Agriculture
USDA said that net Upland Cotton export sales were -68,500 bales this year and 130,800 bales next year. General Comments: Cotton closed a little higher on hopes for improved demand and as bad growing conditions continued in West Texas.
Currencies
However, the yields have been essentially flat for the past three months making further appreciation of the Australian dollar (relative to the Canadian dollar) rather unlikely. In fact dollar weakness has been seen in the poor performance registered recently by the dollar index. Rising AUDCAD means that the Australian dollar is appreciating, while the Canadian dollar is depreciating. It shows daily closing exchange rates for 1 Australian dollar to Canadian dollar.
Declining AUDCAD means that the Australian dollar is depreciating, while the Canadian dollar appreciating. One of the consequences of the recent dollar depreciation of the past few months has been the outperformance of emerging markets over their developed peers since May. The dollar has fallen sharply since March to around 92.50, its lowest level since the spring of 2018. US Dollar weakness has garnered quite a bit of attention recently with the broader DXY Index fluctuating around its lowest level in two-years.
Should the dollar reverse, and even regain half of its recent losses for a short period, it could cause some severe pain in many of these assets. Should the dollar begin to stabilize or rise from its current level, it could result in copper price falling to around $2.70. It appears that those rebound attempts were short-lived, however, with the broader US Dollar now gravitating around the lower end of its recent range. Based on the decline in the dollar, investors are worried that job growth will slow and the deadline will pass with no agreement.
Yet, the Euro’s advance against the US Dollar may have stalled out at the 1.1900-price level. Gold started its July move as the U.S. 10-YR Treasury real yield decline accelerated, and was capped off by the plunging U.S. dollar (USD). The weaker US dollar has also relieved pressures on the developing nations that have taken on too much dollar-denominated debt. The US dollar’s weakness can be linked to the dramatic drop in US real (i.e., inflation-adjusted) yields.
US Dollar weakness could accelerate if EUR/USD bulls can surmount this obstacle. Conversely, the Canadian dollar is currently one of the most “oversold” currencies. On the other hand, another rejection at this technical barrier might suggest US Dollar selling pressure has grown exhausted. The inability for copper prices to advance despite the weaker dollar suggests that the metal has likely topped out.
Declining AUDCAD means that the Australian dollar is depreciating, while the Canadian dollar appreciating. One of the consequences of the recent dollar depreciation of the past few months has been the outperformance of emerging markets over their developed peers since May. The dollar has fallen sharply since March to around 92.50, its lowest level since the spring of 2018. US Dollar weakness has garnered quite a bit of attention recently with the broader DXY Index fluctuating around its lowest level in two-years.
Should the dollar reverse, and even regain half of its recent losses for a short period, it could cause some severe pain in many of these assets. Should the dollar begin to stabilize or rise from its current level, it could result in copper price falling to around $2.70. It appears that those rebound attempts were short-lived, however, with the broader US Dollar now gravitating around the lower end of its recent range. Based on the decline in the dollar, investors are worried that job growth will slow and the deadline will pass with no agreement.
Yet, the Euro’s advance against the US Dollar may have stalled out at the 1.1900-price level. Gold started its July move as the U.S. 10-YR Treasury real yield decline accelerated, and was capped off by the plunging U.S. dollar (USD). The weaker US dollar has also relieved pressures on the developing nations that have taken on too much dollar-denominated debt. The US dollar’s weakness can be linked to the dramatic drop in US real (i.e., inflation-adjusted) yields.
US Dollar weakness could accelerate if EUR/USD bulls can surmount this obstacle. Conversely, the Canadian dollar is currently one of the most “oversold” currencies. On the other hand, another rejection at this technical barrier might suggest US Dollar selling pressure has grown exhausted. The inability for copper prices to advance despite the weaker dollar suggests that the metal has likely topped out.
Metals
Investors can consider both a physical gold bullion investment as well as exposure to gold via companies that search for and extract gold from the ground, or gold miners. Gold Bullion or LBMA Gold Price is the London Bullion Market Association measure of gold price quoted in U.S dollars. Since 1968, when gold was $35 per ounce, gold bull markets have fallen into two categories: inflationary and deflationary. Gold bullion has displayed a lower volatility profile historically and forms the basis for the price of gold.
