Crude Oil Rally Pauses on Trump’s USD Comments

Posted on | by Todd | Leave a Comment on Crude Oil Rally Pauses on Trump’s USD Comments

Since posting an intra-day low of $55.80 on December 6th, the price of West Texas Intermediate (WTI) crude oil has rallied almost 20% to hit a 3-year high of $66.60 in NY trade last night.

The sharp rise in WTI has had 2 primary tailwinds: a seasonal drawdown of crude oil in storage and a 4% drop in the USD Index.

However, this week’s events could diminish, or possibly reverse, those 2 market impulses.

According to the American Petroleum Institute (API), the amount of WTI in storage has dropped for 11 consecutive weeks. This week’s drawdown was 1.1 million barrels compared to an expected reduction of 2.3 million barrels.

In addition, the recent rise in WTI has seen the US rig count rise from 789 in early December to 939 this week. More production from rigs online will likely break the string of weekly drawdowns in the near-term.

With respect to the USD, Mr Trump told CNBC yesterday that the Greenback will strengthen over time and that recent remarks made by Treasury Secretary Steve Mnuchin about a weakening USD were misunderstood.

Our ALGO engine currently has a sell signal in OSH from the $7.60 area. A material correction in the WTI price could see the stock trade back to November support level near $7.00.

Oil Search

 

The US Government Is Back Open………….Until February 8th

Posted on | by Todd | Leave a Comment on The US Government Is Back Open………….Until February 8th

The US Senate was able to agree on a short-term resolution to allow the Government to reopen until the 8th of February.

The US has not had a properly ratified budget since 2009 and these “stop-gap” agreements are now getting shorter in duration.

The DOW, S&P 500 and the NASDAQ all responded by making new all-time highs.

Interestingly, as illustrated in the charts below, not only are the 2-yr Treasury notes now yielding more than the SP 500 in the last 10 years, but the Index itself is the most overbought in history.

We suggest that the extreme valuations on Wall Street will soften US yields over the medium-term.

As such, we would expect to see buying interest in the ASX yield names such as TCL, SYD and WFD .

Our ALGO engine currently has flagged buy signals in TCL and SYD at $11.70 and $6.80, respectfully.

2-yr versus SP 500 yields

SP 500 Sentiment Oscillator

 

 

 

 

 

Goldman Sachs Slips On Lower Revenue

Posted on | by Todd | Leave a Comment on Goldman Sachs Slips On Lower Revenue

Goldman Sachs posted Q4 earnings of $5.69 per share, versus estimates of $4.98, on slightly higher revenue of $7.83 billion.

However, shares of the investment bank fell 2.5% to $252.00 as trading revenue in the fixed income, Forex and commodity division fell over 50% from a year ago.

With overall trading revenue falling 34% from a year ago, several analysts are doubtful that the GS share price will repeat the 6% gain from last year.

Daily charts suggest the next level of support in the $240.00 area, followed by the September lows of $205.

Goldman Sachs Group

 

JP Morgan Q4 Earnings

Posted on | by Todd | Leave a Comment on JP Morgan Q4 Earnings

Shares of JP Morgan reached an all-time high of $112.80 as the firm announced adjusted Q4 EPS of $1.76 versus expectations of $1.69.

Revenue numbers were announced at $25.45 billion against the street’s forecast of $25.15 billion.

The small gain in revenue was tempered by a 34% decline in its fixed-interest revenue, which was a result of lower market volatility and tighter credit spreads.

The company returned $6.7 billion back to shareholders during Q4 with $4.7 in net share buy-backs.

With the major indexes at elevated levels, Q4 earnings could add some volatility to global equity markets.

Other key banking names reporting this week include CitiBank on Tuesday followed by Goldman Sachs and  BoA on Wednesday.

JP Morgan Chase

 

US Stock Watch – General Electric (Deep Value)

Posted on | by Leon Hinde | Leave a Comment on US Stock Watch – General Electric (Deep Value)

In late November we highlighted GE as a counter trend buy.

We maintain that GE offers deep value for longer term investors and highlight the recent buying interest which is starting to build.

GE has now rallied over $1.00 or 7% from the November low.

GE shares sold off following the re-statement of accounts and recognition by investors of the cash flow issues, bloated expenses and under performing  business units.

The new CEO, John Flannery,  is now in place and announced a restructuring plan last month along with a 50% cut in dividend.

Like any large organisation, these changes take time to address and implement. However, 1 – 3 years out we’ll start to see a very different GE begin to emerge.

If you’d like to add GE to your portfolio or other international shares, please contact  leon@investorsignals.com

 

 

 

 

Crude Oil Slips Lower After IEA Report

Posted on | by Todd | Leave a Comment on Crude Oil Slips Lower After IEA Report

Spot Crude Oil prices fell sharply in overnight trade after a report from the International Energy Agency (IEA) said that global oil demand is much weaker than OPEC consensus figures and will weaken further in 2018.

The report also showed that US shale, and other non-OPEC producers, will add an additional 1.4 million barrels per day of supply on top of the fall in demand.

These comments pushed the front-month WTI Crude contract down over 2% to $55.10.

Oil traders have gained confidence in the rebalancing effort lately, with impressive OPEC compliance and a high likelihood that the cartel extends its production cuts, perhaps through the end of 2018, when they meet later this month.

We continue to like WPL and ORG as our preferred buy-side opportunities.

Crude Oil Firms After OPEC Comments

Posted on | by Todd | Leave a Comment on Crude Oil Firms After OPEC Comments

The price of WTI Crude Oil rose over 2% on Friday as comments from several OPEC ministers reaffirmed their commitment to rein in excess output from OPEC and non-OPEC producers.

The front-month November contract posted a 6-month high at 54.20 as the apparent adherence to the production cuts creates a solid pretext for the November 30th OPEC meeting in Vienna.

OPEC and other major producers including Russia have pledged to reduce production by around 1.8 million barrels per day to drain a global supply glut.

The next key resistance level is the February 23rd high of $54.90.

WTI Crude Oil

Amazon Surges After Q3 Earnings Report

Posted on | by Todd | Leave a Comment on Amazon Surges After Q3 Earnings Report

Shares of Amazon rose 12% in overnight trade and reached an all-time high of $1,105.58.

The E-commerce giant reported earnings per share of 52 cents compared to the street’s estimate of 3 cents per share.

The company pointed to the 42% year-on-year increase in its web services and a boost in sales from Whole Foods as key drivers for growth in the quarter.

Interestingly, with the share price over $1,100.00, the “Price to Earnings” ratio is now 246.25 to 1.

Amazon

US Banks Fall On Lower Revenue Numbers

Posted on | by Todd | Leave a Comment on US Banks Fall On Lower Revenue Numbers

Despite beating top line quarterly expectations, shares in US banking giants JP Morgan and Citigroup both fell on Wall Street as trading revenue numbers showed a sharp decline on a year-on-year basis.

Citigroup shares closed 3.4% lower after their trading revenue dropped 16% and JP Morgan shares slipped 1% lower on a 27% fall in year-over-year revenue.

We expect the other major US banks to report the same fall in trading revenue as lower volumes on the NYSE, combined with historically low price volatility, reduces overall market participation.

The next key levels of support are $67.50 for Citigroup and $91.70 for JP Morgan.

Citigroup

JP Morgan