(Bull) Market April 2021

[ducati916]

So there are still a couple of days left in March, but, what the hell.

What to expect (as per seasonality) in April:

Looks like a promising month to be in the market.

Last month's returns:

Rotations?

Daily v Weekly (next month I'll add the Monthly also)

So in Growth v Value, plenty of room for a bounce. If it bounces, does it resume its bull move or slip into a down trend?

Discretionary v Staples:

Will rising support in the form of MAs provide that support?

Looking at the Tech. wreck of 2021:

The headlines are for more pain to come. Do you trust the headlines? If not, then ARK ETF is an ETF based on the growth stock mantra.

To be continued in post #2

jog on
duc

 

[ducati916]

From post #1

ARK:

Pretty beaten down. It all depends if you think the growth mantra can return.

Another look at the rotation to date:

Mr flippe-floppe-flye:

Interesting. I haven't seen that story yet, but it always happens. You would think that the 'professionals' would understand the issues around leverage by now given that this has happened so many times in the past.

Oil News:

Friday, March 26th, 2021

Oil has bounced around with significant volatility this week, dragged down by slow vaccinations, lockdowns, and speculative outflows, but pushed back up on Suez Canal bottlenecks. Analyst sentiment is also all over the place.

Goldman remains bullish. In a Friday note, Goldman Sachs noted bearish fears, but struck an upbeat tone: “We continue to view the decline in prices as overshooting the shifts in oil fundamentals,” the bank said. “In particular, we expect a slower ramp-up in OPEC+ production this spring to help offset both slower EM and EU demand recovery and higher Iranian exports, with global demand still set to increase sharply through the summer.”

Bank lending to fossil fuels down 9%. Bank lending to fossil fuels declined by 9% in 2020 due to the pandemic and the ensuing downturn. The 60 largest banks lent more than $750 billion to 2,300 fossil fuel companies in 2020, down from $824 billion in 2019, according to a report by Rainforest Action Network, Reclaim Finance, Oil Change International, and other non-governmental organizations

$3 gasoline nears. Average retail gasoline prices rose to about $2.88 per gallon in the U.S. last week. Analysts say $3 is likely by summer.

Moody’s cuts ExxonMobil. Moody’s cut ExxonMobil (NYSE: XOM) to Aa2 from Aa1, with a stable outlook. “ExxonMobil's large increase in debt in 2020 and accompanying deterioration in financial leverage metrics following the onset of the coronavirus pandemic looks unlikely to be fully reversed in the next few years,” said Pete Speer, Moody's Senior Vice President.

World’s largest coal miner bets on solar. Coal India Ltd., the largest coal miner in the world, said that it might shift into solar panel manufacturing. “Coal as you know, we’re going to lose business in the next two, three decades. Solar will take over (from) coal slowly as a major energy provider in the coming years,” the company’s chief executive said.

Equinor makes North Sea discovery. Equinor (NYSE: EQNR) made a “significant” new oil discovery near the Fram and Troll complex in the North Sea.

Federal Reserve to scrutinize climate risk. The U.S. Federal Reserve said that its new Financial Stability Climate Committee (FSCC) will focus on the potential threats climate change can pose to the broader financial world.

Fossil fuels talking loudly about ESG. Fossil fuel companies have gone from barely talking about ESG issues, to mentioning it hundreds of times in the first quarter of 2021, according to a Bloomberg analysis.

Glencore trader charged with manipulation. A former oil trader at mining company Glencore PLC (LON: GLEN) was charged with manipulating fuel oil prices

Clean energy bubble? Bloomberg Green explores the prospect of a financial bubble in the clean tech sector.

Dallas Fed: Shale resumes growth. The new Dallas Fed survey offered glimmers of optimism. From a reading of just 18.5 for the fourth quarter of 2020, the business activity index of the survey soared as high as 53.6 over the first quarter of this year.

Shale costs creep up. The average cost to drill a new well in U.S. shale rose to $52 per barrel according to the Dallas Fed survey, up 6% from last year. Cost inflation due to fewer service providers has contributed to higher costs.

Ovintiv sells shale assets for a third of original cost. Ovintiv (NYSE: OVV) sold Eagle Ford assets to Validus Energy for $880 million, after paying $3.1 billion for those assets in 2014.

Asian market soft, pressuring prices. Chinese refinery maintenance and renewed lockdowns in Europe put pressure on crude, forcing traders to mark down prices. “Barrels are struggling to find homes in the export market as Asia still isn’t buying and Europe is struggling as well,” said Scott Shelton, energy specialist at United ICAP.

Goldman: EVs grapple with higher costs. Rising demand for battery metals and minerals will lead to an increase in EV battery costs, Goldman Sachs analysts said in a note, pointing out that this could lead to an increase in EV prices.

