Oil, Hot Stocks, and Currencies – Part III

By TheTechnicalTraders.com

In our continued effort to help skilled traders/investors understand the future risks associated with geopolitical market turmoil, the EU Elections next week and the continued US/China trade war, this Part III of our Sector Rotation article will highlight certain sectors that we believe may continue to perform over the next 12 to 24+ months and help traders/investors survive any extended price volatility/rotation over that same time. Read Part I, and Part II.

Currently, the US stock market has weathered a bit of a jolt in terms of price rotation.  After many stock indexes reached new all-time highs, the news of Iran Oil Sanctions, US/China trade talks failing and the political turmoil in DC as an incredible 2020 US Presidential election cycle heats up, investors are watching the markets for any signs of strength or weakness.  Meanwhile, the US Dollar continues to strengthen against other global currencies in an incredible show of “King Dollar” strength and dominance.  All of this plays into one of our favorite narratives that we started discussing over 30 months ago – the Global Capital Shift.

For those of you who remember our many articles about this global market phenomenon and the root causes of it, we’ll try to keep the following example/explanation of it fairly short.  For those of you that are new to our research, please allow us to try to explain the Capital Shift event and why it is important to understand.

The Capital Shift started after the 2008-09 global credit market collapse.  The US and many other nations created an easy money policy that was designed to spark investment and recovery across the globe.  This easy money, at first, supported failing companies and governments in order to maintain social order and structure.  After that process was completed, this capital went to work investing in under-valued global markets and assets.  As prices continued to rise and the easy money policies became rooted into the social structure, the hunt for greater returns rotated throughout the planet – diving into undervalued markets and opportunities, often with no regard for risk.



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After 2014, things began to change in the US and throughout the planet.  The US entered a period of extended sideways trading that caused many investors to reconsider the “buy the dip” mentality.  In 2014-15, China initiated “capital controls” in an effort to prevent outflows of capital from a newly rich population and corporate structure.  Just before 2014, the Emerging Markets went through a period of pricing collapse which was associated with over-inflated expectations and $100+ oil.  All of that started changing in 2014~2016 as Oil prices collapsed – taking with it the expectations and promises of many Emerging Market investors and speculators.

This shifting of capital in search of “returns with a moderate degree of risk” is what we are calling the “Capital Shift Event”.  It is still taking place and it is our opinion that the US stock market will become the central focus of global capital investment over the next 4+ years.  We believe the strength of the US Dollar and the strength of the US Stock Market/US Economy will drive future capital investment into US and other US Associated major markets in an attempt to avoid risks associated with the foreign market and currency market valuations.  In other words, when the crap starts flying across the globe, cash will rush into the US and other safe-haven investments to protect real value.

 

Currently, the potential for another price decline in Crude Oil is rather strong with our research expecting a move back below $55 ppb over the next 4+ months.  We believe a further economic contraction across the globe with a very strong potential for increased price volatility will drive Oil prices back below $55 with a very strong potential for prices to settle near $46~48 before the downward trend is completed.

The potential for some type of price contraction over the next 12+ months will be related to how the global and localized economic concerns play out over the next 24+ months.  Yet, investors can prepare for these extended price rotations now by becoming aware of weakening price trends and the potential that certain sectors will likely be hit harder than others.  For example, the most recent price weakness in the US stock market appears to be focused in certain sectors:

Technology, Semiconductors, Scientific Instruments, Financials, Asset Management, Property Management, Banking (Generally all over the US), Consumer Goods – Electronics, Airlines, Mail Order Services, Industrial Goods, Aerospace/Defense, Farming and Farming Supply, Medical Laboratories, Medical Appliances, Oil & Gas and others.  This type of market contraction is fairly common in an early stage Commodity and Industrial economic slowdown.

 

The sectors that are improving over the past week are : Healthcare, Electric Utilities, Diversified Utilities, Gas Utilities, Consumer Personal Products, Consumer Confectioners, Cigarettes, Entertainment, Beverages and Soft Drinks, Meat Products, Specialty Eateries, REITS (almost all types), Credit Services, Telecom and Telecom/Communication Services.

All of these are protectionist rallies based on the US/China trade war and the market rotation away from Technology/manufacturing growth and into more consumer protectionist spending mode – where the consumer and larger firms focus on core items while expecting a mild recession within the economy.  All of this is very common at this time within the US Presidential Election cycle.  In fact, our researchers have shown that nearly 80% of the time when a major US presidential election is taking place, the US stock markets will decline within the 24 months prior to the election date.

