast today The Fortune Teller Speaks The stock market bulls just may be toast today despite yesterday s euphoric gains All Eyes on Wall Street All eyes on Wall Street will likely be looking at the Weekly Unemployment Claims report released today which indicaded 2000 fewer claims for last weeek however the Consumer Pice Index Report stayed even and the Core CPI lost a few points I am under the impression that any bad data will trigger a massive sell off considering that the Fed is still tapering 10 billion off per month in asset purchases and that all of this data seems like a mirage anyways We are also due out for the Homebuilders Index and Philly Fed reports at 10 00 AM EST both of which can sway markets substantially Today is also a huge day for earnings reports with Goldman Sachs NYSE GS Citigroup NYSE C American Express NYSE AXP showing mixed results already and Intel NASDAQ INTC all reporting their 4th quarter 2013 earnings around 4 00 PM EST tonight Today could be bloodbath or another record I predict bloodbath Overall we are still in a tug o war between the bulls and the bears as any whiff of good or bad information triggers massive volatility and backlash When this all stops is anyone s guess Hindsight is a Beach and We re Playing on It Yesterday we were 100 correct finally for the first time this week and I was pleased to call the all new record high for the S P 500 NYSEARCA SPY which rose 52 to close at 1848 38 Gotta love these records when the economy still sucks The Dow Jones Industrial Average NYSEARCA DIA rose 66 and the NASDAQ Composite NASDAQ QQQ rose 76 Let s keep the ball rolling Fun Fact Both healthcare costs and pet care costs rose 87 from 2001 to 2012 Pets have it good in this country Disclaimer The content included herein is for educational and informational purposes only and readers agree to Wall Street Sector Selector s and before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group LLC |
C | Knocking Out Misleading Statements In The Rare Earth Element Space | Following up on our last article The Knock Out Criteria For Rare Earth Element Deposits there were several comments that were noted from our readers so I took the opportunity to discuss these with Darren L Smith M Sc P Geol of Dahrouge Geological Consulting Ltd In Germany people were even discussing emails that they received from companies that were mentioned in the article No matter whether these are legit or legitimately published they make a good case for discussion nonetheless Hence consider the comments from investors and company representatives as well as the responses below as general statements of the rare earth element REE space I present these in an effort to better place and compare these deposits in context for investors and further to understand why I am a supporter of Commerce Resources Corp and their Ashram Deposit as being a serious contender in the REE space The article is full of inaccuracies outdated references and misinformation Anyone confronted with such a statement would very much like to know specifically the inaccuracies outdated references and misinformation that are being referred to If specifics are not given then such a statement is difficult to respond to My best recommendation would be to read the article again and this time with a more open mind If such a statement as per above is made it must be backed up with specifics or it is likely unwarranted and without merit i e poor sportsmanship If any company feels the article is full of inaccuracies outdated references and misinformation I assume towards HREE companies then please contact me and inform me of the specifics in order to be able to address However to the author s knowledge the information contained in the article The Knock Out Criteria for REE Deposits is accurate current and discussed in a clear and fair manner with all data presented available in the public domain In addition Dahrouge Geological Consulting Ltd has extensive experience in mineral exploration and development with many notable discoveries to their credit including the Ashram Rare Earth Deposit Further Darren L Smith is a well known Professional Geologist with significant experience in the REE space Mr Smith s interview is based on his considerable experience and knowledge of the REE space and his comments should be noted as such
Discussing TREO grade without a breakdown of the contained light and heavy rare earth components is misleading information In this case only 7 of the total REEs in this deposit are medium or heavy REEs while lanthanum and cerium for which is there is little or no demand for new supply comprise 72 of the TREO
For those that are not aware REE distribution i e the breakdown referred to in the comment is the proportion of each REE relative to all the REEs combined 15 total elements La through Lu Y Often companies with an REE distribution more weighted in the HREEs are considered to have a more favorable REE distribution This is somewhat of a misleading statement itself as neodymium Nd and europium Eu light and middle REEs respectively are also in high demand and short supply with neodymium specifically having a larger market than all the HREEs combined I will discuss this further a bit later in this article One may expect this sort of comment from HREE plays It is sometimes the only thing they can promote on as most other REE companies do not have what they have namely an REE distribution more weighted in the valuable high demand and short supply HREEs terbium Tb dysprosium Dy and yttrium Y The article The Knock Out Criteria for REE Deposits was absolutely not misleading by not discussing mineral distribution in detail Here is why Anyone could make the same argument on jurisdiction CAPEX OPEX native issues social acceptability logistics by products co products etc The previous article was not focusing the discussion on distribution or any other project aspect for that matter but on metallurgy This is because too often cost of metallurgical recovery is ignored by the HREE companies when discussing their projects as it is inherently the most difficult aspect nearly every time A discussion on metallurgy does not require an equal discussion on REE distribution Quest Rare Minerals Ltd Quest and Avalon Rare Metals Inc Avalon were mentioned because both are very well known in the REE space for having poor mineralogy metallurgy yet both are often cited as the most advanced deposits in development The article was solely focusing on economics pure and simple from a metallurgical point of view At the end of day the REE distribution is irrelevant if one cannot get the commodity REEs out of the rock That is the point Further I would like to note that a typical granite rock for which you may have as a countertop may have a better distribution than most HREE deposits albeit its grade is trace Thus in my opinion it would be very misleading to discuss REE distribution without mentioning grade specifically because those two factors are intimately intertwined To this effect you may notice how many HREE deposits rarely discuss grade when discussing REE distribution because they occupy the lower grade spectrum in the REE space Lastly I consider the comments on supply demand the pot calling the kettle black Only three HREEs have ready markets that being terbium Tb dysprosium Dy and yttrium Y The remaining five Er Ho Tm Yb and Lu have very tiny markets in comparison and may not sell for some time after being processed if at all For these reasons those five elements are typically not included in an economic evaluation however many HREE companies will include several or all of them for some reason I expect it is because they have more appreciable amounts than an LREE company however if the market is not there for these elements it is not there Therefore assigning these five HREEs a value in an economic assessment may be wishful thinking and certainly not a conservative approach Further europium Eu is not an HREE and any HREE company that is claiming they have appreciable amounts is in error Europium is preferentially removed from granitic hosted HREE deposits dominant HREE deposit host rock type due to the chemical composition of the magma and mechanisms involved that form such deposits This is done through a process of substitution whereby Eu2 will substitute for Ca2 in the early forming feldspar minerals plagioclase during solidification of the magma thus removing Eu from the magma that still contains all the other REEs in their normal proportions The remaining magma then solidifies containing far less Eu which is expressed as a negative europium anomaly in relation to the other un affected REEs Therefore most HREE deposits are depleted in this highest priced critical element e g Avalon Nechalacho Deposit Quest B Zone Deposit Ucore Bokan Mountain Deposit Tasman Norra K rr Deposit Matamec Kipawa Deposit etc This process does not occur during the formation of carbonatites as feldspar is very rare in that source magma and thus those deposits maintain their levels of europium throughout their formation e g Commerce Ashram Deposit In fact in terms of europium Commerce s MHREO Zone part of the Ashram Deposit hosts among the best grade and distribution relative to the other REEs in the world See below chart on europium REE distribution as listed by Technology Metals Research However all this being said let s discuss this comment in a bit more detail To fully discuss distribution one needs to discuss the critical rare earth oxides CREOs neodymium Nd europium Eu terbium Tb dysprosium Dy and yttrium Y That is the REEs in the shortest supply relative to demand Simply put the more promising REE deposits will have the highest percentage of the CREOs and ideally a well balanced distribution among them the CREOs to act as a hedge against inevitable price fluctuations of any of the individual elements As alluded to above many people will tell you that HREE deposits are essentially a two trick pony That meaning these deposits are relatively enriched in dysprosium Dy and yttrium Y and maybe appreciable terbium Tb but very little of the other critical REEs Thus if you own an HREE deposit you are likely going to be held hostage to just three REEs and their respective markets and price fluctuations The Norra K rr Deposit Tasman Metals Ltd and the Kipawa Deposit Matamec Exploration Inc are good examples as both are essentially dysprosium yttrium deposits with low TREO grade and potentially a zirconium Zr by product co product Thus if the dysprosium or yttrium price drops they may have considerable difficulty remaining economic These deposits basically lack the hedge that a well balanced distribution would give them It s like putting your entire stock portfolio into gold and then trying to survive when the gold price plummets Whereas if you diversified into financials uranium utilities oil and gold for example your portfolio would be much healthier and would be able to sustain a price drop in any one sector while the other sectors keep you financially healthy This same hedge argument cannot be extended to by products like tantalum and niobium that many HREE deposits host This is because those products require an entirely different circuit flowsheet of processing and metallurgy than the REEs since they dominantly reside in non REE minerals Zirconium may reside in an REE mineral e g eudialyte however once freed into solution it must be separated from the REEs resulting in an additional flowsheet scenario Alternatively when one processes for REEs you get all of them since they all occur in the same mineral and thus all the CREEs cost essentially the same to process whether you get one out of the rock or all of them out Consider Avalon as a good example Avalon arguably must rely on credits from niobium tantalum and zirconium to remain economic Co products such as these complicate the metallurgical flowsheet and the subsequent economic picture and if their prices were to drop significantly it may have serious implications for the company Further I would like to note here Commerce