Trading the Trend

[ducati916]

Thanks @qldfrog and @ducati916

Saudi Arabia seems to be the wildcard in all of this. Political instability is imminent and either a decrease in oil supply or a massive oversupply. The latter more likely. Then again, oils is oils.

gg

I think the Saudi's have accomplished pretty much what they wanted to. It came at a tremendous cost to themselves however. I'm not so sure they want to go the over-supply route again anytime soon: under-supply if anything, get the price higher. That of course leads to the potential of loss of market share to Russia et al. I don't see over-supply, it just cost them far too much.

jog on
duc

 

[ducati916]

The BAC Options trade:

So BAC in XLF. XLF looks quite bullish currently. See how that support holds. BAC itself, a little ahead of XLF, but could well bounce at support. If it does, the trade looks more attractive depending on what happens to that pricing. At $25 the trade (currently) looks pretty solid. I'll see how it trades Monday and possibly at the close might make a decision.

jog on
duc

 

[ducati916]

Theme based ETFs:

iShares Exponential Technologies ETF (NASDAQ: XT).

The $2.53 billion XT, which is almost 5 years old and holds almost 200 stocks, tracks the Morningstar Exponential Technologies Index.

Why It's Important

Blockchain is often viewed through the lens of technology and XT reflects that view with a 34.57% weight to that sector, but the fund also offer exposure to blockchain's other applications. The health care and communication services combine for about 41% of XT's roster.

While XT is a versatile ETF, what may be keeping some investors at bay regarding blockchain ETFs is perception of an intimate link between blockchain and bitcoin's price action.

What's Next

Some investors may be burned out on hearing about bitcoin and its various fits and starts, but that could actual be a positive for long-term adoption and prove beneficial to ETFs, including XT.

“In the last year and a half, this trough of disillusionment has set in. People have started to tire of the buzz and have started to question it,” according to BlackRock. “But as is typical in that classic Gartner hype cycle, the fundamentals – speed, privacy, security and scalability – are actually improving. That doesn’t mean we’re going to see widespread adoption, and a lot still needs to happen. But we’re certainly starting to see meaningful progress.”

jog on
duc

 

[ducati916]

Bank stocks:

Bank stocks, relative to their bonds, are undervalued. That is (a) good for bank stocks generally and (b) interesting re. the BAC trade specifically, especially if looking at a Sept. expiry.

jog on
duc

 

[ducati916]

EVs

This would impact TSLA stock how? I would posit that as the competition heats up, valuations accorded to TSLA will fall. That is just the way it is. The Oregon Pension Fund also lightened up in TSLA stock.

jog on
duc

 

[ducati916]

Sports (take 2) re-opening:

The duc'ster is a big NHL (Rangers) fan. I only really have time to watch the highlights on youTube, but glad it's back or will be soon.

jog on
duc

 

[ducati916]

These are the top % holdings of LRNZ:

I have heard of; AMZN, NVDA and AMD. The rest are new to me. Looks interesting though for the following reason: keeping up with the latest Tech. in this space (for me) is almost impossible. All you need are a couple of new AMZNs in there and the ETF will do really well. The odd acquisition in there will also boost returns. I'll have a look at some of the other individual names out of curiosity. A definite possibility for me.

jog on
duc

 

[ducati916]

So here is 1 holding:

Now there is no way that I could/would buy this stock. I can't even figure out what exactly it does. As to its success/failure in delivering whatever it delivers, who knows. But held in an ETF, with enough diversification, maybe. I just looked at DDOG, CRWD, OKTA, TWLO, SDGR, all heading straight up in the market Most are probably losing money somewhere along the line, their financials (very quick glance) for the most part look horrible. This is a super speccy ETF. These companies though are quite well capitalised, most turning in at $30B.

jog on
duc

 

[ducati916]

Another reason why Tech. is running and why Financials will (eventually) pick-up:

CEOs who are incentivised via stock options and cash them in, have to do buybacks to prevent the massive dilution and eventual lowering of earnings/share that these grants of share options create. As noted above, debt is so cheap, it allows debt to be used to finance the buybacks. One of the issues when the nominal rate (and real rate) is far below the natural rate of interest. Bit of a Ponzi scheme? Of course.

jog on
duc
duc

 

[qldfrog]

Mr Duc @ducati916 : something interesting today; I owe some GSIQ25
TREAS INDEXED BOND CPI+3.00% 20-09-25 QLY

and today:

these bonds are usually extremely stable..fat finger or something else?

 

[ducati916]

This morning's ISM report on the manufacturing sector indicated continued improvements in the month of July. July's rise in the headline number to 54.2 from 52.6 marked back to back months with expansionary readings for the first time since January and February of this year. It was also a third consecutive month in which the index has risen. That leaves it at its highest level since March of last year.