World’s most controversial pipeline shift to hydrogen? Moscow is silently investing in the production of hydrogen, potentially aiming to make it flow through its new NordStream 2 pipeline.

Suez bottleneck causes trade problems. Automakers have been forced to scale back production due to global supply chain problems related to semiconductors. The supply chain problems are about to get worse due to the blockage of the Suez Canal. The blockage could also delay the delivery of at least 10 LNG cargoes to Europe. At the end of the week, it appeared that global shipping began rerouting around Africa as the outage continued.

Permian methane emission back to pre-pandemic levels. Permian methane emissions are back to pre-pandemic levels according to EDF.

API endorses a carbon price. The most powerful oil lobby in the U.S., the American Petroleum Institute (API), came out in favor of a carbon price, although it did not endorse a particular tax or price level. The move is a substantial change of position, and the head of the group said that it came from internal pressure, particularly from the European oil majors.

Canada’s Supreme Court upholds carbon tax. In a 6-3 decision, Canada’s Supreme Court ruled that a carbon tax is constitutional.

China boosts oil and gas spending. PetroChina is planning to spend $36.6 billion in capex this year, making it the world’s top spender, just above Saudi Aramco’s (TADAWUL: 2222) $35 billion. The top spender from the western oil majors is Royal Dutch Shell (NYSE: RDS.A) at $20.5 billion.


The energy market is clearly in transition. Whether it ever makes it, I guess we'll find out in time. For the moment though I think POO is more or less (+/- $10/barrel) roughly where in a re-opening, it will sit.

Obviously Europe has f**ked-up its distribution of vaccines and chaos as usual reigns in Brussels. The US however seems to making progress. No idea re. China. The point being, at some point, probably later this year, re-opening will take place.

My position now (always subject to revision) is that 'inflation' is a non-event. Not happening. I know CPI is horribly manipulated and every week I spend more at Countdown than I did the previous week, but CPI inflation is irrelevant. PPI inflation is the deal and it (as long as the Fed. stays out) is being managed by the Bond Vigilantes.

So the headlines are very negative 'growth' stocks currently. I think they bounce. Not only do they bounce, they rotate back into leadership. So aggressive positioning sees you buy back into the sector next week. More conservative traders wait and watch the price action to confirm.

What is the duc watching?

Apart from FB which I hate, looks ok as far as holdings. It has been smashed. Really, I'll just be working on an entry. The vol. is not an issue.

And SPACS:

If you buy this s**t, well best of luck.

jog on
duc

 

[reasonableman]

Hi Duc, new to the forums. Looking to find a network of fellow traders focused on US mkts.

So that list above (below XLC chart) is current portfolio, or just a watchlist?

 

[ducati916]

Hi Duc, new to the forums. Looking to find a network of fellow traders focused on US mkts.

So that list above (below XLC chart) is current portfolio, or just a watchlist?

Those are (the list below) the major positions held within XLC ETF. I'll be adding XLC sometime this week. Probably Tuesday.

Jog on
duc

 

[ducati916]

So an interesting start to the week, with Mr flippe-floppe-flye's heads up from last week, the Hedge Fund blow-up dominates the news:

Even Barron's leads with this story:

So 'Media' stocks: which are exactly the stocks contained in the ETF XLC. The interesting thing is that the Chinese versions if they are in there at all, are very small % holdings.

So I purchased XLC this morning. Buy the blood-in-the-streets.

So how is the overall market responding?

So far:

Vol. is still subdued, but, I would expect it to go higher.

When looking at the shorter time frame, the inference is higher vol. Usually with HF blow-ups, the overall market's reaction can be a bit behind as the news and repricing is assimilated.

The market by sectors:

XLC seems (for the moment) to have stabilised, which is about right. Most of the selling in those names will have occurred last week. The risk is that other sectors catch the selling fever due to forced liquidations in the media names. Essentially, I don't want to sell my media stocks because they are already discounted by 50%, but I have to sell something. So I sell something that is profitable to make the margin call.

Bonds are up. Which means that yields are down. Probably either (a) a run to safety or (b) DXY higher/Bonds higher or (c) a bit of both.

My model has yields still going lower. So a continued run higher for DXY, which was the thesis.

I'll be watching the commodities markets. There are still lots of media stories around 'inflation'. Inflation is currently not a thing. The re-opening, as it gradually factors in around the globe will re-establish disinflationary forces. For the moment at least, the Bull lives on.

jog on
duc

 

[ducati916]

That should have gone here:

Market Movers

- Chevron (NYSE: CVX) is the leading contender to purchase the 145,000-bpd Puget Sound refinery in Washington State from Royal Dutch Shell (NYSE: RDS.A).