The Monthly S&P heat map is not much different.  It is still showing weakness where we expect and strength in sectors that have been somewhat dormant over the past 4+ years.  The key to success for skilled traders is to be able to play this future price rotation very effectively as the different sectors continue to rotate headed into the 2020 US Presidential Elections and with all of the external foreign market factors taking place.

 

It is quite likely that the US Dollar will continue to push high, possibly well above $102, before finding any real resistance.  It is very likely that most of the US stock market will fair quite well over the next 24+ months – yet we do expect some extended price rotation over this time and we believe Technology, Financials, Real estate, and Industrial/Consumer related stock sectors could take a hit over the next 16 to 24 months.  These rotations are, again, common for this type of US Presidential Election cycle.  Skilled traders are already aware of this cycle and have begun to prepare for this event to unfold.  The unknowns of the current global market is China and the EU at present.

 

And with that last US Dollar chart, there you have it.  Our three-part article about how the Global Capital Shift is about to intensify and continue to drive a US Sector rotation that many traders have failed to consider.  The EU elections, the US/China trade wars, and the US Presidential Election event are all big factors in what we believe will drive in an increased level of uncertainty over the next 16~24 months.  Additionally, we are very concerned that China is very close to experiencing what we are calling a “broken backbone” over the next 12+ months.  We believe the pricing pressures in combination with a slowing economy and a consumer move into a protectionist stance could create a waterfall event in China/Asia.

Our advice for traders is to protect open long positions and to prepare for 16 to 36 months of “repositioning” of the global markets.  The US elections are certain to drive an incredible range of future expectations throughout the world.  Combine that with the EU elections, the BREXIT effort and the continued repositioning of US/China/Foreign market relations and we are setting up for a big shock-wave event in the near future.

Follow our research.  We’ve already mapped out the next 24 to 36 months of market price activity with our proprietary price modeling tools.  We believe we know what will happen over the next 24 to 36 months, we are just waiting for the price to confirm our analysis. Visit TheTechnicalTraders.com to learn more.

Chris Vermeulen
Technical Traders Ltd.

 

Pound knocked below 1.27 as Brexit fears mount

The British Pound descended deeper into the abyss this morning with prices falling below $1.27 for the first time since January 2019 as uncertainty over Brexit dented investor sentiment.

Rising concerns over the UK crashing out of the European Union without any kind of transition deal coupled with political drama in Westminster compounded to the Pound’s woes. With a broadly stronger Dollar rubbing salt in the wound and punishing Sterling further, the GBPUSD remains heavily bearish on the daily timeframe.

Much attention will be directed towards today UK inflation report hearings by the Bank of England’s Governor. While this event could impact the Pound, the currency is likely to be more concerned with Brexit developments and the Political drama at home.

Technical traders will continue to closely observe how the GBPUSD behave around the 1.2700 level. A solid daily close below this point signals a move lower towards 1.2620 and 1.2500 as discussed earlier in the week.



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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Offshore Yuan hitting 7 top of headlines, but what about Dollar Index above 100?

The turn for the worst that has transpired with the unforeseen breakdown in US-China trade relations over the past two weeks has accelerated a flurry of selling momentum in the offshore Yuan. The question that continues to linger in financial market headlines following the brutal period of late for the Chinese currency stands as a matter of when, and not if the offshore Yuan will weaken beyond 7 against the Greenback.

The USDCNH stands at time of writing marginally close to levels that have previously acted as the last line of defence for the Offshore Yuan; but what if authorities had a trick up its sleeve in the ongoing tit-for-tat tariffs and allowed the Yuan to freely weaken? This is a scenario that might still appear as unlikely and one that has not been priced in, but it is something that shouldn’t be ruled out following the escalation and it is a scenario that would lead to a round of shock for global investors.

Think about it from the perspective of the Chinese economy. You thought, like the majority that a trade deal should by all accounts be concluded by end of the quarter but you now face headwinds from additional tariffs that were not expected just two weeks ago. These tariffs are serious headwinds to the Chinese economy and a threat that realistically puts a question mark on whether the 6-6.5% government target for economic growth in 2019 should be reassessed.

China will not be able to match the tariffs that the United States has put on its goods blow-for-blow and this is something that we have all been aware about since the trade tensions erupted over a year back. But, China could offset the upcoming economic pressures that the mainland economy will face in light of additional tariffs by allowing the Yuan to weaken further.