s recent comments regarding a potential high grade fluorite concentrate product it may produce in addition to the REE products see news release dated December 4th 2013 This fluorite concentrate a near acid spar grade of 94 CaF2 does not require any additional processing to produce as it is part of the same flowsheet used to concentrate the REE minerals The ability to create such a product with solid supply demand metrics without any additional cost to the REE mineral processing flowsheet is a highly advantageous hedge to REE price fluctuations Commerce does not claim to be an HREE deposit however they are also not a pure LREE deposit as the comment infers Commerce is in the middle of the pack boasting a well balanced distribution namely appreciable amounts of all the CREOs Nd Eu Tb Dy and Y Hence Commerce is not held hostage to only a couple of the more valuable REEs So if the dysprosium price drops for example Commerce has a much better chance of staying economic thanks to the fundamentals of the other CREOs Even this being said Commerce s Ashram MHREO Zone boasts a higher dysprosium grade 155 ppm Dy2O3 measured indicated resources than Matamec s Kipawa Deposit Mineral Reserves 147 ppm Dy2O3 a well known HREE deposit Charts outlining REE distribution with TREO grade as well as CREO deposit grades as noted by Technology Metals Research are shown below Avalon s Nechalacho Deposit does boast a REE deposit with a very respectable REE distribution with appreciable amounts of the CREEs They sit typically between Ashram MHREO and deposits like B Zone Kipawa and Norra K rr see chart above However Nechalacho s economics have a significantly high CAPEX and OPEX a direct result of complex mineralogy and metallurgy and as discussed in the previous article metallurgy is what will typically make or break a REE project s economics So with respect to Avalon s Nechalacho Deposit and Quest s B Zone and all the other HREE deposits for that matter having a respectable distribution is a great thing but that does not make you the best deposit out there or very economic for that matter either The cost of metallurgical recovery is absolutely essential in the REE space and without it REE distribution means nothing So the point is you can have the best REE distribution in the world but if you don t have the grade tonnage and the crucial mineralogy metallurgy it is irrelevant Case in point is Matamec Kipawa Deposit Ucore Bokan Mountain Deposit and Namibia Lofdal Deposit all of which are HREE deposits that have very limited tonnage and or grade and thus limited mine life and or higher OPEX Quest and Avalon have the tonnage and a good REE distribution however they suffer from complicated mineralogy metallurgy and thus are facing much difficulty on the road to production resulting in exacerbated costs and a higher potential to result in failure So at the end of the day what REE company should someone invest in I would argue this should be one with a well balanced distribution over all five of the CREOs so they can weather price fluctuations better because REE supply and demand is a constant flux over the life of a mine Also I would look for companies with sufficient tonnage so that the typical high CAPEX can make sense as well as one with mineralogy metallurgy that is simple and demonstrated so that management does not need to tiptoe around for a decade updating Preliminary Economic Assessments PEA Pre Feasibility Studies PFS and Feasibility Studies FS Moreover if I am betting on a REE deposit to be put into production I am looking for one with rock types and REE minerals that have been commercially processed historically given how mineralogy metallurgy can make or break development Commerce boasts all of these aforementioned attributes placing it at the forefront in its peer group As stated in the previous article only four REE minerals have ever been commercially processed monazite bastnaesite xenotime and loparite Below is the Mineral Concentrate Comparison Chart edited to highlight those deposits hosting minerals that have been commercially processed historically As becomes clearly evident those deposits that host REE minerals that have been commercially processed historically have an inherent metallurgical advantage over those that do not At 1 9 TREO it is very low grade for a light REE dominant deposit For comparison Molycorp s Mountain Pass Deposit with a similar light to heavy distribution has a grade of over 9 TREO Such a statement is quite outdated and incorrect Firstly Molycorp s Mountain Pass Deposit is 6 6 TREO not 9 as commented yet it is still among the highest grade deposits in the world Further Commerce s Ashram Deposit has a higher grade then Mountain Pass for three out of the five CREOs Eu Dy and Y and nearly equal for terbium Second the world s 5 TREO deposits have all been discovered as recent exploration strongly indicates totaling less than 10 overall in the world it would appear A quick review of the REE space makes this quite apparent with any deposits over 3 a rarity and very LREE enriched Therefore consider 2 3 as the new high grade Moreover read the previous article again and find out how grade becomes irrelevant when you can easily upgrade to a mineral concentrate of 40 TREO as Commerce does This is how low grade beach sands were able to be mined economically Commerce s Ashram Deposit has a very respectable grade relative to its peers and is higher than its well known HREE peers Commerce actually has one of the highest grades of the large tonnage advanced stage REE deposits in development This is illustrated in the chart below as noted by Technology Metals Research Regarding the comment on the REE distribution of Commerce s Ashram Deposit being similar to Molycorp s Mountain Pass Deposit this is simply not true Commerce does not have a similar REE distribution to Molycorp as Commerce is much more HREE enriched in comparison Ashram s MHREO Zone has 11 2 middle heavy REE while Mountain Pass has 1 4 This means Ashram is eight times higher than Mountain Pass in this regard for that particular zone and still five times higher based on total resource For carbonatite hosted deposits Ashram MHREO has one of the best REE distributions in the world This is due to the highly unusual presence of xenotime the most preferred HREE mineral on the planet Take a look at the above chart on REE distribution and note the position of Mountain Pass and Ashram MHREO deposits in relation to each other There is only one carbonatite hosted REE deposit to the right of Ashram MHREO that being the lateritic Mount Weld Duncan Deposit This is very significant as nearly all REE deposits in production or that have historically produced that are not beach sands or ion absorbed clays are carbonatite The construction of a REE project is not cheap Companies within the rare earth sector even as they graduate from Preliminary Economic Assessment phase to Pre Feasibility Study are finding out that this is an expensive proposition Avalon was the first rare earth company to complete a Feasibility Study so they are aware of the costs and are taking steps to either reduce costs further increase the profitability or both The other rare earth companies are still far behind and have much to learn yet According to my understanding Commerce is no newbie to the REE space and has put together and developed a team that get the game It is all about costs and that is the fundamental point of our last article PEAs commonly underestimate costs and Commerce identified early that simple metallurgy is the best manner to keep them in check going forward The previous article had two main points 1 a mineral concentrate is the best means of reducing downstream costs 2 Commerce can make among the best if not the best mineral concentrate of all REE deposits in development Commerce knows and has known since having started in the REE space that the best way to cut those costs is front end concentration to a mineral concentrate Comments like the above go straight to the notion that such companies tiptoe around their complicated mineralogy metallurgy My impression is Commerce understands costs very well and it is why they focus their efforts on metallurgy Same applies for the producers Molycorp and Lynas both of which generate mineral concentrates well in excess of 30 TREO for their operations Simply put Avalon s costs are high because their mineralogy is complex and metallurgy difficult they will be mining underground as opposed to open pit and are choosing to produce separated oxides Basically this means Avalon s costs are likely to be high at every stage of the game and they will have much difficulty in getting around it based on their FS Alternatively Commerce has simple mineralogy excellent metallurgy open pit with very low strip ratio I believe industry lowest strip ratio and is advancing to a simple end product of mixed REO or partial separation I bet that their PFS results will be pleasantly surprising
Avalon s discussions with prospective customers are on going As you may know Avalon has several Memorandums of Understanding with end users Is as when these discussions advance to Off Take Agreements the results will be announced Those Off Take Agreements are an important condition for financing As well the equity markets are challenging for all resource companies at this time Fortunately Avalon was well financed to advance to where it is today the most advanced predominantly heavy rare earth project in development outside of China with a completed Feasibility Study Environmental Assessment approval and Government approval in place allowing it to proceed to the permitting stage
First of all a Memorandum of Understanding MOU means nothing if not binding With public exploration and development companies it is typically used as a marketing technique to keep shareholders more or less up to date and thus somewhat happy by hinting of a possible future Off Take Agreement However until an Off Take Agreement is announced it does not exist One of Avalon s MOUs see Avalon news release dated January 29th 2013 was on its Enriched Zirconium Concentrate EZC product which at that time included Ta Nb and some REE However with the new metalurgical process Avalon produces a zirconium sulphate product and not an EZC see Avalon news release dated December 12th 2013 Thus that particular MOU seems a little outdated now I would argue If a company holds MOUs for long time and no material developments can be seen in that respect you better take yourself to the other side of the table the party who signed a MOU with the exploration and development company is eagerly waiting on metallurgy results for comfort The longer it takes the more displeased a potential off taker becomes eventually pulling out this circumstance commonly results in negative effects on the share price of an REE company So in essence announcing an MOU prematurely can do more harm than good To this notion Avalon s metallurgical process is not finalized and still undergoing radical changes as seen from their recent news releases This means they may very well be required to complete another economic update Additionally the company started talking about moving the hydromet plant from Pine Point to another locality right after the FS was released Avalon had an updated PFS and they look like they will have to do an updated FS as well The current FS costs 60 million mind you Good thing the company has the money to keep spending on it and during this period of delay tactics as some shareholders have commented already If a company is so well financed you may ask yourself why they are not farther along with more certainty especially in their metallurgy
There is no ready market for a REE mineral concentrate outside of China especially a radioactive one which any xenotime rich resource would be
