Agriculture
The USDA report on Friday showed U.S. corn stocks down more than a billion and a ½ bushels from August, but over 7 billion bushels from a year ago. Through a global chain of more than 32,000 company-owned and licensed stores, Starbucks sells coffee, espresso, teas, cold blended beverages, food, and accessories. The coffee maker also counts on its powerful membership (over 19.4M members) to boost comparable sales. Finally, SBUX should grab more market in China as Luckin Coffee is stuck with fraud problems.
Sugar prices extended a steady trend as demand-supply and volume remained normal. Iron ore, oil, sugar, soybeans, all make tops for exports. On the corn front, Today is Last Trading Day on all September Grains. USDA estimated US Cotton production at just 127.06 million bales on Friday. The Bombay Sugar Merchants Association spot rates (₹/quintal): S-grade 3,300-3,362 and M-grade 3,386-3,502.
Sugar prices extended a steady trend as demand-supply and volume remained normal. Iron ore, oil, sugar, soybeans, all make tops for exports. On the corn front, Today is Last Trading Day on all September Grains. USDA estimated US Cotton production at just 127.06 million bales on Friday. The Bombay Sugar Merchants Association spot rates (₹/quintal): S-grade 3,300-3,362 and M-grade 3,386-3,502.
Currencies
Gold prices rose helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Gold prices rose helped by a weaker U.S. dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. The dollar value of foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
This can only translate into a weaker dollar and higher stock market prices, with not even one hint that the trend may change sometimes in the future. Minor losses were seen in the Canadian dollar (-0.86%) and the New Zealand dollar (-0.78%). The trade-sensitive Australian Dollar followed commodity prices higher, as gold climbed above $1940/oz and crude oil clawed back lost ground. The euro has been moving marginally higher as most euro crosses are trading in the red after last week’s gains.
less A broad risk-on tilt was seen throughout the Asia-Pacific trading session, as the haven-associated Japanese Yen (FXY) and US Dollar (UDN) lost ground against their major counterparts. less As the week gets going, we’re seeing currencies bid up against the US Dollar, while stocks attempt to build on their recovery from recent lows. In the depths of the coronavirus pandemic back in March, it took almost 6 reais to buy one dollar.
This can only translate into a weaker dollar and higher stock market prices, with not even one hint that the trend may change sometimes in the future. Minor losses were seen in the Canadian dollar (-0.86%) and the New Zealand dollar (-0.78%). The trade-sensitive Australian Dollar followed commodity prices higher, as gold climbed above $1940/oz and crude oil clawed back lost ground. The euro has been moving marginally higher as most euro crosses are trading in the red after last week’s gains.
less A broad risk-on tilt was seen throughout the Asia-Pacific trading session, as the haven-associated Japanese Yen (FXY) and US Dollar (UDN) lost ground against their major counterparts. less As the week gets going, we’re seeing currencies bid up against the US Dollar, while stocks attempt to build on their recovery from recent lows. In the depths of the coronavirus pandemic back in March, it took almost 6 reais to buy one dollar.
Metals
When gold (XAUUSD:CUR) and silver prices will rise to much higher levels than right now, even small denomination gold coins will be unsuitable for actual physical barter. The Gold Analyst offers quality technical and fundamental analysis of the price of gold to help educate readers in their investment decisions. (Source: “Gold Demand Trends Q2 2020,” World Gold Council, July 30, 2020.) However, the price of silver did not follow the breakout higher seen in gold in 2019.
Just like gold, which broke higher in the summer of 2019, silver saw an improved sentiment from institutional investors. The world’s top gold miners are retrenching after COVID-19 related shutdowns despite record prices for the yellow metal, with cost-conscious executives prioritizing investor returns over production growth. It would come as no surprise if temporarily gold would front-run silver for a tiny little bit again. Thus, a 1 oz bar of silver will be almost twice as large as a 1 oz bar of gold.
While gold allowed for a handsome financing point (see our quad exit strategy), silver was lagging. 2020 so far proved to be a spectacular year for silver investors – the price of silver rose from $11 during the March 2020 to almost $30.
Just like gold, which broke higher in the summer of 2019, silver saw an improved sentiment from institutional investors. The world’s top gold miners are retrenching after COVID-19 related shutdowns despite record prices for the yellow metal, with cost-conscious executives prioritizing investor returns over production growth. It would come as no surprise if temporarily gold would front-run silver for a tiny little bit again. Thus, a 1 oz bar of silver will be almost twice as large as a 1 oz bar of gold.
While gold allowed for a handsome financing point (see our quad exit strategy), silver was lagging. 2020 so far proved to be a spectacular year for silver investors – the price of silver rose from $11 during the March 2020 to almost $30.
Oil
However, as the first true Latin American independent oil company, which we believe to be the next major oil region, the company has significant long-term potential. The oil prices may remain under pressure in the short term, which could weigh on the performance of US oil producers. Also, EOG Resources has monetized its crude oil hedges and its cash flows are highly exposed to oil price weakness. At the same time, given the company’s EV, if oil prices remain at $40, the company’s share price can more than double in the next 7 years.
EOG Resources, however, is a low-cost oil producer that can withstand weak oil prices.