The likelihood of the trade tensions extending into the second half of the final year for the decade also highlights the potential that we should be preparing ourselves for an attempt by the Dollar Index to make another run for 100.



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The steady climb in the Dollar Index over the past week or so hasn’t been documented that much, but I do think investors are hedging on the Greenback in anticipation of the trade conflict between the United States and China potentially extending into 2020. 100 in the Dollar Index would be a painful migraine for all currencies in the developing world, one which would make the second half of 2019 a troublesome end to the decade for emerging market currencies.

An advance towards 100 in the Dollar Index would stand as the final nail in the coffin in even the most doubtful of spectators that the offshore Yuan would not be allowed to weaken beyond 7. It would also marginalise buying demand for emerging markets at a time where they have not yet adapted to the incoming external headwinds, with restricted buying demand for emerging markets causing pain for currencies stretching from the Malaysian Ringgit to the South African Rand and even as far as the Brazilian Real.

Upcoming European elections to signal another push for right-wing in Europe; swing lower in Euro ahead?

The Euro has opened yet another week with low volatility as traders brace themselves for the upcoming European elections. Things have been quiet for Euro volatility in the FX space for a very long time, and one must wonder whether the upcoming European elections could be what the doctor ordered to inject some life back into a Eurodollar that has been asleep for most of the past year.

I am going to take the contrarian view and look at the upcoming European elections as the warning lights that risk the Euro falling to 1.10 for the first time since May 2017. The recent history of European politics suggests that the European elections will signal more power moving towards far-right political parties and this isn’t something that investors will be able to ignore forever.

If the European Elections do threaten the stability of the European Union, a great deal of concerning views on the outlook of the Euro can even lead to the discussion over Eurodollar parity making their way again.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

SP500 falls led by technology

By IFCMarkets

US stock market pullback continued on Monday led by technology shares hurting from ban on business with Huawei Technologies. The S&P 500 lost 0.7% to 2840.23. Dow Jones industrial slid 0.3% to 25679.90. The Nasdaq composite tumbled 1.5% to 7702.38. The dollar weakened after data showed Chicago Fed’s national activity index slipped to a negative 0.45 in April, down from an upwardly revised positive 0.05 in March: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, edged down 0.03% to 97.93 but is higher currently. Futures on US stock indexes point to higher openings today.

European stocks slide accelerated on Monday as slump in technology shares dragged equity markets. Both EUR/USD and GBP/USD turned higher but are lower currently. The Stoxx Europe 600 index declined 1.2% with technology sector dropping 3%. The DAX 30 fell 1.6% to 12041.29. France’s CAC 40 tumbled 1.5%. UK’s FTSE 100 lost 0.5% to 7310.88.

Asian stock indices are mixed today. Nikkei closed 0.1% lower at 21272.45 despite enduring yen slide against the dollar. Markets in China are mixed despite news US has decided to extend 90-day exemptions to some US companies from the technology export ban announced last week: the Shanghai Composite Index is up 1.2% while Hong Kong’s Hang Seng Index is 0.1% lower. Australia’s All Ordinaries Index extended gains 0.4% as Australian dollar resumed its slide against the greenback.

HK50 testing MA(200)  05/21/2019 Market Overview IFC Markets chart



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Brent futures prices are edging higher today on US-Iran tension with global markets slump capping gains. Prices fell yesterday despite Middle East tensions: July Brent crude lost 0.3% to $71.97 a barrel on Monday.

Market Analysis provided by IFCMarkets

Note:
This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.

