In today’s briefing:
- Synopsys: Harnessing Complexity
- The Diverging Impact of Falling Crude Prices on Various Oil Producing Regions
- Alphabet 1Q’25 Update
- Lucror Analytics – Morning Views Asia
- Oilfield Services Industry to Bear the Brunt of Falling Oil Prices
- Indian Rubber Prices Shrugging Off Negative Trump Tariff Impact
- VNCE: 4Q Preview; Being Realistic on Tariffs; Reit. Buy, Lowering PT & Estimate
Synopsys: Harnessing Complexity
- Chip design has long been a paradoxical craft.
- On one hand, engineers must trust sophisticated software to help them craft circuits of mind-boggling complexity; on the other, they maintain a healthy skepticism, knowing a single flaw can doom a chip.
- The old mantra “trust, but verify” could well have been coined for this process.
The Diverging Impact of Falling Crude Prices on Various Oil Producing Regions
- U.S. oil producers need prices between USD 61-70 per barrel to maintain profitability. With prices around USD 60 per barrel, drilling activity is likely to decrease.
- Rising tariffs and trade uncertainty are increasing oilfield equipment costs and threatening production growth in the United States.
- While Saudi Arabia faces fiscal pressures and OPEC supply constraints, Petrobras benefits from low breakeven costs, no OPEC restrictions, and strong investment.
Alphabet 1Q’25 Update
- On an FX adjusted basis, Alphabet increased its revenue by 14% in 1Q’25 (~200 bps headwind from FX).
- For the 11th consecutive quarters, Google network’s revenue went down.
- Just when regulators are lambasting Google for their network business in court, it keeps dwindling to oblivion.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: Sands China, SK Hynix
- The rebound in US equity continued overnight, amid bets the Fed could cut rates sooner than anticipated to prevent a recession. The S&P 500 rallied by 2%, while US treasuries rallied 7-9 bps across the curve.
- Some 5 bps of additional Fed cuts were priced in for 2025 after comments by Fed officials. Gold climbed 1.7%, continuing its strong rally YTD.
Oilfield Services Industry to Bear the Brunt of Falling Oil Prices
- Crude prices plunged to multi-year lows amid rising global supply and trade tensions, stoking demand fears and slowing U.S. shale activity.
- Oilfield services firms are underperforming peers as falling rig counts and steel tariffs drive up costs and erode margins.
- With fixed-cost-heavy models and fewer upstream clients, the sector faces amplified downside risks and limited pricing power in the near term.
Indian Rubber Prices Shrugging Off Negative Trump Tariff Impact
- RSS-4 prices near stable around INR 198/kg for past ten days
- Kerala farmers engaged in rainguarding in right earnest
- RRII devises process for extracting top-quality rubber from skim latex
VNCE: 4Q Preview; Being Realistic on Tariffs; Reit. Buy, Lowering PT & Estimate
- We are lowering our FY25 projections and price target for Vince Holding ahead of the company reporting 4QFY24 (January) results next Friday.
- While we love the company’s product direction, material returns from further expansion in men’s and accessories, ability to open new stores in key domestic and international arenas and the potential to add more wholesale relationships, and believe new management, under CEO Brendan Hoffman, is highly motivated to expand the brand and reach of Vince, we believe the company, with 79% of goods purchased from China in FY23, will be materially impacted in the near term by the current tariff regime, especially as they pivot in FY25.
- As such, we believe the material turn in earnings we previously projected will now be shifted into FY26, and we are lowering our FY25 EPS from $0.55 to a loss per share of $0.08 and cutting our VNCE price target to $4 (from $6).
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