This is an irrelavant comment Commerce is not selling a mineral concentrate but using it as a feed for their hydromet plant in order for them to produce simple REE products that do have markets The above statement indicates a lack of understanding Firstly yes xenotime can have thorium and thus be radioactive Our bodies are naturally radioactive remember However no one with any knowledge of the REE industry would ever knock a deposit for hosting xenotime Such a statement loses all credibility for the speaker Xenotime is the one REE mineral that all companies wish they had It is the best HREE bearing mineral on the planet No one has ever claimed Commerce to be xenotime rich They simply have enough that it matters Secondly every hard rock REE deposit has some appreciable levels of radioactivity U or Th as those elements are typically concentrated with the REEs Avalon Quest Ucore etc are no different More importantly it is largely irrelevant due to Commerce s simple mineralogy Commerce will not sell a product with thorium Th in it as they are processing their mineral concentrate themselves in their hydromet plant and removing the thorium during that process in the end selling thorium free products Further they demonstrated early on in their metallurgical work that they can remove all the thorium Note that the uranium content of the Ashram Deposit is nil Thirdly as noted above xenotime hosts the highest amount of HREEs out of any known mineral and is therefore the most in demand REE mineral in the world Companies hosting minerals such as xenotime and monazite have the ability to produce a mineral concentrate of 30 TREO and in turn produce downstream products of value These are exactly what China is looking for to increase imports because even they the Chinese are short of these which of course they the Chinese know how to process through to the separated oxides that they vitally need for their domestic industries The more HREEs the better but remember neodymium and europium are also in short supply and high demand and are very important REEs to have in the mix Below is Commerce s simple flowsheet to produce a 44 TREO mineral concentrate from a 2 TREO feed material from its Ashram Deposit This process is simple very few steps utilizes common and historically proven techniques requires minimal consumables and thus is very likely an effective realistic and economic process as I expect to be confirmed easily by the forthcoming PFS
How much of Ashram deposit is Critical Rare Earths HREE s and what is the breakdown Europium is considered LREE s to which there is an abundance China and ROW Surely Critical and Heavies are the most valuable rare earths right now So to compare Quest s Critical rare earths portfolio with LREE s Is like comparing Gold to Silver
Of the TREO approximately 19 of the Ashram Resource and 24 of the Ashram MHREO Zone are comprised of CREO This equates to roughly 65 and 72 of the value per tonne of ore Quest by comparison has a CREO distribution of 40 for the Strange Lake Granite and 48 for the Strange Lake Enriched Zone with approximately two thirds of the CREO consisting of yttrium For the europium distribution percentage of TREO the total Ashram Resource has 0 46 and the MHREO Zone 0 76 with the Strange Lake Granite and Enriched Zone being 0 14 and 0 12 respectively However as explained earlier in this follow up article it is not as simple as comparing gold to silver The demand for Neodymium an LREE and also a CREE is estimated at more than twice that of all the HREEs combined Further europium geologically and scientifically an LREE also a CREE is the most valuable from a price per kg perspective than any other REE with no substitutes known for it Too often all the LREEs and HREEs are grouped together when in reality each element has its very own supply demand fundamentals Having a well balanced distribution over all the CREEs I think is more important than being too weighted in the HREEs and is why I believe Commerce is at the top of the pack Further and perhaps most importantly Commerce has demonstrated that they have mineralogy and metallurgy that works
I have the same critique of this article Nothing on the breakdown of TREO Price difference between materials in this space is of major importance especially to leave out a chart of HREE comparisons and to not even make them part of the article
This was not the point of the article as metallurgy was which is as important if not more important than REE distribution I would argue However I do agree that no complete evaluation of a REE deposit can be done without a discussion of the REE distribution and is something this follow up article sought to address for our readers
Jack Lifton arguments propagates at the moment that the COMPOSITION of a deposit is the most important aspect And then he also has an interesting list of 4 other criterias This is what we should consider for ASHRAM as well the choice of deposits should be made on the basis of the distribution of the TREEs contained The other key factors to be considered are 1 Grade and the extent of the deposit 2 Radionuclides contained 3 Ease cost safety and containment of extraction of the desired REEs from the radionuclides and 4 Cost of separation purification of the desired REEs from all of the contained REEs and non radionuclide contaminants Fe Al F etc Note well that factors 2 and 3 and lately 4 more and more are coming to trump factor 1 due to advances in our understanding of the chemistries of A Ore leaching called the metallurgy in mining engineering and of B Mineral beneficiation concentration and of C Rare earths separation from each other as well as of the chemical engineering issues arising from scaling up such chemistries to production levels
Jack is well regarded in the industry however I would argue that a low grade can be solved with economic upgrading to a mineral concentrate via good mineralogy metallurgy as long as the tonnage is supportive Also essentially all REE deposits will have the presence of radionuclides and thus it is not overly relevant to evaluating a REE deposit assuming they can demonstrate those radionuclides can be removed All comments on costs of beneficiation metallurgy and separation are all valid and go back to one fundamental attribute of any deposit the mineralogy Simple equals lower costs and complex equals higher costs REE distribution is a factor as well for sure however it must be economic to get out of the rock and too often this aspect is ignored It all starts at the front end that being the REE minerals present Hence Commerce as my top pick in the space
Quest s OPEX is far more than that of CCE But they also want to produce a lot of by products what can be supportive if the costs are serious Quest only plans to mine 180 days per year CCE plans to mine all year around 350 days Waste strip ratio is 5 2 1 with Quest and 0 19 1 with CCE That means Quest must mine 5 times as much mass as CCE to get the same amount of ore for the mill And that is with half of the mining days per year Thus they would need 10 times of the mine equipment to accomplish that Not bad They will have calculated that already Less deteriotation of mine equipment if they do not operate in deepest winter Other advantages However the ore for the mill must then be transported completely over land to the port Quest calculates with 168 km of road whereas CCE as per their PEA with 185 km Quest wants to transport 1 44 million tons per year and calculates an OPEX with 114 million for the complete transport and logistics in one single year There will be a lot more to the transportation of ore However the lion s share will be on the transportation of ore CCE calculates in its PEA with 21 000 tons of concentrate per year that must be brought to the port and calculates for this position 5 million For 70 times as much quantity Quest only has 23 times the costs Maximum Respect This is probably a quantity discount from the logistics companies However Quest in their PEA only calculated 35 million CAPEX for the construction of the road Now in the PFS they are already at 258 million And the ore should be processed as slurry and then pumped through pipelines to the port If there are mistakes in my calculations please inform me
Quest vastly underestimated that cost in their PEA as is evidenced by their PFS A pipeline slurry may be an option but is not so simple It requires pumping stations heating and access still for maintenance Like Quest Commerce prefers a road route however unlike Commerce Quest must build across the grain of the terrain arguably making construction more difficult Further they must deal with two jurisdictions being Quebec and Labrador where native issues also persist This affects permitting and environmental assessments So all this being said both companies appear to prefer the road route option however I would argue that Commerce resides logistically and socially in a far better position Regarding the disparities in the costs of transport I cannot really comment without a more in depth look into the economics of that particular facet Given Commerce s significant advancements in metallurgy since the release of their PEA it may make more sense to wait for their PFS to compare directly with the level of Quest s study
I once counted how many large bridges it would take to connect Shefferfield and Kuujiag I calculated 6 According to my understanding the best way would be along the Caniapiscu River Total length around 500 km But if there will be production of oil up north in the Bay ofKuujiuag Much more bridges were also not calculated in the PEA
The Commerce Ashram PEA identified three crossings that will be needed all being relatively simple structures The ongoing PFS has confirmed only three crossings are needed and even shortened their length Regarding a route to Schefferville I understand this is a much more difficult route to take as it becomes more rugged terrain as one progresses south I would expect more crossings and difficult ones would be required if a road were pushed south as opposed to north Commerce s road route also has the added advantage of potentially forming part of the land link proposed by the Provincial Government as part of Plan Nord I am not familiar with oil exploration potential in Ungava Bay
It must be 7 bridges In earnest this summer Commerce talked about optimization of the route plan and a total of 3 bridges The road route from the mine site to a northern docking facility has been significantly optimized and improved from the initial route evaluated in the PEA Although the length cannot be finalized until an exact docking facility location is confirmed the length has been reduced considerably by 25 km from 185 km to 160 km when compared to the PEA Further the three crossings noted in the PEA 40 m 50 m and 60 m have also been significantly reduced in size 22 m 28 m and 42 m due to the newly optimized route See CCE Press Release of June 19 2013
Yes Commerce has reported that the road route has been optimized and indicates it will be shorter with smaller crossings and perhaps most importantly cheaper to build I think this adds weight that Commerce did a good job being conservative in the PEA and we should not expect such a wide swing in costs as that of the Quest PEA PFS transition especially for the road
Given the latest breakthrough in Commerce Resources s metallurgy the construction and transportation costs could be substantially reduced So what is the revised CAPEX Typically the largest OPEX cost for a REE project is the mineral processing and subsequent hydromet The fundamental way to reduce this cost for any project is to create a mineral concentrate What is the OPEX cost per kg
There is no revised CAPEX as the PFS has yet to be finalized However typically the largest cost to any REE mine is the mineral processing and metallurgy and this is what Commerce has put the most focus on The PEA used a 10 TREO mineral concentrate as a base case The current flowsheet just produced a 44 TREO mineral concentrate Thus the possibility of a lowered CAPEX and OPEX exists The OPEX per kg outlined in the PEA is 8 kg of REO produced 95 per tonne of ore treated Note that to properly compare OPEX per kg of REO produced or OPEX per tonne of ore one has to take into account the end product to be produced