Jamaica hikes rate to curb risk inflation falls below target

By CentralBankNews.info
Jamaica’s central bank said its third rate hike this year was aimed at stimulating an even faster expansion of private sector credit and economic activity to to help inflation return to the midpoint of its target and reduce the risk inflation will fall below its target in the next three years.
The Bank of Jamaica (BOJ), which on Saturday announced the 50-basis-point cut in its policy rate to 0.75 percent on Twitter ahead of today’s press release, has now lowered its rate 11 times and by a total of 300 basis points since July 2017 when it adopted the overnight deposit rate as its policy rate as part of a reform of its monetary policy framework.
In addition to rate hikes, BOJ has also loosened its policy stance by lowering the reserve requirement for commercial banks twice this year by a total of 500 basis points to lower the cost of credit for businesses and households to boost economic activity and inflation.
Jamaica’s inflation rate has come down following a 2013 agreement with the International Monetary Fund (IMF) and after fluctuating within BOJ’s target range of 4-6 percent in 2017, inflation fell below the lower limit in March last year and then again toward the end of 2018 and in the first three months of this year.
In April the inflation rate rose to 4.0 percent from 3.4 percent in March and the central bank expects inflation to rise and average 4.5 percent over the next 8 quarters.
However, BOJ also said there will be months when inflation falls below the lower limit and after March 2020 inflation will decline towards the bottom of its target range and only slowly return to the mid-point over the following three years.
“Of note, the projected trajectory of inflation is lower than previously forecasted,” BOJ said, adding this reflects its view that inflation expectations are now lower than previously assessed and the projected pace of expansion in domestic demand after next March will be slower due to headwinds from the global economy.
In general, BOJ said economic data remain positive, with foreign reserves above the level deemed adequate, the current account sustainable, market interest rates low, labour market conditions continue to improve and the fiscal performance is strong.
Jamaica’s dollar has fluctuated between 137 and 126 to the U.S. dollar since early 2018 and this year has depreciated since mid-March after dropping from early February.
Today the Jamaican dollar was trading at 135.6 to the U.S. dollar, down almost 6 percent this year.

The Bank of Jamaica released the following press release:

“Bank of Jamaica announces its decision to lower the policy interest rate (the rate offered on overnight balances with Bank of Jamaica) by 50 basis points to 0.75 per cent per annum, effective 20 May 2019.
This decision reflects Bank of Jamaica’s assessment that, while inflation is expected to increase to average 4.5 per cent over the next eight quarters, there will be months when inflation will fall below the lower limit of the Bank’s target of 4.0 per cent to 6.0 per cent in the context of low underlying inflation. The forecast is for inflation thereafter to approach the midpoint of the target gradually but at a slower pace than previously expected at the last assessment in February 2019.
As with the last decision announced in March 2019, Bank of Jamaica’s decision today to lower the policy rate is intended to stimulate an even faster expansion in private sector credit which should lead to higher economic activity, consistent with the inflation target. This action will support inflation returning more quickly to the centre of the target.

Inflation
Annual inflation at April 2019 reported by the Statistical Institute of Jamaica was 3.9 per cent, up from 3.4 per cent at March 2019 and 3.2 per cent at April 2018. While annual inflation has been rising, underlying inflation remained low.
Bank of Jamaica anticipates that inflation will rise towards the mid-point of the target by the March 2020 quarter as (i) domestic agriculture prices increase from the low levels of recent months to more normal levels and (ii) domestic economic activity increases in response to the lowering of the policy rate over the last eight quarters.
However, inflation is not expected to stay at the mid-point of the target but will decline towards the bottom of the target in the period after the March 2020 quarter and only return to the mid-point slowly over the ensuing three years. This outlook carries a material risk that inflation will fall below the target again during that period in the absence of a policy response.
Of note, the projected trajectory of inflation is lower than previously forecasted. This reflects the Bank’s view that inflation expectations are lower than previously assessed and the projected pace of expansion in domestic demand in the period after the March 2020 quarter will be slower due to headwinds from the global economy.
The risks to the inflation forecast are assessed to be balanced. The main upside risk, which could cause inflation to be higher than forecasted, is the possibility of higher-than-anticipated crude oil prices. The main downside risks, which could cause inflation to be lower than forecasted, include better-than-anticipated production in the agriculture sector which could lead to lower food-price inflation. In addition, growth could be lower than projected if global trade tensions escalate.

 



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Precious Metals Miner Reevaluates Nevada Operations After Q1/19 Miss

By The Gold Report

Source: Streetwise Reports   05/17/2019

The reasons for the miss and possible paths forward were outlined in a ROTH Capital Partners report.

In a May 9 research note, analyst Jake Sekelsky reported that ROTH Capital Partners reduced its target price on Hecla Mining Co. (HL:NYSE) to $3 per share from $4 after the company suspended operations at its Nevada operations. The stock was trading at around $1.51 per share on May 16.

Management made this decision after issues at the Fire Creek mine resulted in Q1/19 results that came in below expectations. The primarily problems were “the presence of water that limited access to certain areas of Fire Creek as well as poor conversion of resources to reserves,” explained Sekelsky.



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He indicated that Hecla intends to “re-evaluate operations and outline a viable longer-term operating plan.” Until then, it will hold off on providing production and cost guidance for those assets.