- Devon Energy (NYSE: DVN) said its first-quarter production would decline by 8% due to the Texas freeze.

- Vine Energy (NYSE: VEI) announced a bond sale to raise $950 million in senior unsecured notes due in 2029. Vine Energy recently launched an IPO and raised less money than it had hoped.

Tuesday, March 30, 2021

Oil prices fell on Tuesday as the Suez Canal was cleared and concerns about global bottlenecks eased. Traders are now focused on the upcoming OPEC+ meeting, which most observers believe will result in an extension of cuts, and the impact of Covid-19 on oil demand in Europe.

OPEC+ poised to extend cuts. Saudi Arabia wants OPEC+ cuts extended through June. Russia, the leader of the non-OPEC group in OPEC+, favors a rollover of the alliance's oil production cuts while seeking a slight increase for itself to meet higher seasonal demand.

Total evacuates staff from Mozambique. Total (NYSE: TOT) and other international contractors evacuated some staff from Mozambique over the weekend as insurgents advanced to the coastal town of Palma, a hub for the country’s nascent LNG industry. Total’s $20 billion project is the largest foreign investment on the African continent but now appears to be at grave risk.

Iran and China sign an economic and security agreement. Iran and China signed a wide-ranging economic and security agreement, billed as a “strategic partnership” that will last 25 years. Details remain sparse, but the move likely paves the way for more Chinese investment in Iran’s oil sector and also open up more room for exports. The WSJ also says that the two countries could set up a joint bank that would help Iran evade U.S. sanctions. Reuters reports that Iranian oil exports are expected to continue to rise in March.

Sinopec to ramp up hydrogen investment. Sinopec, the largest oil refiner in Asia, announced plans to shift towards carbon neutrality by 2050, a plan that leans heavily on hydrogen.

Abu Dhabi debuts Murban contract. Abu Dhabi allowed trading in its futures contract, Murban, on the Intercontinental Exchange (ICE). The move is aimed at bolstering the emirate as an international oil trading hub.

Biden invites China and Russia to climate summit. President Joe Biden is including rivals Vladimir Putin of Russia and Xi Jinping of China among the invitees to the first big climate talks of his administration, according to the AP. The event will be held virtually April 22 and 23.

Exxon and Chevron cautious on shale drilling. ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) have dramatically scaled back drilling in the Permian compared to a year ago. According to Rystad, the two majors accounted for 28% of Permian drilling activity in the spring of 2020, a share that is now down to less than 5%. “We essentially hit a pause button,” said Chevron Chief Financial Officer Pierre Breber, according to Reuters.

Will U.S. shale exploration surge? Cheap financing and higher crude oil prices could kick off another round of drilling in U.S. shale, despite promises to exercise restraint.

Questions on Shell’s bet on LNG. The Wall Street Journal reports that massive billion-dollar bets on LNG appear riskier as the energy transition gains momentum. Royal Dutch Shell (NYSE: RDS.A) spent over $50 billion to purchase BG Group in 2015, a large wager on the future of LNG. But the gas era could be short-lived as countries leap frog to renewables. Shell has written down gas assets and lowered its forecast for demand growth.

Shell links executive pay to climate. Royal Dutch Shell (NYSE: RDS.A) has proposed linking director’s pay more closely to its climate performance, while also severing the link between LNG production.

Vanguard and BlackRock make net-zero emissions plans. BlackRock (NYSE: BLK) and Vanguard Group are among 43 investment firms managing more than $22 trillion in assets that are joining Net Zero Asset Managers initiative.

Natural gas prices are stuck. The U.S. natural gas benchmark is set for several months of below $3 MMBtu price analysts and EIA forecasters say. The agency cited declining demand for heating in the spring along with rising American dry natural gas production.

New Mexico adopts flaring regulations. New Mexico regulators adopted new regulations that end routine flaring from Permian drillers. They can still flare in the event of an emergency, but no longer simply as a fact of doing business.

Biden announces offshore wind push. The White House announced Monday an ambitious plan to expand wind farms along the East Coast and jumpstart the country’s nascent offshore wind industry. The Biden administration is targeting 30 GW of offshore wind by 2030.

Biden infrastructure plan to include orphan wells. One aspect of President Biden’s forthcoming $3-$4 trillion infrastructure proposal (to be unveiled Wednesday) is a big push to clean up abandoned oil and gas wells.

EIA: Battery boom on U.S. grid. The EIA laid out a long-term forecast for energy storage in the U.S., and in its reference case, the U.S. sees 59 GW of battery storage by 2050, a figure that could be much higher if renewables accelerate.