We think the best guidance for the current gold market is to look at prior gold bull markets. Gold is not an investment but money, driven out of circulation over the last hundred years by the steady encroachment of gold substitutes evolving into pure unbacked fiat. Gold has now reached all-time highs in every major currency, and conversely, every currency is at an all-time low in gold terms. This “higher growth outlook equals higher gold prices” causation will be the opposite of the experience of the past decade (which was marked by the 2011-2019 gold bear cycle).
6, 2020 3:16 PM ET|| About: Royal Gold, Inc. (RGLD)by: SA TranscriptsThe following slide deck was published by Royal Gold, Inc. in conjunction with their 2020 Q4 earnings call.
Gold continues to be a scarce commodity, and the fact that there have been no significant new gold discoveries since 2016 only adds to its supply pressure. Demand for gold, however, has continued to rise as investors have sought exposure and central banks have added to their gold reserves. Other than the odd headline when gold exceeded its previous September 2011 high of $1920, only gold bugs seem to be excited.
But both recent deflationary gold bull markets suggest that a price over $3,000 is reasonable in our view. In recent commentaries, we have argued that gold has developed into an asset class with both long duration and short duration qualities, and an asset with positive convexity features. With gold prices surpassing $2,000/oz recently, the monetary metal has now made new all-time highs versus all the world’s major fiat currencies.
Year to date, the precious metals complex continues to outperform as gold has attained “escape velocity,” i.e., it has gravitationally moved away from other asset classes. The precious metals complex set off fireworks in July as gold bullion reached all-time highs. Silver bullion and gold mining equities broke through significant long-term resistance levels to further improve their bullish standing. But besides mining stocks, today there are exchange-traded funds that do offer some investment exposure to gold for fund managers.
Initially, the gold price continued rising to $1680 on 9 March, but by 18 March it finally reacted, falling to $1471 in only nine trading sessions.
We think the best guidance for the current gold market is to look at prior gold bull markets. Gold is not an investment but money, driven out of circulation over the last hundred years by the steady encroachment of gold substitutes evolving into pure unbacked fiat. Gold has now reached all-time highs in every major currency, and conversely, every currency is at an all-time low in gold terms. This “higher growth outlook equals higher gold prices” causation will be the opposite of the experience of the past decade (which was marked by the 2011-2019 gold bear cycle).
6, 2020 3:16 PM ET|| About: Royal Gold, Inc. (RGLD)by: SA TranscriptsThe following slide deck was published by Royal Gold, Inc. in conjunction with their 2020 Q4 earnings call.
Gold continues to be a scarce commodity, and the fact that there have been no significant new gold discoveries since 2016 only adds to its supply pressure. Demand for gold, however, has continued to rise as investors have sought exposure and central banks have added to their gold reserves. Other than the odd headline when gold exceeded its previous September 2011 high of $1920, only gold bugs seem to be excited.
But both recent deflationary gold bull markets suggest that a price over $3,000 is reasonable in our view. In recent commentaries, we have argued that gold has developed into an asset class with both long duration and short duration qualities, and an asset with positive convexity features. With gold prices surpassing $2,000/oz recently, the monetary metal has now made new all-time highs versus all the world’s major fiat currencies.
Year to date, the precious metals complex continues to outperform as gold has attained “escape velocity,” i.e., it has gravitationally moved away from other asset classes. The precious metals complex set off fireworks in July as gold bullion reached all-time highs. Silver bullion and gold mining equities broke through significant long-term resistance levels to further improve their bullish standing. But besides mining stocks, today there are exchange-traded funds that do offer some investment exposure to gold for fund managers.
Initially, the gold price continued rising to $1680 on 9 March, but by 18 March it finally reacted, falling to $1471 in only nine trading sessions.
Oil
COVID-19 has had a dramatic effect on oil demand and the energy companies that supply crude oil and refined product (see PSX And The Future of Refining). That’s bad news for refiners, and real bad news for Cenovus since it depends on refining to help prop-up the low margin oil sands production. For the $13.3 billion price tag, Cenovus took over assets that had a production of ~280,000 boe/d, most of it low-margin oil sands production. 6, 2020 3:20 PM ET|| About: Murphy Oil Corporation (MUR)by: SA TranscriptsThe following slide deck was published by Murphy Oil Corporation in conjunction with their 2020 Q2 earnings call.