I dont believe the revised estimates on CAPEX and OPEX have been incorporated into a revised PEA However on the CAPEX it is interesting to note that Ashram has considerable I believe it is nearly 200 250M costs incorporated into the current PEA for infrastructure However that cost will not be entirely left with CCE There is a considerable provincial push on building out infrastructure in Quebec and other significant mining deposits of base metals in the area which means this 200M cost will be shared by several interested parties CCE s portion could be closer to 50M so a 25 35 reduction in their overall CAPEX presented in the current PEA IMPORTANT This reduction in CAPEX will significantly improve the positive economics that are in the current PEA I am not as clear on the OPEX savings If anyone else has anything to add or comment on here please do
Commerce has not released a revised PEA and is still focused on completing the PFS I assume Regarding the PEA Commerce was conservative and opted to include the entire cost of the road CAPEX and OPEX in their economics In reality I would agree it is very possible perhaps likely that the Provincial Government would chip in to help build the road with other companies in the area paying for maintenance since they will undoubtedly use the road However this can now only be considered as a bonus and would likely be commented further in the PFS I would expect In addition Commerce s road route has the added advantage of potentially forming part of the land link between Kuujjuaq and the South as planned and studied at the PFS level by the Provincial Government and outlined in Plan Nord announced in 2011 One of Commerce Resources Corp s Project Camps in Canada The above is a follow up article of The Knock Out Criteria For Rare Earth Element Deposits Cutting the Wheat from the Chaff which can be read with the following link DISCLAIMER The author holds shares Commerce Resources Corp and may sell those any time without notice whereas neither Rockstone Research Ltd nor the author was remunerated by any of the companies mentioned herein to produce or publish this content Please read the full disclaimer at as none of this content is to be construed as an investment advice |
C | Stocks Bring Mixed Performances | Stocks were mixed on Thursday as earnings reports brought some bad news while bringing good news for BlackRock Thursday brought a mixed bag of earnings reports which sent stocks in a number of different directions The financial sector generally had a bad day after a horrible earnings miss by Citigroup C On the other hand BlackRock BLK home of the iShares ETFs beat earnings estimates and saw its stock price surge 1 61 percent Thursday s big tragedy featured Best Buy BBY which saw its share price take a 26 83 percent nosedive after reporting weak holiday season sales The Dow Jones Industrial Average DIA lost 64 points to finish Thursday s trading session at 16 417 for a 0 39 percent decline The S P 500 SPY made a 0 13 percent retreat to close at 1 845 The Nasdaq 100 QQQ rose 0 04 percent to finish at 3 611 The Russell 2000 IWM advanced 0 15 percent to end the day at a record high 1 173 13 In other major markets oil USO declined 0 36 percent to close at 33 65 On London s ICE Futures Europe Exchange March futures for Brent crude oil declined 19 cents 0 8 percent to 105 56 bbl BNO February gold futures advanced 1 10 0 09 percent to 1 241 30 per ounce GLD Transports got slowed down by the snow on Thursday as the Dow Jones Transportation Average declined 0 63 percent IYT In Japan the exchange rate for the yen continued to be the dominant factor in stock market activity Japanese stocks made modest declines as the yen strengthened to 104 17 per dollar during Thursday s trading session in Tokyo A stronger yen causes Japanese exports to be less competitively priced in foreign markets FXY The Nikkei 225 Stock Average declined 0 39 percent to 15 747 EWJ Stocks held close to the breakeven level in mainland China as investors were disappointed that the People s Bank of China has been holding back on further liquidity injections In Hong Kong Internet giant Tencent Holdings bought a ten percent stake in e commerce firm South China City The Shanghai Composite Index rose 0 02 percent to 2 023 FXI Hong Kong s Hang Seng Index advanced 0 37 percent to 22 986 EWH In Europe stocks made a moderate retreat as a result of disappointing earnings reports from a number of retail firms whose names would be unfamiliar to most Americans The Euro STOXX 50 Index declined 0 59 percent to 3 150 on Thursday remaining above its 50 day moving average of 3 048 Its Relative Strength Index is 63 28 FEZ Technical indicators revealed that the S P 500 remained above its 50 day moving average of 1 806 after declining 0 13 percent from its latest record high close to finish Thursday s trading session at 1 845 Its Relative Strength Index declined from 61 69 to 60 34 The MACD is on a level trajectory just below the signal line which would suggest that the S P could remain in the 1 845 1 848 range during the immediate future On Thursday five sectors advanced and four sectors declined The utilities sector made the biggest advance climbing 0 69 percent The financial sector made the most significant decline falling 0 63 percent Consumer Discretionary XLY 0 53 Technology XLK 0 03 Industrials XLI 0 25 Materials XLB 0 24 Energy XLE 0 14 Financials XLF 0 63 Utilities XLU 0 69 Health Care XLV 0 25 Consumer Staples XLP 0 02 Bottom line Stocks were mixed on Thursday as a wide spectrum of earnings reports brought an equally wide range of stock market performances Disclaimer The content included herein is for educational and informational purposes only and readers agree to Wall Street Sector Selector s and before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group LLC |
BMY | Key events next week healthcare | Noteworthy events during the week of June 3 9 for healthcare investors Sunday 6 3 Associated Professional Sleep Societies Annual Meeting SLEEP Baltimore MD 4 days Jazz Pharmaceuticals NASDAQ JAZZ 20 abstracts across sleep portfolio Monday 6 4 TherapeuticsMD NYSEMKT TXMD Investor Analyst Day NYC Bristol Myers Squibb NYSE BMY ASCO Investor Event 8 30 pm ET Wednesday 6 6 European Cystic Fibrosis Conference Belgrade 4 days Eloxx Pharmaceuticals NASDAQ ELOX ELX 02 data Thursday 6 7 ASM Microbe Atlanta GA 5 days CytoDyn OTCQB CYDY Phase 2b 3 data on Pro 140 in HIV 1 OpGen NASDAQ OPGN Data from Colombia study on rapid diagnostic test Achaogen NASDAQ AKAO Plazomicin data five presentations Now read |
BMY | Bristol Myers Squibb s Empliciti reduced risk of cancer progression in mid stage MM study | A Phase 2 clinical trial ELOQUENT 3 assessing the addition of Bristol Myers Squibb s BMY 1 6 Empliciti elotuzumab to Celgene NASDAQ CELG s POMALYST pomalidomide and low dose dexamethasone in patients with relapsed refractory multiple myeloma MM met the primary endpoint The data were presented at EHA in Stockholm Patients receiving the triplet therapy experienced 46 less risk of cancer progression hazard ratio 0 54 p 0 0078 compared to those receiving POMALYST and dexamethasone alone Median progression free survival PFS the primary endpoint was 10 3 months in the Empliciti group compared to 4 7 months in the doublet therapy group The company plans to review the data with regulatory authorities The FDA approved Empliciti in November 2015 for MM followed by approval in Europe in May 2016 Now read |
JPM | JPMorgan wins approval to open three new branches in India | MUMBAI Reuters JPMorgan Chase Co N JPM said on Friday it has won approval from India s central bank to open three more branches in the country even as most foreign banks are scaling back their operations in India JPMorgan obtained approval from the Reserve Bank of India to open branches in the capital New Delhi and in the southern cities of Bengaluru and Chennai it said in a release The branches are expected to be operational in the next few months the bank said This is another significant milestone for growing our Indian franchise and deepening our banking footprint said Kalpana Morparia CEO South South East Asia JPMorgan in the statement The expansion endorses our long term commitment to India a key market for J P Morgan as well as for many of our clients she said in the statement JPMorgan said it will provide all existing products and services through the new branches including cash management trade finance and foreign currency payments In the last few years India has seen almost an exodus of foreign banks from a host of services that they provided in the country In January British bank Barclays Plc L BARC said it would shut its India equities business to cut costs and boost profits
Later in May HSBC Holdings Plc L HSBA said it planned to close 24 branches in India as part of its strategic review of its retail banking and wealth management business |
JPM | European UK shares snap winning streak silver surges | By Vikram Subhedar LONDON Reuters The post Brexit recovery across European markets stalled on Monday with major share indexes mixed and safe haven demand for precious metals helping the price of silver surge to a near two year high Light trading volumes because of the July 4 public holiday in the United States is likely to keep markets choppy through the day Europe s Stoxx 600 STOXX fell 0 4 percent and London s FTSE 100 FTSE fell 0 2 percent with weaker financials offsetting gains from shares in mining companies Earlier in the day the Australian dollar recovered from a wobbly start caused by political uncertainty post election while Asian shares and base metal prices rose partly on expectations of economic stimulus from China JPMorgan NYSE JPM strategists warned investors against chasing the rally in risky assets We do not believe that we will see a sustained upmove Positioning is not washed out market internals are not positive and political uncertainty will linger they wrote in a note Caution is likely to persist through the week with the Bank of England scheduled to publish its quarterly financial stability report on Tuesday the June U S Federal Reserve meeting minutes due on Wednesday and U S jobs data on Friday In bond markets worries about the health of Italian banks and some 20 billion euros 22 24 billion of bond supply in the region this week combined to halt a post Brexit tumble in regional borrowing costs Italian banking index FTIT8300 fell more than 3 percent on Monday while the European Central Bank asked Italy s Banca Monte dei Paschi di Siena MI BMPS to slash its bad debts by 40 percent over three years heaping more pressure on Rome and Brussels to stabilize the Italian banking system Italy is in talks with the European Commission on devising a plan to recapitalizes Italian lenders with public money limiting losses for bank investors an EU spokeswoman said on Sunday UK POLITICS Sterling came under pressure from poor data that showed Britain s construction sector PMI survey suffered its worst contraction in seven years in the run up to the vote to leave the European Union The currency was off 0 1 percent at 1 3251 still nursing its losses after an 11 percent plunge to a 31 year trough of 1 3122 a week ago following last month s shock Brexit vote The weekend s headlines were dominated by mixed messages from the candidates seeking to replace David Cameron as Conservative Party leader and prime minister offering markets little certainty about the outlook for the months ahead The euro edged lower to 1 1121 and was down slightly against its Japanese counterpart at 114 27 yen EURJPY R The dollar rose 0 2 percent to 102 65 yen Crude oil prices extended gains from Friday s surge after comments by the Saudi energy minister that the oil market is heading towards balance despite signs of slowing demand in Asia Spot gold added 0 7 percent to 1 352 10 an ounce after gaining 1 5 percent on Friday and about 9 percent in June
Silver spiked 3 percent higher to 20 30 an ounce breaking the 20 dollar level for the first time in nearly two years |