With low CapEx and cost-cutting efforts, the company is in a position to generate free cash flows in a sub-$40 a barrel oil price environment. The impact of oil prices on the company is the company’s largest risk over the coming years GeoPark has an impressive portfolio of assets that’s worth paying attention to. We have already seen historical volatility in crude oil and natural gas move higher, and elevated levels are likely to remain in place over the coming weeks.
In a low-$30s a barrel oil price environment, the company likely won’t generate any free cash flows. BP’s 2020 benchmark Energy Outlook underpins Chief Executive Bernard Looney’s new strategy to “reinvent” the 111-year old oil and gas company by shifting renewables and power.
EOG Resources, however, is a low-cost oil producer that can withstand weak oil prices.
With low CapEx and cost-cutting efforts, the company is in a position to generate free cash flows in a sub-$40 a barrel oil price environment. The impact of oil prices on the company is the company’s largest risk over the coming years GeoPark has an impressive portfolio of assets that’s worth paying attention to. We have already seen historical volatility in crude oil and natural gas move higher, and elevated levels are likely to remain in place over the coming weeks.
In a low-$30s a barrel oil price environment, the company likely won’t generate any free cash flows. BP’s 2020 benchmark Energy Outlook underpins Chief Executive Bernard Looney’s new strategy to “reinvent” the 111-year old oil and gas company by shifting renewables and power.
United States
The market could get roiled for weeks or even months after Election Day while things get “sorted out.” And Wall Street may already be anticipating this risk. Amazon announced on Monday that its planning to hire 100,000 new employees in the US and Canada on top of the 33,000 corporate new hires it announced last week. The Nasdaq last week suffered its biggest one-week decline since the market crisis of March. Tech stocks and energy names dragged all three major US stock indices into the red last week, with the Nasdaq Composite falling hardest, losing 4.1%.
In other words, the effects of the Fed’s actions will be seen on a weaker USD, higher stock market prices, and tight credit spreads. But to achieve its new mandate of creating average inflation around the 2% level, the Fed will need to ease conditions even more than it did so far. His market analysis can also be read in most major financial publications, including the Wall Street Journal.
According to The WSJ, the deal may not take the form of an outright sale, with Oracle instead set to become TikTok’s “trusted tech partner” in the US. AxiCorp’s chief market strategist Stephen Innes commented that the Fed might not make any policy changes and this might result in inflation. Most European equity markets were lower, as the healthcare sector underperformed after U.S. President Donald Trump signed an executive order to lower drug prices in the United States.
In other words, the effects of the Fed’s actions will be seen on a weaker USD, higher stock market prices, and tight credit spreads. But to achieve its new mandate of creating average inflation around the 2% level, the Fed will need to ease conditions even more than it did so far. His market analysis can also be read in most major financial publications, including the Wall Street Journal.
According to The WSJ, the deal may not take the form of an outright sale, with Oracle instead set to become TikTok’s “trusted tech partner” in the US. AxiCorp’s chief market strategist Stephen Innes commented that the Fed might not make any policy changes and this might result in inflation. Most European equity markets were lower, as the healthcare sector underperformed after U.S. President Donald Trump signed an executive order to lower drug prices in the United States.
China
While it seems Beijing has gone for a bells and whistles growth approach, the details are less ‘positive’- if that is the right word. President Xi Jinping holds virtual talks today with Chancellor Angela Merkel as Beijing seeks to keep Europe from aligning more closely with the U.S. on a variety of issues. But Microsoft said on Sunday that the Beijing-based company had turned it down.
Europe
Germany, which counts on China for almost two-thirds of its pork exports outside of the EU, confirmed a case of African swine fever last week. But Lagarde said the central bank expects inflation to increase to 1% next year from an average 0.3% this year, raising its forecast for 2021 from 0.8% previously. Christine Lagarde spent eight years as a cheerleader for the global economy when she headed the International Monetary Fund. A case of African swine flu was detected in Germany, but rather than reject pork from that area, like the EU has, China as banned all of German pork.
Meanwhile as DB’s Jim Reid writes, attention will remain on Brexit, as the UK government’s incendiary Internal Market Bill is debated in the House of Commons this week. The EU has threatened new restrictions on Chinese investment as due primarily to its heavy use of state aid. The British currency is under pressure since the UK may not conclude a trade agreement with the EU until the end of the transition period after Brexit.
EU President Ursula von der Leyen will set out her vision for the bloc in her first annual state of the union speech on Wednesday.
New EU climate plan brings end of the combustion engine closer. less The rebels are back – despite having a large majority in parliament, Prime Minister Boris Johnson’s victory in passing a controversial Brexit-related bill is unclear.
0 Meanwhile as DB’s Jim Reid writes, attention will remain on Brexit, as the UK government’s incendiary Internal Market Bill is debated in the House of Commons this week. The EU has threatened new restrictions on Chinese investment as due primarily to its heavy use of state aid. The British currency is under pressure since the UK may not conclude a trade agreement with the EU until the end of the transition period after Brexit.
EU President Ursula von der Leyen will set out her vision for the bloc in her first annual state of the union speech on Wednesday.
New EU climate plan brings end of the combustion engine closer. less The rebels are back – despite having a large majority in parliament, Prime Minister Boris Johnson’s victory in passing a controversial Brexit-related bill is unclear.
