World Themes This Week 🌍 Oil Market Turns Bullish 😍

by | 25 Feb, 2019

 

1. World Themes This week

Geopolitics is going to be the talk of the town this week. Who’s ready for another big week?

A sea of green washed over US markets on Friday as positive movements in the trade war saw volatility come down quite significantly. The volatility index (VIX) registered a multi-month low at 13.51% and equities got a considerable boost across the board.

This sentiment has filtered through into Asian markets this morning which opened stronger thanks to the announcement that President Trump would extend the March 1 deadline in order to finalise a trade deal. The subsequent summit with President Xi is one of the clearest signs of progress in the negotiations yet, and the equity markets love the good news! The Chinese CSI 300 is up 4.6% already during the Chinese session and the Dow Jones Industrial Index looks poised to open in the green too.

On the Brexit front, Theresa May piled more pressure on herself by delaying the latest vote on her plan until the 12th of March, leaving only 12 days until doomsday arrives. Even though there have been whispers of a possible 2 month extension this morning, investors are becoming more wary of a no-deal catastrophe with uncertainty rising swiftly.

BOE governor, Mark Carney, is set to discuss inflation today, but Brexit is likely to dominate the day with rate cuts coming into force in the event of a no-deal outcome and vice versa. For now, all we know is the clock is ticking and uncertainty is rising. Best of luck Mrs. May.

 

 

2. Oil Market Turns Bullish

The oil market seesaw seems to have finally resolved itself to the upside with OPEC’s supply-curbing measures finally winning the battle over rampant US supply. The Saudis must be chuffed!

The oil markets have finally managed to confirm a breakout from their sideways range to the upside, holding above the key $56 level and showing signs of under-supply in the futures market.

The situation, known as ‘backwardation’ to futures boffs, is when front month oil futures are more expensive than prices further out, indicating a near-term shortage of oil. The opposite is known as ‘contango’ and OPEC has been trying to shift from contango to backwardation since 2017. Eureka, they’ve finally done it!

Another sign that the bulls are returning is the 10% increase in long positions on oil registered in the fund management space. This is the highest bullish inflow since August 2018 while bearish bets declined by 5.5%.

Sanctions on both Venezuela and Iran have also helped buoy price optimism in the oil markets and solidify the global curbing of the oil glut that has been putting pressure on prices since October last year. Consumers may not be happy about the rise in oil prices, but the oil bulls are ready to graze on some higher prices!

 

 

2. Company Results Coming Up This Week

Monday – QBE Insurance, Bank Of Ireland, Bunzl, Centamin, CIE Automotive, Dechra, Etsy, Tenet Healthcare, McDermott International

Tuesday – Caltex Australia, Standard Chartered, Home Depot, Autozone, Sempra Energy, Morgan Advanced Materials, Range Resources, Tenet Healthcare, Pirelli, T Rowe Price, Mylan

Wednesday – OZ Minerals, Bayer, Best Buy, Campbell Soup, Chesapeake Energy, American Tower, Veloxis, Alteryx, Monster, Square Inc

Thursday – ABB India, Amadeus, Borussia Dortmund, Dell, Ebro Foods, GAP, Adecco, AmBev, Aston Martin, BAT, Rolls Royce, Mondi, CenterPoint Energy, Nielsen, PG&E, Nordstrom

Friday – Proximus, Essentra, Man Group, William Hill, Foot Locker, Astec Industries, Tegna, Marriott International

 

Today we are watching…

1.  Tenet Healthcare (#tenet)

Ultra-deep ocean oil-rig producer, Transocean, is looking decidedly shaky ahead of its earnings call today with analysts unsure as to whether the company can beat expectations this quarter. The precipitous drop in oil prices from October-December caused a massive shift from offshore drilling to land-based drilling, impacting the company’s margins significantly. Operational inefficiencies and 37.5% higher expenses are also likely to filter through into a weaker performance for the early part of 2019.

2. Campbell Soup (#campbl)

Campbell Soup was the unfortunate victim of collateral damage on Friday as Kraft Heinz plummeted 27%, dragging the entire food sector down with it. Kelogg and Contra Brands were also part of the fallout, dipping a few percent lower on the day. The fear is that the food industry will follow Kraft Heinz lower with higher than expected costs forecast to impact profitability and growth going forward. This week will set an important tone for the industry. If these associated brands cannot recover from the sell-off there may be more downside in store for them!