That later has cut the legs out from under its JV with PSX which had, heretofore, been greatly helping prop-up the company’s low margin oil sands production. Alberta’s mandated oil sands production cuts are still in place, and that greatly helps CVE as companies like Suncor (SU) have to share the pain. This not only caused massive oil demand destruction but also hit refiners right between the eyes due to the massive drop in jet-fuel and gasoline.
That said, note the spread begins to blow out again in December ($-15/bbl), which starts to get problematic for Cenovus and its relatively high-cost oil sands production.
When that didn’t get built, oil sands production backed up and Western Canadian Select (“WCS”) ended up trading at as much as a $50/bbl discount to WTI. Cenovus (CVE) took all the proper steps to right the ship after purchasing the vast majority of ConocoPhillips (COP) oil sands operations in March of 2017. Cenovus has taken a direct hit from COVID-19 due to both lower crude prices and massive demand destruction for both jet-fuel and gasoline.
Not hyperbole to say that 2Q 2020 was arguably the most challenging in the history of the oil and gas business. The truth is this: although it is a Canadian company, Cenovus is very dependent on the US for crude oil exports and for its refining and marketing profits. Yet, Cenovus continued to struggle with the new oil sands operations. As for natural gas prices, the recent pullback was largely expected.
LNG economics will continue to dictate the effective ceiling for prices in the near term. In addition, the falling US$ could be a tailwind for crude prices. Once those worries disappeared (over this past weekend), prices quickly rallied to the LNG ceiling before fading away. 6, 2020 3:33 PM ET|| About: Cheniere Energy, Inc. (LNG)by: SA TranscriptsThe following slide deck was published by Cheniere Energy, Inc. in conjunction with their 2020 Q2 earnings call. Now despite the fact that September LNG cargoes are all fixed, this does not mean prices will rally to LNG economics.
That later has cut the legs out from under its JV with PSX which had, heretofore, been greatly helping prop-up the company’s low margin oil sands production. Alberta’s mandated oil sands production cuts are still in place, and that greatly helps CVE as companies like Suncor (SU) have to share the pain. This not only caused massive oil demand destruction but also hit refiners right between the eyes due to the massive drop in jet-fuel and gasoline.
That said, note the spread begins to blow out again in December ($-15/bbl), which starts to get problematic for Cenovus and its relatively high-cost oil sands production.
When that didn’t get built, oil sands production backed up and Western Canadian Select (“WCS”) ended up trading at as much as a $50/bbl discount to WTI. Cenovus (CVE) took all the proper steps to right the ship after purchasing the vast majority of ConocoPhillips (COP) oil sands operations in March of 2017. Cenovus has taken a direct hit from COVID-19 due to both lower crude prices and massive demand destruction for both jet-fuel and gasoline.
Not hyperbole to say that 2Q 2020 was arguably the most challenging in the history of the oil and gas business. The truth is this: although it is a Canadian company, Cenovus is very dependent on the US for crude oil exports and for its refining and marketing profits. Yet, Cenovus continued to struggle with the new oil sands operations. As for natural gas prices, the recent pullback was largely expected.
LNG economics will continue to dictate the effective ceiling for prices in the near term. In addition, the falling US$ could be a tailwind for crude prices. Once those worries disappeared (over this past weekend), prices quickly rallied to the LNG ceiling before fading away. 6, 2020 3:33 PM ET|| About: Cheniere Energy, Inc. (LNG)by: SA TranscriptsThe following slide deck was published by Cheniere Energy, Inc. in conjunction with their 2020 Q2 earnings call. Now despite the fact that September LNG cargoes are all fixed, this does not mean prices will rally to LNG economics.
United States
In Ms Trump’s book, the 55-year-old folds back the curtain on the Trump family’s private life and how the president’s upbringing has made him “the world’s most dangerous man.” Donald Trump’s niece warns that the re-election of her uncle would herald “the end of American democracy” in a new book that explores the president’s life and psychological health. The tell-all book by President Donald Trump’s niece depicts a family riven by greed and betrayal over generations that turned him into “the world’s most dangerous man”.
As a clinical psychologist, Mary Trump states in the book that her uncle, the president, has all nine of the clinical criteria displayed by narcissists. SolarEdge now seems to be in a significant market share losing mode in the US and gaining back share is going to be much harder than retaining the share. Having endured a miserable time working for the family real estate business under his father, Fred Trump Sr, Freddy pursued a career as a pilot for Trans World Airlines.