Aramco resists dividend cut. Despite a 44 percent drop in its 2020 profits, the Saudi Arabian government has instructed majority-state-owned Saudi Aramco to stick to the US$75 billion per year dividend payout for shareholders that it pledged at the time of its IPO.

jog on
duc

 

[ducati916]

So a bit of a bounce today:

With the beaten down sectors leading the move.

Overall the market is in neutral. The trend higher is not yet confirmed and the rally could meet increased selling. It may not.

The Options market is also meh. Undecided.

NYMO stuck in MOR. Undecided.

And Mr flippe-floppe-flye.

Markets are at an inflection point. They could go either way.

Currently there is no inflation. I expect rates to fall back to 1.5%. This will occur gradually as commodities sell off. I would expect POO to stop rising at the rate that it has. I would also expect it to consolidate in the medium term between $50/$70

Once the market confirms that 'inflation' is not a 'thing', then stocks will continue their rise. Now whether that incurs a rotation back into growth names from the defensives and value plays, very possible, we'll just need to keep a close eye on things:

The defensives have found support. The value plays will have to resolve on a chart basis probably next week at some point. Either way, we will get some insight/clarity on the market reasonably soon.


jog on
duc

 

[ducati916]

The choppiness remains.

We have Bonds down, Commodities up and Stocks up and the DXY down. The stocks component is however a reversal of yesterday's stocks.

The NASDAQ is up strong. Now the NASDAQ is essentially 'Growth Stocks'. When the NASDAQ is strong, it is risk on.

Its components:

We are looking good for April (seasonality) and on the Presidential Cycle:

Overall financial market returns through March:

The issue is that the markets cannot quite decide whether inflation, disinflation, other, is a thing.

The small caps are off their highs and have fallen back below that resistance level. Mid caps are back through. We need everyone back through.

Now these sectors are cyclical risk on. These are re-opening bets. Business as usual. Pent up demand.

Taking a peek inside Industrials:

But then we also have the risk off sectors: Utilities, Staples and Real Estate doing well. Someone is wrong. We just don't know who it os at the moment.

Mr flippe-floppe-flye is more concerned with selling subscriptions currently:

Whatever sector you are in currently, it is likely you are up one day, back down the next. Chop. It can be tough (other than pure day trading strategies) to hold positions or want to hold them, unless you are convinced that you know how this will all resolve. After the fact, it will be very easy to find evidence that the signs were all there suggesting the final direction. It will be easy because the signs exist now for either outcome. The decision however needs to be made now, not with the benefit of hindsight.

What then is the answer?

Market neutral. You win if the market falls, you win if the market rises. You lose a little if it goes nowhere. This is not a market that will go nowhere for long. As the bets build up on either side, positions will be liquidated toute suite once a move occurs. This will along with the trend followers who jump on board the winning side, will create a big and clear move to either risk on/off.

So for what it's worth, my speculations:

(i) Interest rates (TNX) were sitting at 1.73%. My model said 1.52%, rates should continue to weaken by 20+/- basis pts;
(ii) Lower TNX, higher commodities, but only to a point: that point is POO $70. This price is still the driver of inflation; and
(iii) Stocks higher, which will include growth stocks: a gradual rotation back into cyclical and NASDAQ growth; and
(iv) DXY will continue higher, also capping to a level, commodities.


While that scenario or any other scenario plays out, stocks will continue to churn and chop.


jog on
duc

 

[ducati916]

The DXY, if not immediately, but in this environment, sooner rather than later, is going to have an impact.

This may even be the chart that decides the issue. Currently SPY is at new all-time-highs. DIA/QQQ still below. SPY is betting that DXY breaks through the EMA resistance and moves back to previous highs. DIA/QQQ are taking a wait and see approach.

As I said, there is evidence for the winning side wherever you look (especially in hindsight). The trick is to make the right call now. That is a x2 resistance. A tough nut to crack. There is some horizontal support (not drawn) but how strong is that, given that it's back in 2015/2017?

Any currency traders with any insights? Feel free to wade in.

If it fails, we will potentially see Bonds reprice lower (higher yields), which could/should, reinforce DXY, as a falling DXY puts 'inflation' as a thing back on the table.

If it breaks through, then the Bond market is currently a little high, and should reprice lower, by my estimate 20 basis pts.