JPM | China PSBC s clean loan book blotted by boom in risky bets | By Sumeet Chatterjee and Denny Thomas HONG KONG Reuters Postal Savings Bank of China the country s biggest bank branch network is advertising its strong asset quality to boost its up to 10 billion IPO but its offer documents also reveal an unsettling and growing exposure to risky shadow loans The state owned bank which filed a preliminary IPO prospectus last week has a reassuringly conservative profile set up as a deposit taking bank in 2007 on the network of the former postal savings bureau Its bad loans at the end of March 2016 were just 0 81 percent in a country where the sector average is officially about 2 percent and unofficially much worse say analysts But a review of PSBC s 843 page prospectus issued late on Monday reveals the bank s growing exposure to illiquid alternative assets that could pose a risk to its balance sheet Its investment in high return assets such as wealth management products WMP trust investment plans asset management plans and securities investment funds have risen to 12 4 percent of total assets at end March from just 2 7 percent in 2013 the prospectus shows Regulators in China are concerned that such shadow lending products often financing borrowers that struggle to raise loans such as firms with high debts and overcapacity or local government agencies mask the scale and risks of lending in an economy where debt has ballooned since the global financial crisis Such investments typically have more lax provisions for recognizing bad bets than traditional lending and are often structured so as not to appear on the originating bank s balance sheet According to analysts large Chinese commercial banks carry about 5 6 percent of such assets while mid sized banks tend to have higher exposure perhaps 15 30 percent PSBC said in the prospectus it was exposed to credit risks arising from these investments as they are not tradable but it also said the bank had built a credit risk management structure covering its entire business process We assign an aggregate credit limit in each financial institution and bond issuer we transact with or invest in In addition we set an exposure limit for each customer and make timely adjustments to reflect changes in its risk profile PSBC declined to comment beyond the details given in its prospectus GROWTH CYCLE With its more than 40 000 outlets and 505 million customers about a third of China s population PSBC is the last big state backed lender to go public in the world s second largest economy Its access to cheap deposits and a relatively clean loan book have attracted investors including Canadian pension fund CPPIB global banks JPMorgan NYSE JPM and UBS and Singapore sovereign wealth fund Temasek Holdings TEM UL UBS and Temasek declined to comment while CPPIB and JPMorgan did not immediately respond to requests for comment PSBC has also expanded its own WMP offerings in recent years with proceeds rising to 1 25 trillion yuan 187 42 billion last year more than doubling from 2013 and some of that is in turn invested in these risky alternative assets a cycle that potentially feeds ever greater growth in these products The bank said it was not liable for any loss suffered by investors in its WMPs Some investors are also skeptical about the bank s ability to grow after the IPO while keeping its bad loans down in a slowing economy When banks don t have much pressure in growing their assets or loan books its relatively easy for them to control the NPLs said Edmond Law a China banking sector analyst with UOB KAY Hian
After listing if they are going to expand if they are going to make more new loans that s when the risk comes in |
JPM | JPMorgan could move thousands of staff out of UK report | MILAN Reuters JPMorgan Chase Co N JPM could be forced to move thousands of staff out of Britain if the country loses its automatic right to sell financial services to the European Union after last month s Brexit vote bank CEO Jamie Dimon told an Italian newspaper Currently banks based in the UK can sell services freely across the EU under a passporting system considered the most significant feature of the EU single market for financial firms But that is now in doubt after Britons voted to leave the bloc The key issue is the passport rule that we have in London and allows us to provide services to clients in the European Union Il Sole 24 Ore quoted Dimon as saying on Thursday However if the EU imposes new conditions on Britain the worst case scenario is we would have to move some thousands of employees to other branches in the euro zone Dimon said JPMorgan has 16 000 employees in Britain Its European headquarters are in London and the bank has offices in the English coastal city of Bournemouth as well as in Scotland
Those locations helped JPMorgan produce 14 2 billion worth of revenue last year from operations across Europe the Middle East and Africa |
HAL | Halliburton acquires Summit ESP for undisclosed sum | Halliburton NYSE HAL agrees to acquire Oklahoma based Summit ESP a provider of electric submersible pump technology and services financial terms are not disclosed The news confirms reports last week that the two companies were in advanced talks over a deal Electric submersible pump technology is a 5B year global business and HAL was behind main providers Schlumberger Baker Hughes and Weatherford Now read |
HAL | Halliburton buys Summit ESP to strengthen artificial lift business | Reuters Oilfield services provider Halliburton Co N HAL said on Wednesday it would buy oilfield equipment supplier Summit ESP Inc which is backed by Oklahoma energy and banking billionaire George Kaiser Tulsa Oklahoma based Summit ESP makes pumps used to maintain well pressure to increase oil and gas production in aging wells The devices components in a business called artificial lift increasingly are being used to prolong the life of shale wells Financial terms of the deal were not disclosed Reuters reported in June that Halliburton was in late stage talks to acquire Summit Summit ESP was founded in 2011 and is led by executives who had earlier held senior posts at Baker Hughes including Chief Executive John Kenner The company has expanded quickly in the United States and Canada and in May announced it had installed its 8 000th electric submersible pump ESP an increase of 1 000 since November |
HAL | 5 Trade Ideas For Monday BLUE HAL TWLO WP ZUMZ | Bluebird Bio Ticker BLUE
Bluebird Bio NASDAQ BLUE BLUE started moving lower in March In June it dropped under the 200 day SMA and since then it has spent most of its life living under the 50 day SMA Two weeks ago that changed as it pushed above and held on a shallow pullback last week The RSI is rising in the bullish zone and the MACD positive and moving higher Look for a push over resistance to participate higher
Halliburton Ticker HAL
Halliburton NYSE HAL HAL started a move lower in May that continued to a bottom in December Since then it has been moving higher It took a pause last week and then closed the week moving back to resistance The RSI is rising in the bullish zone with the MACD positive and moving up Look for a push over resistance to participate higher
Twilio Ticker TWLO
Twilio NYSE TWLO TWLO had a very different 4th quarter than most stocks as it was up 3 50 on the period It paused as it came back to the all time high levels in early January and then continued ending last week in consolidation pennies from its high The RSI is turning back up and the MACD is doing the same Look for a new high to participate to the upside
Worldpay Ticker WP
Worldpay NYSE WP WP pulled back from a top in October It bounced off of its 200 day SMA then took a second leg lower into November Another bounce and it fell back to the December low Since then it has moved higher It crossed the 50 day SMA 2 weeks ago and then paused Friday it saw a start higher again The RSI is on the edge of the bullish zone with the MACD rising and positive Look for a push over resistance to participate
Zumiez Ticker ZUMZ
Zumiez NASDAQ ZUMZ ZUMZ started to pullback from a high in September It made a weak bounce in October and then continued to a bottom in December It consolidated there for most of the month and then started to move back higher Last week it paused as it touched the 200 day SMA Friday saw it resume a push higher to resistance The RSI is rising in the bullish zone with the MACD flat but positive Look for a push over resistance to participate
Up Next Bonus Idea
After reviewing over 1 000 charts I have found some good setups for the week These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into the last week of January sees equities have taken a pause but remain in their uptrends But they also remain short declaring that the correction is over
Elsewhere look for gold to pause in its uptrend while oil pauses in its move higher The US Dollar Index is back in broad consolidation while US Treasuries pause in their uptrend The Shanghai Composite is building the case for a possible reversal higher while the MSCI Emerging Markets is building a reversal itself
Volatility looks to remain muted keeping the bias higher for the equity index ETF s SPY NYSE SPY iShares Russell 2000 NYSE IWM and NASDAQ QQQ Their charts remain strong in the short timeframe and just short of full bullish on the longer timeframe Use this information as you prepare for the coming week and trade them well
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment I or my affiliates may hold positions or other interests in securities mentioned in the Blog please see my Disclaimer page for my full disclaimer
Original post |
C | U S futures edge lower focus on Fed Dow Jones down 0 11 | Investing com U S stock futures pointed to a lower open on Monday as concerns over a global economic slowdown re emerged following weak Chinese data while investors hoped for fresh easing measures by the Federal Reserve Ahead of the open the Dow Jones Industrial Average futures pointed to a 0 11 fall S P 500 futures signaled a 0 18 drop while the Nasdaq 100 futures indicated a 0 15 decline Investor confidence weakened after official trade data earlier showed that Chinese imports fell unexpectedly by 2 6 from a year earlier while exports grew just 2 7 below expectations Meanwhile investors were eyeing the outcome of the Fed s policy meeting on Thursday after disappointing employment data on Friday fueled fresh speculation that the U S central bank may announce a third round of quantitative easing to boost growth Markets were also jittery ahead of a highly anticipated German court ruling on the constitutionality of the European Stability Mechanism scheduled on Wednesday Commodity related stocks were expected to be active amid reports oil giant BP is in talks to sell some of its Gulf of Mexico oil fields to Plains Exploration Production for around USD7 billion as the U K oil firm looks to raise money to pay for damages from the 2010 oil spill BP shares dropped 0 33 in pre market trade Separately Swiss mining group Glencore laid out its revised USD36 billion all share bid for Xstrata warning it would not improve the terms again as it outlined a fresh offer that made some concessions to shareholders Financial stocks were also likely to be in focus as Goldman Sachs and private equity firm CVC Capital Partners were said to have proposed a debt for equity swap for CVC s Australian television network Nine The deal would wipe out CVC s equity and pass control to its lenders Meanwhile JPMorgan was reportedly considering smaller bonuses for CEO James Dimon and other executives while Citigroup was said to be rethinking executive pay structure according to the Wall Street Journal Elsewhere Apple was set to remain in the spotlight two days before the expected launch of the next iPhone Pandora saw shares tumble over 16 on Friday after Apple announced its intention to enter the streaming music space Across the Atlantic European stock markets were mixed to lower The EURO STOXX 50 dropped 0 32 France s CAC 40 fell 0 12 Germany s DAX inched up 0 01 while Britain s FTSE 100 dipped 0 03 During the Asian trading session Hong Kong s Hang Seng Index rose 0 13 while Japan s Nikkei 225 Index eased 0 03 Trade looked likely to remain subdued on Monday with no significant economic data releases on the calendar |