For Q1/19, Hecla reported a net loss of $0.05 per share and revenue of $152.6 million. These numbers came in below ROTH’s forecasts of a $0.01 per share loss and $173.8 million in revenue.

That said, Hecla’s Greens Creek outperformed during the quarter, producing about 2.2 million ounces at an all-in sustaining cost of $3.24 per ounce, somewhat offsetting the problems in Nevada. “We expect Greens Creek and Casa Berardi to continue to serve as the company’s cornerstone assets and primary cash flow generators as the company re-evaluates operations in Nevada,” Sekelsky highlighted.

The analyst wrote that an update from management on how it plans to proceed with its Nevada assets is expected during Q2/19. Options include stopping operations altogether or revising the mine plan. “Given that Nevada has been a continued drag on cash flow since acquisition, we believe management is taking prudent steps to maximize near-term cash flow,” Sekelsky added.

ROTH removed the Nevada operations from its model on Hecla, and this resulted in the lower target price. The investment banking firm, however, maintained its Buy rating on the miner.

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Disclosure:

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional, and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from ROTH Capital Partners, Hecla Mining Company, Company Note, May 9, 2019

Regulation Analyst Certification (“Reg AC”): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

ROTH makes a market in shares of Hecla Mining Company and as such, buys and sells from customers on a principal basis

Shares of Hecla Mining Company may be subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.

 

ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.

( Companies Mentioned: HL:NYSE,
)

Energy Transportation Firm ‘Looks to Carry Positive Momentum’ Through 2019

The Energy Report

Source: Streetwise Reports   05/17/2019

This company’s solid Q1/19 and growth potential were discussed in an iA Securities report.

In a May 13 research note, iA Securities analyst Jeremy Rosenfield reported that Enbridge Inc. (ENB:NYSE; ENB:TSX) had a good start to 2019, with its Q1/19 results coming in above expectations.

“Solid performance across all business segments” drove Enbridge’s Q1/19, highlighted Rosenfield. The company reported adjusted EBITDA of $3,769 million, higher than iA’s CA$3,353 million projection and consensus’ CA$3,447 million forecast. Adjusted earnings per share was CA$0.81, above iA’s CA$0.79 projection and the Street’s CA$0.73. Discounted cash flow was CA$1.37 per share, also higher than iA’s CA$1.25 estimate and consensus’ CA$1.21.



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Enbridge’s near-term growth and longer-term potential upside “remain on track,” Rosenfield noted. The company intends to put about CA$16 billion into secured growth projects through 2023 and increase discounted cash flow (DCF) per share at an annual rate of about 5–7%.

“We continue to see longer-term potential upside from additional growth initiatives, which could support an extension of the existing DCF/share growth rate, without the need for external equity,” the analyst added.

Enbridge reiterated its financial guidance for 2019.

Rosenfield concluded that Enbridge offers investors stable earnings and cash flows; visible, low-risk organic growth; attractive income characteristics; and upside. IA Securities has a Buy rating and a CA$60 per share price target on Enbridge Inc. The company’s stock is currently trading at about CA$49.41 per share.

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Disclosure:

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional, and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from iA Securities, Enbridge Inc., Research Update, May 13, 2019

Conflicts of Interest: The research analyst and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of iA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, iA Securities may provide financial advisory services for the issuers mentioned in this report. iA Securities may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.

Analyst’s Certification: Each iA Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst’s personal views about the issuer and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst’s compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analyst Trading: iA Securities permits analysts to own and trade in the securities and or the derivatives of the issuer under their research coverage, subject to the following restrictions. No trades can be executed in anticipation of coverage for a period of 30 days prior to the issuance of the report and 5 days after the dissemination of the report to our clients. For a change in recommendation, no trading is allowed for a period of 24 hours after the dissemination of such information to our clients. A transaction against an analyst’s recommendation can only be executed for a reason unrelated to the outlook of the stock for the issuer and with the prior approval of the Director of Research and the Chief Compliance Officer.

Company Related Disclosures:
Enbridge:
The Industrial Alliance Securities Inc. research analyst(s), who cover the issuer discussed, members of the research analyst’s household, research associate(s) or other individual(s) involved directly or indirectly in producing this report: a. have a long position in its common equity securities.
The analyst has visited the issuer’s operations. No payment or reimbursement was received from the issuer for the associated travel costs.