Time will tell.


jog on
duc

 

[qldfrog]

Great post, a side remark: in the comparative market result for the last year, quarter and month, i could not help noticing the heavy fall on China and Brazil coming up again.
Would that be a play of interest for you:
Short China, long Brazil?
It is pretty fair to say they have been going too far last year/quarter : down for Brazil with covid fear, and up for China with opposite reasoning.
They will balance again

 

[ducati916]

Great post, a side remark: in the comparative market result for the last year, quarter and month, i could not help noticing the heavy fall on China and Brazil coming up again.
Would that be a play of interest for you:
Short China, long Brazil?
It is pretty fair to say they have been going too far last year/quarter : down for Brazil with covid fear, and up for China with opposite reasoning.
They will balance again

In theory, yes. However there would need to be an extensive analysis completed before you knew how exactly you were going to trade the pair. So: (i) how tight is their correlation, (ii) what is their relative performance over which time periods, (iii) is there an entry currently that makes sense, (iv) in what time frame?

China is (was) a significant buyer of commodities. Brazil is a supplier of commodities, but not the only supplier (Canada, Australia, Brazil, Africa, Russia, Arabs, etc). Is that historical relationship still the current relationship?

Put up an analysis if you wish.

jog on
duc

 

[Smurf1976]

OPEC have announced a production increase of 2 millions barrels per day, a substantial amount:

OPEC and allies agree to boost crude oil output

The group is restoring production that was slashed last year to support prices as demand sagged during the worst of the pandemic recession, which sapped demand for fuel.

www.theage.com.au

The group will add back 350,000 barrels per day in May, 350,000 in June, and 400,000 in July. Meanwhile Saudi Arabia will over the same period restore an additional 1 million barrels per day in cuts that it made on its own.

That's a fairly large output change, OPEC generally doesn't make single announcements on that scale it's normally a lesser volume and implemented as a single step not gradually.

How that influences the overall situation I don't know but thought I'd post it here given that thoughts of inflation typically involve oil somewhere in the mix.

PS - I've no idea what the aluminium pictured in the article has to do with it. Pretty much nobody smelts aluminium using oil as the power source, it's simply too expensive for that purpose, so it doesn't have a lot to do with the subject.

 

[gartley]

SPX edging toward 40 week Projection range of between 4148 to 4288 ( only 3.3% away from lower part). Dynamic price projection suggesting 4416.
Short term AD line showing small divergence in DJIA but nothing yet in other indexes.
Have decided to exit and step aside most trades here and will focus only short term stuff pending signals as market is approaching caution/danger zone in months/weeks ahead

 

[ducati916]

Starting with oil news:

Friday, April 2nd, 2021

Oil prices rose despite OPEC+’s decision to increase production. In fact, rather than a bearish move, investors interpreted the decision as a vote of confidence in demand. “The [supply] deficit that we’re already in is likely to accelerate,” Jeff Currie, head of commodities research at Goldman Sachs Group Inc., said in a Bloomberg Television interview

OPEC+ agrees to gradually increase production. OPEC+ decided to add more than 2 mb/d over the next few months, betting on rising demand. The deal calls for a 350,000-bpd increase in May, followed by the same amount in June, and then by 450,000 bpd in July. At the same time, Saudi Arabia will ease its voluntary 1 mb/d cuts by July. OPEC+ surprised markets last time around by maintaining cuts, this time they surprised in the other direction after analysts expected no change.

Pioneer Natural Resources nears $6 billion deal for DoublePoint Energy. Pioneer Natural Resources (NYSE: PXD) is nearing a $6 billion deal to acquire DoublePoint Energy, a cash and stock deal, according to Reuters.

Shale output to erode. U.S. shale production is set to decline through at least 2022, according to BNEF. By the end of the year, the industry could lose another 485,000 bpd. “It could be a while before U.S. oil companies feel comfortable growing production again,” BNEF analyst Tai Liu said in a note.

Total and Shell see lingering refinery issues. Total’s (NYSE: TOT) Port Arthur refinery may be offline for another three to four weeks for repairs after an unplanned shutdown during the Texas freeze. Royal Dutch Shell (NYSE: RDS.A) is having problems with its Deer Park refinery as well. Meanwhile, ExxonMobil (NYSE: XOM) said it would take an $800 million hit related to the storm.

Oil companies win one climate court case, lose another. A federal appeals court rejected New York City’s effort to hold oil majors accountable for climate change, a big win for the industry.

EVs gain in Biden’s $2.25 trillion infrastructure plan. President Joe Biden introduced the outlines of his major infrastructure package, which would have far-reaching effects on the energy industry. The bill calls for $174 billion for EV recharging stations. “For the EV sector, the Street has been awaiting this day since Biden was elected,” an analyst with Wedbush Securities wrote in a note to clients. ChargePoint Holdings Inc (NYSE: CHPT), the largest owner and operator of EV-charging stations in the U.S., jumped as much as 24%

Aramco could reduce dividend. Aramco could pay less than the originally planned $73.5 billion to its Saudi state shareholder in order to prioritize investments, Crown Prince Mohammed said earlier this week, opening the door to the oil giant to relieve some of the pressure on its balance sheet

Renewables gain too. The infrastructure plan calls for a 10-year extension of wind, solar and battery tax credits. It also calls for incentives to build out 20 GW of long-distance transmission.