C | Elliott Wave Suggests Bearish AUD USD Below 0 8882 | AUD USD broke to the upside last week as we can see out of a wave b triangle so it looks like pair is making more complex and deeper corrective wave 4 Important is that rally from 0 8818 still has signs and personality of a contra trend move We are observing a b c rally that could already be completed at latest swing high near 0 9000 level We however need to see a break of that 0 8882 wave b low to confirm lower prices for wave 4h Elliott Wave AnalysisAUD USD 4h title AUD USD 4h height 553 width 451 |
C | AUDUSD Looking Back Down To 0 8818 | AUD USD is turning bearish again after recent push through 0 8880 wave b swing low which confirms the idea of a completed a b c rally in wave 4 at 0 9000 psychological level For now the price is still not accelerating to the downside but we are confident that sooner or later pair will reach new lows for wave 5 around 0 8700 Fibonacci projected zone AUDUSD 4h Elliott Wave AnalysisAUD USD 4h Elliott Wave AnalysisAUD USD 4h Elliott Wave Analysis title AUD USD 4h Elliott Wave Analysis height 554 width 451 Strategy We favour shorts as long as pair trades beneath 0 9005 |
C | The Astonishing News About The December Jobs Report | Summary Manufacturing is strong household income is growing driven by gains for the top quintile Employment is the weak link in the recovery The news media focuses on the monthly changes mostly noise Strong months confirm the narrative excuses explain the weak months In fact the economy s trend remains locked near the 2 stall speed supported by years of fiscal and monetary stimulus now fading Here we look at the December report The key point it gives no evidence that the widely expected second half growth acceleration has begun Contents revised from the usual format
The big picture
Did bad weather kill jobs
Household survey
Establishment survey
Unemployment
Wages and hours worked
What are the hot sectors for jobs
For more information about
1 The big picture This report dashes the hopes again of those hoping the US economy has returned to normal growth The growth of non farm payrolls was 75 thousand SA not statistically significant from zero the minimum significant change is 92 thousand This is no surprise to those of us who have said for four years that the US remains locked in a slow growth mode aprox 1 7 in 2013 Now eyes turn to 2014 with the consensus forecast seeing faster growth 2 6 but far slower than the 3 5 expected for 2013 in November 2011 Consider the price paid for this slow growth Not just the 774 billion in debt the USA accumulated during the past 12 months 4 6 of GDP but also the as yet unknown results of 5 years of zero interest rates and 3 rounds of quantitative easing the third and largest still running to be tapered in 2014 As for 2014 there are too many variables to do more than guess 2 Did bad weather kill jobs Most questions and objections people raise to the Bureau of Labor Statistics have been considered in detail by their experts Such as the effect of bad weather From the Unusually severe weather is more likely to have an impact on average weekly hours than on employment Average weekly hours are estimated for paid time during the pay period including pay for holidays sick leave or other time off In order for severe weather conditions to reduce the estimate of payroll employment employees have to be off work without pay for the employee s entire pay period Employees who receive pay for any part of the pay period even 1 hour are counted in the payroll employment figures It is not possible to quantify the effect of extreme weather on estimates of over the month change in employment Below is an attempt to quantify it Note that last month s weather related job losses were high but not much higher than previous peaks during the past decade Here is about bad weather s impact on jobs 3 The Household survey CPS The Bureau of Labor Statistics conducts two surveys one of households one of businesses They are not directly comparable each giving different perspectives on the US economy The Current Population survey looks at households Compared to the survey of businesses it has large error bars there are no revisions It s the basis for the headline unemployment rate and gives useful data not in the more accurate business establishment survey Also some research suggests that the household report shows inflection points before the establishment survey The monthly employment gains have been quite volatile averaging about 60 thousand per month SA during the past five months and 65 thousand during the past three months a pitifully slow growth rate of roughly 1 per year 4 The establishment survey CES The second survey asks employers to report the number of civilian non farm jobs Although it usually shows a similar pattern of growth as the household survey during the past year it has showed slow improvement but at a faster rate than the household survey It has smaller error bars but gets large sometimes massive revisions Highlights for December
The gain of 75 thousand jobs SA is not statistically significant
The average gain over the last two months is 157 thousand SA
The average gain over the past 12 months is 183 thousand month 1 6 per year NSA Faster than the CPS but still slow
The manufacturing boom that so obsesses business journalists and Wall Street added a total of 77 thousand jobs over the past 12 months 0 6 party on
5 Measures of Unemployment a New claims for unemployment insurance are one of the most accurate and useful real time measures of the job market Compare the change in the 4 week moving averages of December i e the 4 weeks ending January 4 and the same period in 2012 seasonally adjusted December s rise in claims erased much of 2013 s improvement
A year ago 369 thousand
Last month 358 thousand 3
b The unemployment rate a complex metric that gets far too much attention The analysts at BLS calculate six measures of unemployment from narrow to broad definitions None is more real than the others none are easily comparable to the rough estimates of unemployment during the 1930s the first reliable surveys were in the early 1940s Most people consider U 3 or U 4 or U 5 as the most useful measure The broadest U 6 includes people with part time jobs who prefer full time work and so includes the underemployed These below numbers are not seasonally adjusted Any way you count it unemployment has decreased during the past year But the broader the measure the slower the decline U 1 down 17 U 6 down only 10 NSA 6 Another important metric wages and hours worked Looking at nonfarm private workers in December 2013 vs 2014 seasonally adjusted from the Establishment Report
Average hours worked per week 34 5 vs 34 4 unchanged
Average hourly earnings 23 75 vs 24 17 up 1 5 unchanged after inflation
Average weekly earnings 819 38 vs 831 45 up 1 5 unchanged after inflation
No signs of acceleration after a generation of stagnation or of the Wage Inflation so dreaded by corporations and economists 7 What are the hot sectors for jobs From the about the December CES a Everybody wants to work in the Information Sector Too bad its not generating jobs b Temping is a hot field more jobs but no benefits and no security c Education and health services Employment grew by 321 000 in 2012 208 000 in 2013 and zero in December That was the weakest monthly change for this sector since September 2010 Both health care and education are overdue for radical restructuring and its employment might stabilize or shrink over the next decade For details see 2 January 2014 |
C | Major Pairs Pound Rose For First Time In Four Days Versus Euro | EUR USDThe euro was little changed against the dollar on Tuesday after data showed that U S retail sales rose more strongly than expected in December bolstering expectations that the economic recovery will continue to strengthen The Commerce Department said U S retail sales rose 0 2 last month beating expectations for a 0 1 increase Core retail sales which exclude automobile sales climbed 0 7 in December above forecasts for a 0 4 increase The euro rose to session highs against the dollar earlier after European Central Bank Governing Council member Ewald Nowotny said the euro zone economy might surprise to the upside this year The ECB revised its growth forecast for 2014 slightly higher in December saying it expected growth of 1 1 meanwhile data released on Tuesday showed that industrial production in the euro zone rose more than expected in November easing concerns over the outlook for growth Eurostat said industrial production rose 1 8 in November beating expectations for a 1 4 gain recovering from a downwardly revised decline of 0 8 in October On a year over year basis industrial production rose 3 more than double expectations for a 1 4 Hour Chart title EUR USD Hour Chart width 624 height 433 GBP USDThe pound rose for the first time in four days versus the euro as inflation slowed to the Bank of England s target for the first time in more than four years boosting optimism the U K s economic recovery will strengthen Sterling climbed the most in two weeks versus the dollar as a report showed inflation reached the central bank s 2 percent threshold last month helping Governor Mark Carney to keep interest rates at a record low for longer U K government bonds erased gains that had sent 10 year gilt yields to the lowest level in six weeks Abating price pressures would continue to support the real purchasing power of U K consumers and prop up growth said Valentin Marinov head of European Group of 10 currency strategy at Citigroup Inc in London The improving macroeconomic background should continue to support sterling and it could be a buy on dips The pound appreciated 0 4 percent to 83 14 pence per euro at 4 28 p m London time after weakening 1 1 percent in the previous three days Sterling rose 0 4 percent to 1 6448 the biggest advance since Dec Hour Chart title GBP USD Hour Chart width 624 height 433 USD JPYThe yen fell the most in four weeks versus its U S peer after a government report showed Japan s current account deficit widened to a record in November The dollar gained for the first time in four days as U S retail sales rose more than forecast in December giving the world s biggest economy a lift at the end of 2013 The Swedish krona strengthened as a report showed inflation was faster in December than economists forecast South Africa s rand slid to a five year low against the dollar on speculation labor disputes at platinum producers will reduce exports Dollar yen is a bet everyone wants to be long on investors are buying on a dip because of the Japanese data said Vassili Serebriakov a foreign exchange strategist at BNP Paribas SA by phone from New York A long position is a bet an asset in this case the dollar will appreciate The retail sales report makes the payroll numbers look more one off instead of the economy looking to be on a soft Hour Chart title USD JPY Hour Chart width 624 height 433 USD CADThe U S dollar extended gains against the Canadian dollar on Tuesday re approaching recent four year highs after data showed that U S retail sales rose more than forecast in December The Commerce Department said U S retail sales rose 0 2 last month beating expectations for a 0 1 increase Core retail sales which exclude automobile sales climbed 0 7 in December above forecasts for a 0 4 increase The data helped bolster expectations that the economic recovery will continue to deepen going into this year The Canadian dollar remained under heavy selling pressure after a recent series of weak economic data undermined the outlook for growth and reinforced expectations that the Bank of Canada will stick to its dovish stance on interest Hour Chart title USD CAD Hour Chart width 624 height 433 |
