Two oil tanker attacks on June 13 in the Gulf of Oman, a key waterway used for shipping oil to the world by seven major Middle Eastern producers, jolted the market. The US and Saudi Arabia blamed Iran, though the latter vehemently denied having any role.
The fact this followed a similar incident on May 12 involving four oil tankers off the UAE port of Fujairah, and amid increased attacks on Saudi infrastructure by the Iran-backed Houthi rebels in Yemen in recent weeks, points to a new high in geopolitical tensions in the Middle East.
And yet, benchmark Brent crude recorded its fourth successive weekly loss, closing at $62.01/barrel on Friday. The “fear premium” in crude was kept in check by oil market bears, who have rapidly soured over the prospect of global consumption growth this year amid economic headwinds unleashed by trade wars and tensions.
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It is the Atlantic hurricane season and severe tropical storms in the US Gulf of Mexico, depending on the damage and disruption to oil facilities caused by them, can be expected to splash the market with bouts of bullishness.
The approach of Tropical Storm Barry (which reached hurricane strength as it made landfall in Louisiana), helped by the report of an unexpectedly large weekly drawdown in US crude inventories, prompted a 4-4.5% spike in crude prices last Wednesday. But the rally stalled as the week drew to a close.
It may have been expectations of no major disruption to oil facilities in the wake of Barry as the picture on the storm became clearer, that put a lid on crude’s rise. But perhaps more significantly, the market remained focused on the oversupply prognosis of all three major forecasters — the EIA, OPEC and IEA — in their latest monthly reports last week.
The oil bears may have temporarily taken shelter from Barry, but with the disruption to crude and refined product facilities in and around the US Gulf expected to be minor (if any) and short-lived, we expect them to remain in control.
While the S&P 500 has hit marginal new highs, price action of the S&P 500 and the price and RS of several Sectors/subsectors is similar to the periods leading up to the October 2018 and May 2019 breakdowns. We draw several similarities in today’s report, and we continue to believe upside is likely to be muted from here barring additional positive developments.
The oil market is keeping global economic headwinds firmly in sight, with weakening manufacturing activity across several parts of the world in June serving a fresh reminder.
Crude prices tend to jump if there is a big weekly drawdown in crude stocks, or a fresh incident triggers a spike in tensions in the oil-rich Middle East. But the rallies don’t seem to have staying power. Market sentiment defaults to bearishness from demand growth fears.
When the words “tentative” and “fragile” appear with mentions of the trade war truce agreed between presidents Trump and Xi barely a week after their meeting in Osaka, oil bulls know better than to try and take centre-stage again.
Yes, some puzzle over why crude remains on a slippery slope despite supply restraints (OPEC cuts), constraints (Iran, Venezuela) and risks (Middle East tensions). We explore why some of these are being discounted, and for good reason.
The extension of output cuts wasn’t really the main news out of the OPEC/non-OPEC meetings in Vienna last week. We give you our take on what was more important.
On April 22, the National Stock Exchange of India (NSE) published a list of 34 stocks that would be excluded from the Futures and Options segment for not meeting the enhanced eligibility criteria to remain in the derivatives segment with effect from June 28. What followed was a complete and utter meltdown across the stocks involved. While the Nifty was up 2.13% during the period, the average return across the 34 stocks was -14% with the median return at -13%.
This has a profound impact for investors in Indian equities, especially those focused on small and midcap names. With 161 names still included in the derivatives market, investors need to be aware of the impact of changes in the derivatives market on their stock portfolio.
The S&P 500 made a new all-time closing high following the largely as-expected U.S.-China trade cease-fire agreement, but it did so unconvincingly. We would not call it a breakout as the market closed well off of the opening highs and not one cyclical Sector is decisively in new high territory. Overall, the market is sending mixed signals. Barring additional positive developments we believe upside is likely to be muted from here. In today’s report we highlight attractive Groups and stocks within Health Care, Services, and Technology: Diagnostic Imaging, Construction & Engineering, Large-Cap, and Solar Energy.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
In the current environment of very low Asian LNG and European gas prices it is worth looking at whether US LNG economics still justify production or if there is the chance of shut-ins. We have analysed the various factors that influence the US LNG delivered price both on a full cycle cost basis and a variable cost basis.
We visited Modec Inc (6269 JP) today and conditions remain strong and stable in spite of the somewhat disappointing news yesterday that it had lost out on its bid for Petrobras’ Mero 2 FPSO to archrival SBM Offshore NV (SBMO NA). We believe Modec is on track to win three FPSO orders this year which will take the company’s shipbuilding busines to almost full capacity and its steady and growing O&M business which generates 55% of profit is in our opinion worth more than Modec’s market cap on its own. We believe the company is capable of generating about ¥400 in EPS which would put it on 7.2x PE. That is excessively cheap.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
While the S&P 500 has hit marginal new highs, price action of the S&P 500 and the price and RS of several Sectors/subsectors is similar to the periods leading up to the October 2018 and May 2019 breakdowns. We draw several similarities in today’s report, and we continue to believe upside is likely to be muted from here barring additional positive developments.