Oil’s surprise gain in Biden’s plan. Bloomberg notes that Biden’s infrastructure plan, which leans heavily on clean energy, would also stoke demand for asphalt, boosting heavy crude blends.

Is Russia About To Invade Ukraine? While the world is focused on OPEC news and Easter preparations, the Ukrainian crisis is heating up and there is a real threat of a military confrontation involving Ukraine, Russia, and Belarus.

California turns to energy storage. California is expected to add 1.7 GW of energy storage this year, enough to power 13 million homes. The state is hoping that the batteries will help head off blackouts this summer.

Energy storage to take $277B from the grid. Energy storage will become a $277 billion market between 2020 and 2050.

ConocoPhillips takes a hit from hedges. Oil prices are up sharply this year, but ConocoPhillips (NYSE: COP) said that its first-quarter results would take a $600 million hit from its acquisition of Concho Resources and hedges. The incident highlights that many companies would miss out on the oil price rally due to hedges they locked in at lower prices. According to Reuters, many independent companies hedged their production at an average between $43 and $45 per barrel.

Santos announces LNG FID. Santos (ASX: STO) announced an FID on its Barossa joint venture, a $3.6 billion LNG export project in Australia. Santos had to take on a greater share of the project than it had previously wanted.

Europe lockdown to hit demand. Oil demand will take a hit from new lockdowns in Europe and slow vaccinations. Rystad Energy says it could prevent 1 mb/d of demand from coming back this year.

Two countries leading on offshore drilling. Lower lifting and breakeven costs at the most prolific offshore oil regions off Brazil and Guyana are setting the stage for a rebound in offshore drilling in South America, which will be one of the main growth drivers of global offshore activity this year.

Europe gas storage depleted. Diminished natural gas storage in Europe could provide a jolt to the global gas market as the year wears on.

Canada’s oil sands face pressure to transition. Canada’s oil sands producers are posting stronger cash flow than expected, and investors praised producers for returning cash to shareholders and to pay down debt. However, they are also under growing pressure to plan for the energy transition.

World Bank revises lending policy. The world bank revised its climate change commitments but stopped short of halting all funding for fossil fuels.

So for April seasonality, very bullish. This chart goes back 100yrs:

The fundamental case for buying big Tech:

The technical case for waiting for a pullback:

Stocks are increasingly seeking to raise additional capital in this stage of the bull market:

Gold not having any fun currently. A turnaround in DXY might have an impact (positive): see next chart.

DXY at an inflection point: looking at FXE/DXY, I would say that DXY is going to pullback. We will have a period of DXY weakness, which could also mean a rally in gold and their Miners. If you are playing in this field, buy the Miners.

Mr flippe-floppe-flye and Archegos:

jog on
duc

 

[qldfrog]

Just an info /warning for people following this thread and interested in the US and VIX: I found the VIX probably too low at the moment so thought:
hum could get more VIX ETF ? Would be a good time:
I bought someVXX in the past , all happy to have this cushion ready for the next fall but had a second look at the chart before placing my order..hum..this is not an ETF, but an ETN and it is IMHO seriously flawn, a bit like OOO on the ASX
https://investorplace.com/2017/04/ipath-sp-500-vix-short-term-futures-tm-etn-vxx-the-quick-guide/
DYOR

 

[ducati916]

Indices are up. Individual sectors are mixed, but generally up.

Some sectors running hot...

And Mr flippe-floppe-flye's take:

We have DXY lower, possibly ready to trend back down. Because it's an inflection point, it may chop before resuming either the new trend lower or resume its trend higher.

Interest rates are higher and my model has 1.58% as the correct price, which means yields should slow...but atm they do not seem to be. With DXY 'looking' to go lower, rates might be fearing the return of 'inflation'.

Basically the markets are noise currently. There is no really strong clear signal. Something will emerge in time. For the moment it is more about staying out of trouble.

Gold:

Like many others that follow gold closely, I also think that gold is reaching an area where it could rally. I prefer the miners. This would certainly be consistent with a weaker DXY. Yields are rising, but on a nominal basis. Real yields are still negative, thus, gold can easily rise in that environment.

However, gold rising, is a warning for stocks. Not today obviously, but if the rally in gold takes hold, it will be, especially if the fall in DXY takes hold contemporaneously.