BMY | Premarket analyst action healthcare | Jounce Therapeutics NASDAQ JNCE initiated with Buy rating and 33 60 upside price target at H C Wainwright Shares up 3 premarket Bristol Myers Squibb NYSE BMY upgraded to Market Perform with a 47 10 downside risk price target at BMO Capital Markets Shares up 1 premarket Now read |
JPM | Brexit shakes UK banking system but no repeat of 2008 seizure seen | By Jamie McGeever LONDON Reuters Britain s Brexit vote has battered UK bank shares and rocked the country s financial markets but a 2008 style seizing up of its banking system looks unlikely There have been echoes of 2008 following the June 23 vote to take Britain out of the European Union with some bank shares tumbling more than 30 percent sterling falling its most in modern history and Britain losing its triple A credit rating But steps taken since the financial crisis to beef up banks capital and central bank liquidity support and to lower leverage across the banking system mean it is better equipped to cope with a severe economic or financial shock analysts say The plumbing of the financial system short term interbank and money markets clogged up only a little as the premium for risk free lending relative to unsecured lending rose to its highest in four years In the near term money funds have been relatively stable with no material referendum related flows following the vote Fitch Ratings said in a report on Wednesday Sterling money market funds went into the referendum well prepared with overnight liquidity of 32 percent and one week liquidity of 42 percent on average according to Fitch This was high relative to typical levels and its criteria for AAA rated money market funds of a minimum 10 percent for overnight and 30 percent for one week it said The sterling Libor OIS spread a gauge of banks willingness to lend to each other and perhaps the most fundamental barometer of the banking system s health hit its widest level in four years at 26 basis points The wider spread was a result of traders pushing the OIS rate below 30 basis points for the first time since 2009 effectively pricing in a Bank of England rate cut while the interbank Libor rate only came down around 4 basis points But the increase in the spread was small and compared to price swings in some other major asset markets it was minuscule Sterling slumped more than 8 percent against the dollar on June 24 its biggest fall since the free floating exchange rates were introduced in the early 1970s to a 31 year low That was double the rate of decline on Sept 16 1992 when billionaire financier George Soros famously broke the Bank of England after his bets against the pound were instrumental in ejecting it from the Exchange Rate Mechanism Shares in Royal Bank of Scotland L RBS and Barclays L BARC fell more than 30 percent and UK mid cap stocks more sensitive to the UK economy than the globally driven FTSE 100 had their biggest fall since the 1987 market crash FTMC The selling was even more ferocious in parts of Europe particularly in the banks of the so called peripheral euro zone countries like Italy Trading in several was suspended as circuit breaker market protection mechanisms kicked in But central banks and market regulators did not step in The market infrastructure has coped well with the impact and that was not a reason to have any extraordinary measures Steven Maijoor chairman of the European Securities and Markets Authority told a Politico event in London on Wednesday OFFICIAL SUPPORT Yet there is potential for further strains to appear if financial conditions deteriorate as a result of the heightened political and economic uncertainty Ratings agency S P Global this week stripped Britain of its last remaining top notch triple A credit rating the first time it has chopped an AAA rated sovereign credit rating by two notches in one move Rival agency Moody s Investors Service lowered the outlooks on the ratings of 12 UK financial firms and changed the outlook on the UK banking system to negative from stable Investors rushed to protect themselves against the risk of bank default pushing up credit default swap CDS rates on Barclays to a three year high The rise was on a par with that seen the day after Lehman Brothers collapsed in September 2008 And pressure in the sterling dollar cross currency basis markets effectively the cost of swapping sterling into dollars without the exchange rate risk boiled over immediately after the referendum to its most intense in four years A BoE money market operation this week drew a record volume of bids for cash from financial market institutions But they were unwilling to pay a high rate or offer top quality collateral suggesting money market tensions after last week s vote remain contained We re not seeing the kind of stress we saw in the Lehman days The fall in bank shares is an earnings issue not a funding issue said Fabio Bassi head of European Rates Strategy at JPMorgan NYSE JPM in London For a repeat of 2008 you would need a much greater degree of stress than we ve had since the referendum given the amount of liquidity in the system and support from central banks he said The widening of sterling dollar basis and Libor OIS spreads in recent days was nowhere near as severe as the post Lehman period Britain pumped 66 billion pounds 103 5 billion into Royal Bank of Scotland L RBS and Lloyds L LLOY during 2008 09 and provided tens of billions more in liquidity support to the sector The BoE said on Friday it could provide more than 250 billion pounds plus substantial access to foreign currency to ease any squeeze in markets following the Brexit vote Some analysts say it could reactivate and expand its 375 billion pound bond buying stimulus quantitative easing program opened in March 2009 but which has been dormant since July 2012 Sterling Libor OIS Sterling FX basis Sterling and UK govt bond yields Barclays shares
RBS shares |
JPM | U S consumer spending rises Brexit casts shadow on outlook | By Lucia Mutikani WASHINGTON Reuters U S consumer spending rose for a second straight month in May on increased demand for automobiles and other goods but there are fears Britain s vote to leave the European Union could hurt confidence and prompt households to cut back on consumption Wednesday s fairly strong report released by the Commerce Department pointed to an acceleration in economic growth in the second quarter Still economists worry that financial turbulence following last Thursday s so called Brexit referendum could hurt consumer confidence and cause households to bulk up their savings rather than increase spending because of an uncertain economic outlook With the confidence sapping eruption in global financial markets continuing to play out we expect spending momentum to slow in the coming months ahead adding a layer of uncertainty to the U S economic outlook going forward said Millan Mulraine deputy chief economist at TD Securities in New York Consumer spending which accounts for more than two thirds of U S economic activity increased 0 4 percent last month after surging 1 1 percent in April When adjusted for inflation spending rose 0 3 percent after April s 0 8 percent gain Despite the healthy consumer spending Brexit made it unlikely that the Federal Reserve would raise interest rate soon economists said Fed Chair Janet Yellen told lawmakers last week that the U S central bank needed to be sure there was no shock from the outcome of the British referendum before tightening monetary policy further In the wake of the consumer spending report the Atlanta Federal Reserve raised its second quarter consumer spending growth estimate to a 4 3 percent annualized rate from a 4 1 percent rate That pushed up its second quarter GDP growth forecast one tenth of a percentage point to a 2 7 percent rate None of this is likely to matter for supposedly data dependent policy in light of the Brexit vote and the uncertainty pervading global financial markets said John Ryding chief economist at RDQ Economics in New York The Brexit referendum wiped off a record 3 trillion from global stock markets over two days Stock markets in Europe Asia and the United States have however since recouped some of the losses U S stocks rose on Wednesday with the main indexes gaining more than one percent in morning trade The dollar fell against a basket of currencies while prices for longer dated U S government debt rose INFLATION BENIGN So far economists are forecasting that Brexit will subtract an average of two tenths of a percentage point from U S growth over the next six quarters Despite the steady gains in consumer spending last month inflation remained benign The personal consumption expenditures PCE price index excluding the volatile food and energy components rose 0 2 percent after a similar gain in April In the 12 months through May the core PCE increased 1 6 percent after rising by the same margin in April The core PCE is the Fed s preferred inflation measure and is running below the U S central bank s 2 percent target Last month consumer spending was boosted by a 0 3 percent rise in purchases of long lasting manufactured goods such as automobiles Spending on services increased 0 4 percent Growth in income moderated last month Personal income rose 0 2 percent after advancing 0 5 percent in April Wages and salaries gained 0 2 percent Savings slipped to 730 6 billion last month from 753 7 billion in April A separate report from the National Association of Realtors on Wednesday showed contracts to purchase previously owned homes fell 3 7 percent in May after a cumulative 8 9 percent surge in the previous three months Despite the drop contracts in May were still the third highest in the past year The decline likely reflects a dearth of properties available for sale which is pushing up house prices Housing market fundamentals remains strong amid low mortgage rates which could fall further in the aftermath of the Brexit vote A tightening labor market is also supporting housing
In light of declining mortgage rates we think that the trend in home sales is still up said Michael Feroli an economist at JPMorgan NYSE JPM in New York |
JPM | Santander Deutsche Bank U S stress test repeat offenders | By David Henry New York Reuters U S units of Deutsche Bank DE DBKGN and Santander MC SAN suffered the ignominy of failing U S stress tests yet again this year less than a week after Britain s shocking vote to leave the European Union sent their investors running for cover Santander s U S bank is the first to fail the test three years in a row Both banks failed because of poor risk management and financial planning not for lack of capital the Fed said Santander s Chairman Ana Botin vowed in January to fix it within two years after which she would consider selling it Yet any disposal will be tough while the Fed s standards are unmet meaning Santander cannot access the capital to invest in its bigger businesses in Spain Brazil and Britain And it cannot even draw a dividend from the unit in the meantime because of Fed stipulations Santander s U S unit operates a retail and commercial bank with 670 branches and 9 800 employees in the northeast part of the country It also owns nearly 60 percent of publicly traded lender Santander Consumer USA Holdings Inc N SC Santander said it is fixing the problems and is already preparing for next year s test when it expects the Fed to take a better view of the quality of its management We are well on our way to making the enhancements necessary to improve our qualitative assessment Scott Powell the chief executive of Santander Holdings USA said in a statement The Fed faulted Santander for among other things not using reasonable or appropriate assumptions and analysis in its capital planning But the Fed also said Santander has made progress in improving certain approaches to loss and revenue projection And a senior Fed official said bank supervisors have noticed a difference in the resources that Santander has committed to correct the problems Santander hired Powell a former JPMorgan NYSE JPM banker last year and is investing