Most of the sub-indices of the report are likewise now showing expansionary readings. As shown below, most indices have seen continued improvements with the increases in July being in the upper quartile of historic readings; many of these were actually in the upper decile. Nearly every index is now showing expansionary readings with Backlog Orders, Export Orders, and Import Orders all rising above 50 in July. At the moment, the only indices to remain in contraction are those for inventories and employment. These are also at the lower end of their historical ranges. For the indices for inventories, the contractionary readings are not necessarily a glaring negative though as they come off of expansionary readings (rising inventories) in recent months.

Although the numbers are providing a fairly optimistic outlook for the country's manufacturing sector, more anecdotally, the comments in this month's survey had a decent amount of negativity. As shown below, several comments made mention that even if improved, demand is still down dramatically and uncertainty remains higher. On the other hand, some respondents like one from the Computer & Electronic Products industry and the Food, Beverage, & Tobacco Products industry are reporting that demand has either returned to normal or is better than a year ago.

Increased demand, and as a result increased production, has been a major boost to the headline number. As shown below, the index for New Orders saw another huge increase in July rising 5.1 points to 61.5. Excluding last month's extreme rise of 24.6 points, which was the largest monthly gain on record, you would have to go all the way back to July of 2013 to find another time that the index for New Orders rose by more. That leaves the index at its highest level since September 2018 while the index for Production is at its highest level since August 2018. Those improved conditions also appear to be fairly broad with 13 of the 18 industries surveyed reporting growth in new orders and 16 of the 18 reporting growth in production; no industry reported a decrease in production in July.

Stronger demand certainly seems to be the reason for that higher production. Over the past two months, inventories have been building as demand was bouncing back. This month's reading of 47 indicated that reversed as inventories began to be drawn upon. Meanwhile, as New Orders pickup, order backlogs are rising for the first time since February. That was the only other month since April of last year in which order backlogs were rising. The index for Backlog Orders is now at its highest level since April of 2019.

Although production and demand has picked up, employment has been left behind. In other words, businesses appear to be ramping up output without the help of additional labor. Granted, that could change as production continues to pick up. Of the 18 manufacturing indices, ten reported a decrease in employment (again many of these also reported an increase in production) while only five reported growth: Apparel, Printing and Related Support Activities, Furniture, Plastic and Rubber, and Computer and Electronic Products. While improved from the past few months, the index for employment remains low at 44.3.

While unemployment will remain a political issue and an issue for the Fed. (given its mandate) unemployment issues will not impact the market as (currently anyway) businesses can produce more with less. Given that employment costs are usually a significant % in deductions from gross revenues, profitability could well improve as margins improve.

This is just a further example that as far as the market and its trend is concerned, the virus is just a non-issue. There are however as illustrated by a number of respondents, issues that need to be monitored re. demand etc. moving forward. So while a positive report, underpinning the move higher, vigilance is still required.

jog on
duc

 

[ducati916]

How the Yank's used CARES

jog on
duc

 

[ducati916]

A couple of charts looking at gold v stocks as an inflation hedge since 2008 when the 'printing presses' really ramped up.

Stocks and their additional dividends (which count for a significant % of the return) outperform gold. Gold like the latest hot stock can be traded when it is moving and can provide good profits. It simply isn't a religion as espoused by Schiff, Sprott et al.

jog on
duc

 

[ducati916]

Mr Duc @ducati916 : something interesting today; I owe some GSIQ25
TREAS INDEXED BOND CPI+3.00% 20-09-25 QLY

and today:
View attachment 106869
these bonds are usually extremely stable..fat finger or something else?

Mr Frog from the title, they look like TIPS, but the charts look quite different. That they are indexed, might mean they are indexed to TIPS and have just had a bit of a reset. CPI in the US is moving higher again after dropping in Feb. Not really sure.

jog on
duc

 

[qldfrog]

Mr Frog from the title, they look like TIPS, but the charts look quite different. That they are indexed, might mean they are indexed to TIPS and have just had a bit of a reset. CPI in the US is moving higher again after dropping in Feb. Not really sure.

View attachment 106894

jog on
duc

Thanks,
Was just wondering if i had missed something
Anyway, no complaint
a nice 2k for the day fully unexpected..will see if still there tonight...