Obviously the other market that bears watching are the commodity markets. Oil in particular, with the news out of SA, an increase of 2M/barrel/day, the POO should stabilise: ie. it will stop going up so fast. It may find a trading range. This could be consistent with 10yr yields rising softly, DXY falling and gold rallying.

That is an 'inflation', but not in commodities: in asset prices.

jog on
duc

 

[ducati916]

Markets are about as complacent as they have ever been in the last 20yrs.

Feeling good? Feeling confident?

jog on
duc

 

[ducati916]

Market sort of poised, which will become clearer when Mr flippe-floppe-flye's observations are added.

Overall, stocks are meh today after yesterday's big run higher.

Individual sectors are meh.

Bonds are higher. Risk off. DXY is lower (unrelated) I think. DXY was signalling lower in any case.

Gold higher. Risk off.

A pause. This is my inflation gauge. Why? We will I'm sure find out in time.

Miners, which have been reasonably robust in refusing to go lower, are now showing signs of a move higher. Risk off.

Some news:

This has implications. The trouble is, they are going to be so diverse, with some of them just totally unexpected, who knows how this plays out. All that can be said at this point is: this is important.

Surely we see this with Quants and algos all of the time.

Now from Mr flippe-floppe-flye:

Now, not actually addressed, but relevant:

A Hedge Fund blowing up is bad and in the past has had repercussions. This time, the market seems to have merely shrugged. Always a worry. However, a major Bank blowing up is something else again.

Now, whether or not it actually blows up remains to be seen. Essentially, does it get a bail out. History would suggest yes. However, public opinion being the way that it is currently, ie. lots of small businesses gone to the wall, possibly politically, that is not such an attractive move.

So let's say no bail out. What happens if CS does blow up?

That could explain the run to safety in the Bond market. Junk bonds also turned lower as safety was sought. We also have the move to gold, which with the miners, has been going on for a couple of weeks already.

The whole thing may just blow over. Or it may not. Watch credit spreads.


jog on
duc

 

[ducati916]

Oil news:


- U.S. energy consumption declined by 93 quadrillion BTUs in 2020, a 7% decline from the year before. That is the largest annual decline since EIA data collection began back in 1949.

- By comparison, U.S. energy consumption declined by 5% from the global financial crisis in 2008-2009.

- Unsurprisingly, transportation took the biggest hit, with a 15% decline in energy use.

Market Movers

- Occidental Petroleum (NYSE: OXY) plans to build a pilot bio-ethylene plant, using sequestered CO2.

- Canada’s Inter Pipeline Ltd (TSE: IPL) received C$408 million from Alberta to build its Heartland Petrochemical Complex.

- BP (NYSE: BP) said it reached its $35 billion net debt target ahead of schedule and will provide an update on share buybacks later this month.

Tuesday Aril 6, 2021

Oil prices sank on Monday as coronavirus cases surged around the world, leading to renewed lockdowns. The city of Mumbai went into lockdown, suggesting a forthcoming hit to oil demand in India. Oil prices rebounded on Tuesday, although the trend is not exactly bullish, with WTI stuck at around $60.

OPEC+ bets on demand. The loosening of OPEC+ production cuts shows the group believes demand will continue to rise.

Oil bounces on stronger economic outlook. The IMF upgraded its 2021 GDP forecast for the second time in three months, noting the speed of the vaccine rollout. The U.S. is now becoming the focus and engine of global economic recovery with a fast vaccine rollout and substantial fiscal stimulus. “We’ve had these wild moves for the better part of the past ten days,” Bob Yawger, head of the futures division at Mizuho Securities, told Bloomberg. “There’s a recovering economic picture, with an improving vaccine situation in the U.S., on one side of the equation. It’s supply versus demand here for control of the market.”

Goldman Sachs cuts Chevron. Goldman Sachs downgraded Chevron (NYSE: CVX) to Neutral from Buy, noting that the oil major already trades a premium to some of its peers.

Exxon sues Energy Transfer over pipeline dispute. ExxonMobil (NYSE: XOM) subsidiary XTO Energy is suing Energy Transfer LP (NYSE: ET) for disputed payments on the Dakota Access pipeline. The suit alleges that Energy Transfer overcharged XTO when the oil producer shifted oil flows to another pipeline.

Soaring methane as drilling bounces back. U.S. oil production remains about 2 million bpd lower than its pre-pandemic levels. Still, methane emissions are already back to their levels from before the coronavirus.

U.S. and Iran discuss reviving nuclear deal. After a rocky start, the U.S. and Iran are making progress on a diplomatic thaw. Iranian oil exports have already been inching up this year, and a breakthrough in talks could see even more.