The oil market is keeping global economic headwinds firmly in sight, with weakening manufacturing activity across several parts of the world in June serving a fresh reminder.
Crude prices tend to jump if there is a big weekly drawdown in crude stocks, or a fresh incident triggers a spike in tensions in the oil-rich Middle East. But the rallies don’t seem to have staying power. Market sentiment defaults to bearishness from demand growth fears.
When the words “tentative” and “fragile” appear with mentions of the trade war truce agreed between presidents Trump and Xi barely a week after their meeting in Osaka, oil bulls know better than to try and take centre-stage again.
Yes, some puzzle over why crude remains on a slippery slope despite supply restraints (OPEC cuts), constraints (Iran, Venezuela) and risks (Middle East tensions). We explore why some of these are being discounted, and for good reason.
The extension of output cuts wasn’t really the main news out of the OPEC/non-OPEC meetings in Vienna last week. We give you our take on what was more important.
On April 22, the National Stock Exchange of India (NSE) published a list of 34 stocks that would be excluded from the Futures and Options segment for not meeting the enhanced eligibility criteria to remain in the derivatives segment with effect from June 28. What followed was a complete and utter meltdown across the stocks involved. While the Nifty was up 2.13% during the period, the average return across the 34 stocks was -14% with the median return at -13%.
This has a profound impact for investors in Indian equities, especially those focused on small and midcap names. With 161 names still included in the derivatives market, investors need to be aware of the impact of changes in the derivatives market on their stock portfolio.
The S&P 500 made a new all-time closing high following the largely as-expected U.S.-China trade cease-fire agreement, but it did so unconvincingly. We would not call it a breakout as the market closed well off of the opening highs and not one cyclical Sector is decisively in new high territory. Overall, the market is sending mixed signals. Barring additional positive developments we believe upside is likely to be muted from here. In today’s report we highlight attractive Groups and stocks within Health Care, Services, and Technology: Diagnostic Imaging, Construction & Engineering, Large-Cap, and Solar Energy.
In our weekly HK Connect Snippet series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.
We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
The oil market is keeping global economic headwinds firmly in sight, with weakening manufacturing activity across several parts of the world in June serving a fresh reminder.
Crude prices tend to jump if there is a big weekly drawdown in crude stocks, or a fresh incident triggers a spike in tensions in the oil-rich Middle East. But the rallies don’t seem to have staying power. Market sentiment defaults to bearishness from demand growth fears.
When the words “tentative” and “fragile” appear with mentions of the trade war truce agreed between presidents Trump and Xi barely a week after their meeting in Osaka, oil bulls know better than to try and take centre-stage again.
Yes, some puzzle over why crude remains on a slippery slope despite supply restraints (OPEC cuts), constraints (Iran, Venezuela) and risks (Middle East tensions). We explore why some of these are being discounted, and for good reason.
The extension of output cuts wasn’t really the main news out of the OPEC/non-OPEC meetings in Vienna last week. We give you our take on what was more important.
On April 22, the National Stock Exchange of India (NSE) published a list of 34 stocks that would be excluded from the Futures and Options segment for not meeting the enhanced eligibility criteria to remain in the derivatives segment with effect from June 28. What followed was a complete and utter meltdown across the stocks involved. While the Nifty was up 2.13% during the period, the average return across the 34 stocks was -14% with the median return at -13%.
This has a profound impact for investors in Indian equities, especially those focused on small and midcap names. With 161 names still included in the derivatives market, investors need to be aware of the impact of changes in the derivatives market on their stock portfolio.
The S&P 500 made a new all-time closing high following the largely as-expected U.S.-China trade cease-fire agreement, but it did so unconvincingly. We would not call it a breakout as the market closed well off of the opening highs and not one cyclical Sector is decisively in new high territory. Overall, the market is sending mixed signals. Barring additional positive developments we believe upside is likely to be muted from here. In today’s report we highlight attractive Groups and stocks within Health Care, Services, and Technology: Diagnostic Imaging, Construction & Engineering, Large-Cap, and Solar Energy.
In our weekly HK Connect Snippet series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.
We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.
The Trump-Xi ceasefire and resumption of trade talks agreed in Osaka on Saturday has a long road ahead to reach a trade agreement. The US and China will not escalate their trade war, but are not withdrawing existing import tariffs against each other.
The two sides have not set a timeframe to forge a deal. The difficult issues that derailed the talks at the start of May, when the world believed that Washington and Beijing were close to the finish line, could take several months to work through.
As a result, the oil market will keep the economic headwinds firmly in sight. Expectations of lacklustre global oil demand growth, at least for 2019, are unlikely to change any time soon, encouraging oil bulls to continue laying low.