 

[qldfrog]

Thanks,
Was just wondering if i had missed something
Anyway, no complaint
a nice 2k for the day fully unexpected..will see if still there tonight...

was a fat finger it seems:
lost the magic 2.8k today just got 100$ in the exercise

 

[ducati916]

Worth keeping an eye on, particularly due to approaching US elections: https://www.foreignaffairs.com/articles/united-states/2020-08-03/beware-guns-august-asia

jog on
duc

 

[ducati916]

News from the oil patch:

BP cuts dividend, says it will cut production over time. BP (NYSE: BP) reported a replacement cost loss (similar to net loss) of $6.7 billion in the second quarter, down from a $2.8 billion profit a year earlier. BP also cut its dividend for the first time since the Deepwater Horizon disaster a decade ago. The company cut its dividend to 5.25 cents per share, down by half. BP’s CEO Bernard Looney said he looks to accelerate the company’s low-carbon transition, including a 10-fold increase in investment on renewables while shrinking oil and gas production by 40 percent over the coming decade. BP will also not expand exploration to any more countries.

U.S. oil production plunged to 10 mb/d in May. Newly released data from the EIA shows that U.S. oil production plunged to just 10 mb/d in May, down from 11.9 mb/d in April. Also, weekly estimates by the agency at the time pegged production at over 11 mb/d, so the downward revision is significant. In other words, the depth of the collapse in May was much more substantial than analysts thought at the time.

Marathon to close two refineries, and sell retail chain. Marathon Petroleum (NYSE: MPC) said it would permanently close two small refineries in California and New Mexico. The move would eliminate 800 jobs. Marathon also agreed to sell its gas station chain to the owners of 7-Eleven convenience stores for $21 billion in the largest U.S. energy deal so far this year.

India’s fuel consumption stalls. Demand for refined fuels from state-owned refiners in India fell by 13 percent in July compared to June. Higher prices and coronavirus-related shutdowns impacted consumption.

Saudi Arabia may have to cut prices again. After three consecutive months of raising its crude oil prices, the world’s largest oil exporter, Saudi Arabia, is widely expected to make the first cut to its official selling prices (OSPs) since the OPEC+ group started their record production cuts to prop up the market and prices amid crashing demand.

Oil industry embraces remote work. The pandemic could induce significant changes to the operations of the oil and gas industry. Schlumberger (NYSE: SLB), Halliburton (NYSE: HAL) and Baker Hughes (NYSE: BKR) are shifting more tasks to remote work. The changes could mean the elimination of operational and manufacturing jobs while increasing employment for data analysts and engineers.

Carbon prices rise in Europe, hitting coal. Carbon prices have rebounded from recent lows, raising the cost of coal-fired generation. “The carbon market is working: it’s doing its job,” Lueder Schumacher, head of European utilities Société Générale, told the WSJ. “Many coal plants are no longer profitable at these kinds of levels.” Globally, more coal capacity was taken offline than was added in the first six months of 2020, for the first time ever.

UAE brings the first nuclear plant on the Arabian Penisula online. The UAE has started up its $20 billion Barakah nuclear power plant. The project, built with the help of South Korea, will be the first nuclear plant on the Arabian Penisula.

GM to build 2,700 EV recharging stations. GM (NYSE: GM) said it would build 2,700 fast-charging EV stations, equipped to recharge 60 miles of driving in 20 minutes. The move is intended to bolster sales of GM’s EVs. Unlike Tesla (NASDAQ: TSLA), which built stations only for Tesla models, the stations will be open to any type of EV.

Report: rapid U.S. decarbonization would create 25 million jobs. “Rapid and total decarbonization” could create 25 million jobs in an all-out effort to eliminate emissions by 2035, according to a new report.

Range Resources selling shale fields for pennies on the dollar. Range Resources (NYSE: RRC) agreed to sell its Louisiana shale fields for $245 million, after buying them for $3.3 billion just four years ago.

Fieldwood Energy nears bankruptcy. Offshore oil driller Fieldwood Energy is nearing bankruptcy, which would be its second chapter 11 filing in two years.

Energy shrinks as share of S&P. Tech giants reported huge earnings last week just as ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) reported massive losses. Tech now makes up 27 percent of the S&P. “Energy was once the largest sector in the S&P 500,” Matt Stucky, portfolio manager Northwestern Mutual, told the FT. “When we sit here today, it is less than 3 percent…What’s going to drive market trends is some of the largest tech companies.”

More shale bankruptcies coming. So far this year, 23 North American oil and gas companies have filed for bankruptcy, representing more than $30 billion. But more are coming. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months,” Haynes and Boone said in a report.


jog on
duc

 

[Chronos-Plutus]

News from the oil patch:

View attachment 106926

BP cuts dividend, says it will cut production over time. BP (NYSE: BP) reported a replacement cost loss (similar to net loss) of $6.7 billion in the second quarter, down from a $2.8 billion profit a year earlier. BP also cut its dividend for the first time since the Deepwater Horizon disaster a decade ago. The company cut its dividend to 5.25 cents per share, down by half. BP’s CEO Bernard Looney said he looks to accelerate the company’s low-carbon transition, including a 10-fold increase in investment on renewables while shrinking oil and gas production by 40 percent over the coming decade. BP will also not expand exploration to any more countries.