Iran oil won’t shock markets. “With OPEC+ appearing to manage its exit for now, supply concerns will likely shift to the potential return of Iran to the JCPOA (Joint Comprehensive Plan of Action) agreement,” analysts at Goldman Sachs said in a note on Monday.

India cuts oil purchases from Saudi Arabia after price hike. India will buy some 36 percent less crude oil from Saudi Arabia next month, unnamed sources told Reuters soon after the Kingdom said it would increase its official selling price for oil for its Asian buyers.

European battery majors emerging. Europe is scrambling to build out battery manufacturing capacity as EV sales pick up. Backed by billions in EU subsidies for both EVs and battery manufacturing, competition is heating up between Northvolt AB in Sweden, Britishvolt Ltd. and France’s Automotive Cells Co., and Tesla (NASDAQ: TSLA) and Volkswagen (OTCMKTS: VWAGY). BNEF forecasts Europe’s share of battery manufacturing rising from 7% in 2020 to 31% by 2030.

Lawsuits from Texas freeze proliferate. At least 30 lawsuits related to natural gas contracts have been filed in four states since the February freeze, according to the Wall Street Journal.

Pioneer’s takeover of DoublePoint shows shale’s signs of life. The $6.4 billion acquisition of DoublePoint Energy by Pioneer Natural Resources (NYSE: PXD) is the largest purchase of a private shale driller since 2011. The deal is a sign of further consolidation in the U.S. shale industry, but also one that shows “signs of life,” according to the Wall Street Journal.

JPMorgan cuts Pioneer. JPMorgan cut Pioneer Natural Resources (NYSE: PXD) to Neutral from Buy following the $6.4 billion takeover of DoublePoint Energy. The bank said that the acquisition “fits like a glove” and would improve cash flow, but also noted that the purchase price was high.

Shell invests in aviation fuel maker. Royal Dutch Shell (NYSE: RDS.A) has invested in a sustainable fuels company LanzaJet, which is building an “alcohol-to-jet” facility to produce sustainable jet fuel.

Renewables overtake nuclear worldwide. Renewable energy generated more electricity around the world in 2019 than nuclear, a milestone that is unlikely to be reversed. A separate report finds that renewables account for 82% of total capacity additions worldwide last year.

European companies saw energy transition coming. Enel (BIT: ENEL) and Iberdrola (BME: IBE) began their energy transitions years ago, making them now powerhouses in renewable energy. That puts them ahead of the game compared to the oil majors. Reuters looks at how this unfolded.

jog on
duc

 

[qldfrog]

Market sort of poised, which will become clearer when Mr flippe-floppe-flye's observations are added.

Overall, stocks are meh today after yesterday's big run higher.


View attachment 122448

Individual sectors are meh.

View attachment 122447

Bonds are higher. Risk off. DXY is lower (unrelated) I think. DXY was signalling lower in any case.


View attachment 122449

Gold higher. Risk off.

View attachment 122450

A pause. This is my inflation gauge. Why? We will I'm sure find out in time.

View attachment 122451

Miners, which have been reasonably robust in refusing to go lower, are now showing signs of a move higher. Risk off.

View attachment 122452

Some news:

This has implications. The trouble is, they are going to be so diverse, with some of them just totally unexpected, who knows how this plays out. All that can be said at this point is: this is important.

View attachment 122453


Surely we see this with Quants and algos all of the time.

View attachment 122454

Now from Mr flippe-floppe-flye:

View attachment 122456View attachment 122457View attachment 122458View attachment 122459

Now, not actually addressed, but relevant:

A Hedge Fund blowing up is bad and in the past has had repercussions. This time, the market seems to have merely shrugged. Always a worry. However, a major Bank blowing up is something else again.

Now, whether or not it actually blows up remains to be seen. Essentially, does it get a bail out. History would suggest yes. However, public opinion being the way that it is currently, ie. lots of small businesses gone to the wall, possibly politically, that is not such an attractive move.

So let's say no bail out. What happens if CS does blow up?

That could explain the run to safety in the Bond market. Junk bonds also turned lower as safety was sought. We also have the move to gold, which with the miners, has been going on for a couple of weeks already.

The whole thing may just blow over. Or it may not. Watch credit spreads.


jog on
duc

One point to add: i assume CS is Swiss.
When DB needed help, it got it directly and implied: the german government was bankrolling DB.
But in Switzerland, there is real democracy and people (in the street) still have power.i somewhat doubt that the Swiss government aka Swiss citizens would put billions to save CS nilly willy.
CS could be helped by the US or EU...Whose citizens may not like taxes going to save a "Swiss" entity
In any case not as easy as for DB or Citibank etc if it is required.
PS : i have not illusion vs the Swiss-ness of CS, just a name..but the power of a name...