about 170 million a year to reorganize a complex structure partly a hangover from the acquisition of Sovereign Bank in 2009 Powell is one of more than half a dozen executives hired in the past 18 months to fix the bank The Deutsche Bank unit that failed Deutsche Bank Trust Corp is one of a handful of entities the company has in the U S and holds transaction banking and wealth management business The unit is being consolidated into a holding company DB USA Corp on July 1 as part of new rules that require large overseas lenders to organize themselves as holding companies in the United States Deutsche Bank Trust Corporation had not asked for permission to return capital to its parent a bank spokesman said The Fed said the Deutsche unit showed some improvements in certain aspects of capital planning but that the firm overall continues to have material unresolved supervisory issues that critically undermine its capital planning process The trouble the two banks are having passing the tests come amid other problems Santander s capital ratio is lower than many of its large European peers though it had reported an improvement in April and forecast that its tier 1 capital ratio under the strictest criteria would rise above 11 pct by 2018 But since that forecast Santander s large UK business was hit by that country s decision to leave the European Union and the resulting fall in sterling Santander shares have dropped 18 percent since the vote and are down 24 percent so far this year The economic malaise facing Brazil has also cast a cloud over Santander s Latin American operations Brazil is battling its deepest recession in decades Deutsche Bank which has trailed its rivals in bouncing back from the 2008 financial crisis is in the midst of a strategic overhaul Germany s largest lender Deutsche has a large investment banking operation in London Like rivals it faces the risk of a loss in revenue should Britain s exit from the EU deter companies in Europe from buying assets and issuing debt and equity Deutsche may also have to spend and disrupt staff to shift some operations out of the UK if Britain loses the right to sell financial services seamlessly across Europe
Shares of Deutsche have dropped 19 percent since the UK vote and are down 44 percent since the start of the year |
JPM | U S data offers hope for manufacturing jobs market steady | By Lucia Mutikani WASHINGTON Reuters Factory activity in the U S Midwest surged to its highest in almost 1 1 2 years in June amid strong gains in new orders and production offering a ray of hope for the downtrodden manufacturing sector While another report on Thursday showed an increase in the number of Americans filing for unemployment benefits last week layoffs remained low in June backing views the labor market remained healthy despite last month s paltry job gains The signs of stability in manufacturing and low layoffs added to consumer spending data in suggesting that economic growth regained speed in the second quarter But a cloud looms over the economy following Britain s shock vote last week to leave the European Union The so called Brexit referendum unsettled markets and on Thursday the International Monetary Fund said uncertainty over Britain s departure was the biggest risk to the global economy The unexpected Brexit decision could have material influence on how manufacturers view the near term outlook It could also impact firms hiring decisions over the coming months said Sam Bullard a senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina The Institute for Supply Management Chicago said its business barometer jumped 7 5 points to 56 8 this month the highest since January 2015 The increase unwound the prior two months declines A gauge of new orders received by factories in the Midwest region surged to its highest since October 2014 A measure of backlogged orders was the highest in more than five years after contracting for 16 consecutive months At the same time manufacturers reported that production was at a five year high and inventories were growing again U S stocks SPX rose for a third straight day in line with global markets The dollar DXY was little changed against a basket of currencies while prices for U S government debt US10YT RR rose STUCK IN A RUT While the ISM Chicago survey is volatile it mirrored similar gains in some other regional factory surveys Both the New York and Philadelphia Federal Reserve Banks this month reported rebounds in factory activity in New York state and mid Atlantic region respectively But their counterparts in Dallas and Richmond reported further slumps in activity The Institute for Supply Management is expected to report on Friday that its national factory index was little changed at 51 4 in June A reading above 50 indicates expansion in the manufacturing sector which accounts for about 12 percent of the U S economy Despite the improvement in sentiment surveys data on factory orders business spending and industrial production have shown manufacturing stuck in a rut since mid 2014 following a surge in the U S dollar Manufacturing has also been undermined by lower oil prices LCOc1 CLc1 which have put pressure on producers of energy related equipment and efforts by businesses to reduce an inventory overhang have also inflicted pain In a separate report the U S Labor Department said initial claims for state unemployment benefits increased 10 000 to a seasonally adjusted 268 000 for the week ended June 25 Claims have now been below 300 000 a threshold associated with a strong jobs market for 69 consecutive weeks the longest streak since 1973 The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility was unchanged at 266 750 last week The trend in the claims data has improved since late in May supporting our view that the sharp weakening in May payrolls overstated any underlying softening in the labor market said Daniel Silver an economist at JPMorgan NYSE JPM in New York
Non farm payrolls increased only 38 000 the smallest gain since September 2010 A Reuters survey of economists forecast payrolls rising 180 000 in June The Labor Department will publish its June employment report on July 8 |
JPM | How MTN sliced billions off its Nigerian telecoms fine | By Joe Brock and Ulf Laessing ABUJA Reuters Telecoms firm MTN hired former U S Attorney General Eric Holder in January to help it reduce a 3 9 billion fine imposed in Nigeria over unregistered SIM cards Five months later it struck a deal to pay less than half of that The entrance of Holder who stood down as attorney general last year after presiding over some of the largest corporate settlements in American history marked a change of strategy for the South African company MTN dropped a three month legal challenge against the fine and according to government sources and letters seen by Reuters asked Nigerian Attorney General Abubakar Malami to put forward a proposal for a reduced fine to the communications regulator the official authority in the dispute The regulator the Nigerian Communications Commission NCC rejected the proposal as unjustifiable documents show but three months later it accepted a broadly similar deal Reuters was unable to determine the role if any that Holder played in the change of heart MTN Holder Malami and the NCC all declined to comment on the negotiation process There is no indication that any individuals acted improperly and companies have often reached settlements with regulators in Nigeria Lawmakers have however criticized the opaque nature of the settlement process saying it set a precedent for other firms dealing with Nigerian authorities The 780 billion naira fine 3 9 billion at the exchange rate at the time was set by the NCC in December over MTN s failure to deactivate more than 5 million SIM cards not registered by customers Nigeria has been trying to halt the use of unregistered cards over concerns they are being used for criminal activity including by Islamist militant group Boko Haram MTN Africa s biggest telecoms company initially launched a high court challenge against the fine arguing the watchdog had no legal grounds to order it The law states that the NCC does have the right to impose such a penalty In February however MTN withdrew the lawsuit and paid a good faith payment of 50 billion naira to the government which it said was part of efforts to reach an amicable settlement and would go towards the eventual fine agreed The NCC said at the time that it had not agreed to enter into any talks with MTN and that it stood by the 780 billion naira penalty Rather than dealing directly with the regulator Holder approached Malami to help broker a settlement according to the government sources and letters seen by Reuters LETTERS In a letter dated the same day MTN announced it was dropping its court challenge Feb 24 Holder wrote to Malami on behalf of the company offering to pay 300 billion naira and list MTN s local unit on the Nigerian stock exchange to end the dispute Under the Nigerian constitution the attorney general can mediate in a dispute involving a state body after the matter has been taken to court Malami asked NCC to review the MTN offer but the regulator was not impressed according to another letter seen by Reuters The proposal to pay the sum of 300 billion naira is not supported by any verifiable justification NCC Chief Executive Umar Garba Danbatta said in a March 1 letter to Malami Nor was the NCC convinced by MTN s sweetener of a local listing This is a business decision absolutely within MTN s prerogative and primarily to its benefit There is no justification for bringing this along in discussing the present issue Danbatta said But when MTN announced on June 10 that it reached a deal with the government to pay a fine of 330 billion naira just 30 billion naira more the NCC appeared to have altered its view notifying parliament in a letter dated the same day of a full and final settlement It was never about the money it was about making clear the rules are the rules NCC spokesman Tony Ojobo told Reuters on June 13 The MTN listing is a big positive for Nigeria and will benefit the country When asked about the March 1 letter and what had changed the NCC s view Ojobo said he would not discuss the negotiations A parliamentary committee on telecommunications is reviewing the deal and the negotiations that led to it Such reviews by lawmakers are standard practice after big corporate settlements and are aimed at ensuring that there has been no wrongdoing by any party involved and that the public interest has been served What concerns us most is what MTN proposes in February is so similar to what is agreed in June It is clear MTN were dictating the pace committee chairman Saheed Akinade Fijabi told Reuters What does this say to other businesses That to get the best deal you use unofficial back channels and keep the public in the dark DIVISIONS The deal has exposed divisions within the Nigerian government officials within President Muhammadu Buhari s team were also unhappy with Malami s plans to strike a deal with MTN which they considered too generous leading to heated discussions between the two camps two government sources said There has been no official comment from Buhari on the settlement Holder was hired by MTN through his Washington based law firm Covington and Burling which he joined last year after six years as U S attorney general Settlements he presided over in public office included the 13 billion JPMorgan Chase NYSE JPM paid to settle charges of mis selling mortgages in the run up to the financial crisis and the BP LON BP Deepwater Horizon oil spill case which has topped 20 billion It is unclear whether Holder has been based in Nigeria during his time working for MTN which counts Nigeria as its biggest market It also is unclear whether he still advises MTN Covington and Burling declined to comment Following the settlement MTN s share price which had fallen around 30 percent between a fine being announced and Holder being hired has risen by around 25 percent |
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