U.S. oil production plunged to 10 mb/d in May. Newly released data from the EIA shows that U.S. oil production plunged to just 10 mb/d in May, down from 11.9 mb/d in April. Also, weekly estimates by the agency at the time pegged production at over 11 mb/d, so the downward revision is significant. In other words, the depth of the collapse in May was much more substantial than analysts thought at the time.

Marathon to close two refineries, and sell retail chain. Marathon Petroleum (NYSE: MPC) said it would permanently close two small refineries in California and New Mexico. The move would eliminate 800 jobs. Marathon also agreed to sell its gas station chain to the owners of 7-Eleven convenience stores for $21 billion in the largest U.S. energy deal so far this year.

India’s fuel consumption stalls. Demand for refined fuels from state-owned refiners in India fell by 13 percent in July compared to June. Higher prices and coronavirus-related shutdowns impacted consumption.

Saudi Arabia may have to cut prices again. After three consecutive months of raising its crude oil prices, the world’s largest oil exporter, Saudi Arabia, is widely expected to make the first cut to its official selling prices (OSPs) since the OPEC+ group started their record production cuts to prop up the market and prices amid crashing demand.

Oil industry embraces remote work. The pandemic could induce significant changes to the operations of the oil and gas industry. Schlumberger (NYSE: SLB), Halliburton (NYSE: HAL) and Baker Hughes (NYSE: BKR) are shifting more tasks to remote work. The changes could mean the elimination of operational and manufacturing jobs while increasing employment for data analysts and engineers.

Carbon prices rise in Europe, hitting coal. Carbon prices have rebounded from recent lows, raising the cost of coal-fired generation. “The carbon market is working: it’s doing its job,” Lueder Schumacher, head of European utilities Société Générale, told the WSJ. “Many coal plants are no longer profitable at these kinds of levels.” Globally, more coal capacity was taken offline than was added in the first six months of 2020, for the first time ever.

UAE brings the first nuclear plant on the Arabian Penisula online. The UAE has started up its $20 billion Barakah nuclear power plant. The project, built with the help of South Korea, will be the first nuclear plant on the Arabian Penisula.

GM to build 2,700 EV recharging stations. GM (NYSE: GM) said it would build 2,700 fast-charging EV stations, equipped to recharge 60 miles of driving in 20 minutes. The move is intended to bolster sales of GM’s EVs. Unlike Tesla (NASDAQ: TSLA), which built stations only for Tesla models, the stations will be open to any type of EV.

Report: rapid U.S. decarbonization would create 25 million jobs. “Rapid and total decarbonization” could create 25 million jobs in an all-out effort to eliminate emissions by 2035, according to a new report.

Range Resources selling shale fields for pennies on the dollar. Range Resources (NYSE: RRC) agreed to sell its Louisiana shale fields for $245 million, after buying them for $3.3 billion just four years ago.

Fieldwood Energy nears bankruptcy. Offshore oil driller Fieldwood Energy is nearing bankruptcy, which would be its second chapter 11 filing in two years.

Energy shrinks as share of S&P. Tech giants reported huge earnings last week just as ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) reported massive losses. Tech now makes up 27 percent of the S&P. “Energy was once the largest sector in the S&P 500,” Matt Stucky, portfolio manager Northwestern Mutual, told the FT. “When we sit here today, it is less than 3 percent…What’s going to drive market trends is some of the largest tech companies.”

More shale bankruptcies coming. So far this year, 23 North American oil and gas companies have filed for bankruptcy, representing more than $30 billion. But more are coming. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months,” Haynes and Boone said in a report.


jog on
duc

You might like these pictures Duc:

https://www.zerohedge.com/markets/disconnects-everywhere

https://grrrgraphics.com/

 

[ducati916]

The $VIX:

We are still in an elevated VIX environment, but, still look to be heading lower. However on the left hand side of the chart we can see an increased number of areas of support/resistance (in this still elevated) VIX environment. As VIX levels encounter these previous levels, we may see some influence being exerted which will lead to a choppier market. Unless something macro changes, we should simply continue lower, albeit in a choppier manner.

In the bigger picture overview we are out of market crash ranges (10% decline range) into the more garden variety declines, say 5% range. Below is the market added.

With elections approaching and all that entails, hardly surprising. Also, if the market has an end of August swoon, this is an indication that the Democrats are likely to win the election. Usually (but not always) US elections drive some of the more US centric macro indicators, particularly around the Financials (ironically Financials have better returns under Democrats than Republicans). If this is the case this time round, we might be able to exit/hedge any August swoon and re-enter for the election proper. We'll see.

jog on
duc