 

 

 

 

 

 

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Oil's Slick Upward Move

Technocratic officialdom just declared UBS, Zurich Insurance, Nestle, and in fact, the entire Swiss stock exchange, 'off-limits.' They've done what, now?

Once upon a time, a complex myriad of red tape allowed Swiss stocks to be traded across the European Union (EU). Brussels said enough's enough to that and decided to craft one deal to rule them all. While that was being drafted, a Swiss subplot started to boil. Elections, euro-skepticism, and trade unionists became a focal point, and the EU's immovable deal hit a Switzerland's unstoppable sentiment. The treaty crumpled.

In short, the EU just sent the bloc's fourth-largest exchange packing. The SIX, valued at $1.7 trillion with Nestle and Novartis on its register, is out it's own bounds. We can't invest in it anymore!

It's hard to tell who has this worst. For a start, Swiss companies may be forced to other stock exchanges outside Switzerland. A few already have. Investors still with access could end up paying more for shares as, with a European third of orders gone, brokers recoup money by setting higher asking prices. And the officials behind all this? Truly at each other's throats. 

Within the political mire, many hoped both sides could iron out their differences and keep the "equivalence" agreement going. Nope. Switzerland is furious with the EU for what it sees as a flex of power in front of Britain, still in its Brexit muddle. Creating a theatre, it sounds like Brussels is shouting 'don't mess with us!' in the direction of the UK, now teetering closer to a no-deal cliff edge. As Brussels endures its own leadership merry-go-round, Downing Street doesn’t even know to whom it should address its strongly worded letters…

All this couldn't happen to British stocks, could it? Could it?!

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:

Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.

Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.

Brokerage services of US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth, LLC a registered broker-dealer and member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. 

DriveWealth provides no tax, legal, or investment advice of any kind, nor does DriveWealth give advice or offer opinions with respect to the nature, potential value, or suitability of any securities transaction or investment strategy. DriveWealth acts as the clearing firm for securities transactions entered on the Invstr mobile platform. DriveWealth is not affiliated with Invstr. Invstr does not participate in DriveWealth’s decision-making.

There is no minimum initial deposit required to open an investing account with DriveWealth. Expenses and Fees associated with the DriveWealth platform in conjunction with Beanstox includes either a monthly membership fee of $4.99 with a commission charge of $0.01 per share* or, in the event the membership fee is not paid, a commission charge of $0.0125 per share applies, subject to a minimum of $2.99 per transaction. There are no monthly minimum fees, or required ongoing minimum account balance. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost). View a full list of our fees at http://bit.ly/DWFees

The monthly subscription charge is four dollars and ninety-nine cents (US$4.99) per month plus one cent (US$0.01) per share traded (as examples, for a Transaction of 0.90 shares, the per share traded charge is one cent (US$0.01), and for a Transaction of 1.6 shares, the per share traded charge would be two cents ($0.02), and the quarterly subscription charge is fourteen dollars and ninety-nine cents (US$14.97) every 3 months plus one cent (US$0.01) per share traded. The monthly and quarterly subscription charges may be greater or less depending on additional services offered by a DriveWealth partners as part of the subscription model offering, or based on any subsidies provided by a DriveWealth partner as part of the subscription model offering. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost).View a full list of our fees at http://bit.ly/DWFees

This communication is not an offer or solicitation to purchase or sell securities. Investing in securities carries risk, including the loss of principal. Past performance is not indicative of future returns, which may vary. Online trading has inherent risk due to system response and access times that may be affected by various factors, including but not limited to market conditions and system performance. An investor should understand such facts before trading. The risks associated with investing in international securities, including US-listed ADRs and ETFs that contain non-US securities include, among others, country/political risk relating to the government in the home country; exchange rate risk if the country's currency is devalued; and inflationary/purchasing power risks if the currency of the home country becomes less valuable as the general level of prices for goods and services rises. Before investing in an ETF, an investor should consider the investment objectives, risks, charges, and expense of the investment company carefully. ETF prospectuses are accessible within the mobile application via a link under each company’s “Description.”

A fractional share is a share of equity ownership that is less than one full share. Fractional share investing has certain limitations and restrictions that investors should understand prior to purchasing fractional shares: ownership of less than one full share does not give the fractional share owner the right to vote on company matters; fractional shares are non-transferrable, meaning they cannot be transferred to another brokerage firm; and fractional share orders will be accepted as market orders only. For more information and details on fractional shares, and any associated limitations or restrictions please visit: https://drivewealth.com/fractional-shares-disclosure

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