OPEC/non-OPEC ministers meeting on Monday and Tuesday are expected to extend their combined 1.2 million b/d of output cuts through the second half of the year. No surprises there, it has already been baked in.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
We visited Modec Inc (6269 JP) today and conditions remain strong and stable in spite of the somewhat disappointing news yesterday that it had lost out on its bid for Petrobras’ Mero 2 FPSO to archrival SBM Offshore NV (SBMO NA). We believe Modec is on track to win three FPSO orders this year which will take the company’s shipbuilding busines to almost full capacity and its steady and growing O&M business which generates 55% of profit is in our opinion worth more than Modec’s market cap on its own. We believe the company is capable of generating about ¥400 in EPS which would put it on 7.2x PE. That is excessively cheap.
Decoupling from the stock markets’ euphoria over a dovish Fed and under pressure from swelling US crude inventories, crude sank to five-month lows last Wednesday.
Brent and WTI finally rebounded over Thursday and Friday but still closed the week 15% and 19% lower respectively from their year-to-date highs, touched towards the end of April amid peak optimism that a US-China trade deal was imminent.
Equities may continue to cheer expectations of an interest rate cut by the US Federal Reserve. But oil cannot ignore the clear signs of economic deceleration in slowing industrial activity, waning consumer sentiment, and signs of stress in the job market — not just in the US and China, but also other major economies around the world.
The oil bears may keep an upper hand until and unless the OPEC/non-OPEC combine of producers are able to effectively counter the slowdown in global demand growth with their production cuts. It may be a while before we know whether they are succeeding.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Decoupling from the stock markets’ euphoria over a dovish Fed and under pressure from swelling US crude inventories, crude sank to five-month lows last Wednesday.
Brent and WTI finally rebounded over Thursday and Friday but still closed the week 15% and 19% lower respectively from their year-to-date highs, touched towards the end of April amid peak optimism that a US-China trade deal was imminent.
Equities may continue to cheer expectations of an interest rate cut by the US Federal Reserve. But oil cannot ignore the clear signs of economic deceleration in slowing industrial activity, waning consumer sentiment, and signs of stress in the job market — not just in the US and China, but also other major economies around the world.
The oil bears may keep an upper hand until and unless the OPEC/non-OPEC combine of producers are able to effectively counter the slowdown in global demand growth with their production cuts. It may be a while before we know whether they are succeeding.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Decoupling from the stock markets’ euphoria over a dovish Fed and under pressure from swelling US crude inventories, crude sank to five-month lows last Wednesday.
Brent and WTI finally rebounded over Thursday and Friday but still closed the week 15% and 19% lower respectively from their year-to-date highs, touched towards the end of April amid peak optimism that a US-China trade deal was imminent.
Equities may continue to cheer expectations of an interest rate cut by the US Federal Reserve. But oil cannot ignore the clear signs of economic deceleration in slowing industrial activity, waning consumer sentiment, and signs of stress in the job market — not just in the US and China, but also other major economies around the world.
The oil bears may keep an upper hand until and unless the OPEC/non-OPEC combine of producers are able to effectively counter the slowdown in global demand growth with their production cuts. It may be a while before we know whether they are succeeding.
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
On April 22, the National Stock Exchange of India (NSE) published a list of 34 stocks that would be excluded from the Futures and Options segment for not meeting the enhanced eligibility criteria to remain in the derivatives segment with effect from June 28. What followed was a complete and utter meltdown across the stocks involved. While the Nifty was up 2.13% during the period, the average return across the 34 stocks was -14% with the median return at -13%.
This has a profound impact for investors in Indian equities, especially those focused on small and midcap names. With 161 names still included in the derivatives market, investors need to be aware of the impact of changes in the derivatives market on their stock portfolio.
The S&P 500 made a new all-time closing high following the largely as-expected U.S.-China trade cease-fire agreement, but it did so unconvincingly. We would not call it a breakout as the market closed well off of the opening highs and not one cyclical Sector is decisively in new high territory. Overall, the market is sending mixed signals. Barring additional positive developments we believe upside is likely to be muted from here. In today’s report we highlight attractive Groups and stocks within Health Care, Services, and Technology: Diagnostic Imaging, Construction & Engineering, Large-Cap, and Solar Energy.
In our weekly HK Connect Snippet series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.
We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.
The Trump-Xi ceasefire and resumption of trade talks agreed in Osaka on Saturday has a long road ahead to reach a trade agreement. The US and China will not escalate their trade war, but are not withdrawing existing import tariffs against each other.
The two sides have not set a timeframe to forge a deal. The difficult issues that derailed the talks at the start of May, when the world believed that Washington and Beijing were close to the finish line, could take several months to work through.
As a result, the oil market will keep the economic headwinds firmly in sight. Expectations of lacklustre global oil demand growth, at least for 2019, are unlikely to change any time soon, encouraging oil bulls to continue laying low.
OPEC/non-OPEC ministers meeting on Monday and Tuesday are expected to extend their combined 1.2 million b/d of output cuts through the second half of the year. No surprises there, it has already been baked in.
In our weekly HK Connect Snippet series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.
We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