( Companies Mentioned: ENB:NYSE; ENB:TSX,
)

Oil & Gas Explorer with Texas Assets Rated Outperform

The Energy Report

Source: Streetwise Reports   05/19/2019

The energy company’s expectations for the year are addressed in a Raymond James report.

In a May 16 research note, analyst John Freeman reported that Raymond James reiterated its Outperform rating on SM Energy Co. (SM:NYSE) after updating its model on the company to incorporate its latest update and management’s comments.

Freeman highlighted that SM Energy anticipates and remains committed to generating free cash flow in Q2/19. “Overall, our model puts SM in slightly positive free cash flow territory in the back half of 2019, but 2020 should be the real turning point for the company,” he added. “Likewise, the balance sheet remains at about 3x leverage through 2019 before meaningfully improving in 2020.”



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About 14 of SM’s wells in the Eagle Ford are slated to come online in Q2/19 versus two that started production in Q1/10. As such, Freeman noted, Raymond James estimated SM Energy will attain an approximate 13% growth in 2019 over that of last year with a capex of $1.07 billion, weighted to H1/19. Similarly, SM’s budget guidance for the year remains at $1–1.07 billion.

As for pricing in Q2/19, SM Energy expects it to be weaker in Q2/19 and Q3/19 for crude oil and natural gas due to constrained pipeline capacity for both causing Permian price differentials to expand, Freeman pointed out. However, “hedges on 60–65% of oil and 70–75% of Permian gas should alleviate some of the regional pricing burden.”

Raymond James has a $26 per share target price on SM Energy, whose current share price is around $15.10.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Raymond James, SM Energy Company, May 16, 2019

ANALYST INFORMATION

Analysts Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination, including quality and performance of research product, the analyst’s success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The analyst John Freeman, primarily responsible for the preparation of this research report, attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and (2) that no part of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.

Raymond James & Associates, Inc. makes a market in the shares of SM Energy Company.

Raymond James & Associates received non-investment banking securities-related compensation from SM Energy Company within the past 12 months.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available here.

( Companies Mentioned: SM:NYSE,
)

Gold fails to recover above $1280; USDJPY rebounds to 110

The past few days have certainly not been kind to Gold and this continues to be reflected in the bearish price action.

Conflicting signals over the direction of the US-China trade talks have sent investors rushing towards the Dollar – ultimately weighing heavily on Gold. Although bulls are clearly losing the battle as prices sink towards $1274, the war still rages on.

It must be kept in mind that the sentiment pendulum could easily swing in favour of bulls this week, if trade tensions intensify and fears over slowing global growth accelerate the flight to safety. With Gold still supported by core themes in the form of a cautious Federal Reserve and speculation over a possible US rate cut in 2019, the precious metal remains shielded by extreme downside shocks.

Looking at the technical picture, sustained weakness below $1280 is seen opening a path towards $1268.50 in the short to medium term. Alternatively, a breakout above $1280 may offer bulls another chance to challenge the $1300 psychological level.



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Currency spotlight – USDJPY 

Escalating US-China trade tensions have not only strengthened the Japanese Yen but also the Dollar which is seen as a safe-haven asset. This development has transformed the USDJPY into a fierce battleground for bulls and bears with prices trading marginally above 110.00 as of writing. Should the Dollar win the current tug of war against the Yen, the USDJPY is seen pushing higher towards 110.70 in the near term. Alternatively, a failure for bulls to maintain control above 110.00 is likely to open a path towards 109.00.

Commodity spotlight – WTI Oil 

WTI Oil has pushed higher on the daily charts thanks to geopolitical tensions in the Middle East. While bulls seem to be in the driving seat, there seems to be a strong resistance at $64.50 and $66.70, respectively. Should prices fail to break above these two key points, WTI is seen sinking back towards $60.00 in the medium term. Alternatively, a scenario where $66.00 is conquered is likely to open the gates towards $70.00 – a level not seen since October 2018.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Dollar weakened on lower than expected April inflation

By IFCMarkets

US dollar bullish bets fell to $33.58 billion from $38.03 billion against the major currencies during the one week period, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to May 14 and released on Friday May 17. The dollar weakened marginally after a report consumer prices rose a below expected 0.3% on month in April while wholesale prices rose a below expected 0.2%, and trade deficit widened 1.4% in March .

 

 

commitment of traders net long shortcommitment of traders weekly changemarket sentiment ratio long short positions



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Market Analysis provided by IFCMarkets

Note:
This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.