The president’s niece reports being blown away by what her uncle said about Lara Trump, the wife of presidential son Eric Trump. Mary Trump, the 55-year-old daughter of his late brother, reportedly describes many scenes in Too Much and Never Enough, released next week, but one stands out. Even amid high unemployment that could again soar amid a spike in confirmed cases, Mr Trump said the “economy is coming back and it’s coming back strongly.”
The other Fed policy objective would be to keep the USD from strengthening in an uncontrolled manner; even better, would be a steady path to lower levels.
She adds that his father’s failure to make the younger Trump “feel safe or loved” during this time would “scar him for life”. It begins by pointing out Mr Kushner’s involvement in the administration’s handling of the pandemic, stating: “President Trump gives lots of jobs to his son-in-law, Jared Kushner. Mary’s father, Fred Jr, was president Trump’s eldest brother. The publisher, Simon & Schuster, describes the book as a “revelatory, authoritative portrait of Donald J. Trump and the toxic family that made him”.
She also says Mr Trump got $400m from his father’s real estate business despite claiming to be a self-made success story. Ms Trump writes that Donald’s sister, Maryanne Trump Barry, questioned his fitness for office after he announced he was running for president. These companies are still minuscule compared with Wall Street, but the campaign is working: OneUnited Bank, the largest Black-owned bank, recently received $50 million of new deposits.
A particularly damning revelation concerns the death of Fred Trump Jr, the eldest son, known as Freddy and considered the black sheep of the family. None!” His niece, a clinical psychologist, writes that Mr Trump shows all the signs of having a narcissistic personality. CNBC screened for stocks in the Nasdaq-100, which is made up of the largest non-financial stocks in the broader index, to see where analysts were the most bullish.
As a clinical psychologist, Mary Trump states in the book that her uncle, the president, has all nine of the clinical criteria displayed by narcissists. SolarEdge now seems to be in a significant market share losing mode in the US and gaining back share is going to be much harder than retaining the share. Having endured a miserable time working for the family real estate business under his father, Fred Trump Sr, Freddy pursued a career as a pilot for Trans World Airlines.
The president’s niece reports being blown away by what her uncle said about Lara Trump, the wife of presidential son Eric Trump. Mary Trump, the 55-year-old daughter of his late brother, reportedly describes many scenes in Too Much and Never Enough, released next week, but one stands out. Even amid high unemployment that could again soar amid a spike in confirmed cases, Mr Trump said the “economy is coming back and it’s coming back strongly.”
The other Fed policy objective would be to keep the USD from strengthening in an uncontrolled manner; even better, would be a steady path to lower levels.
She adds that his father’s failure to make the younger Trump “feel safe or loved” during this time would “scar him for life”. It begins by pointing out Mr Kushner’s involvement in the administration’s handling of the pandemic, stating: “President Trump gives lots of jobs to his son-in-law, Jared Kushner. Mary’s father, Fred Jr, was president Trump’s eldest brother. The publisher, Simon & Schuster, describes the book as a “revelatory, authoritative portrait of Donald J. Trump and the toxic family that made him”.
She also says Mr Trump got $400m from his father’s real estate business despite claiming to be a self-made success story. Ms Trump writes that Donald’s sister, Maryanne Trump Barry, questioned his fitness for office after he announced he was running for president. These companies are still minuscule compared with Wall Street, but the campaign is working: OneUnited Bank, the largest Black-owned bank, recently received $50 million of new deposits.
A particularly damning revelation concerns the death of Fred Trump Jr, the eldest son, known as Freddy and considered the black sheep of the family. None!” His niece, a clinical psychologist, writes that Mr Trump shows all the signs of having a narcissistic personality. CNBC screened for stocks in the Nasdaq-100, which is made up of the largest non-financial stocks in the broader index, to see where analysts were the most bullish.
China
In terms of the availability of short-term liquidity in the banking system, the PBOC’s open-market operations have been quite balanced and liquidity even tightened a little.
Europe
As shown in my recent article on PSX, jet-fuel demand remains depressed, and Americans have been banned from entering the EU, China, Canada, the Bahamas, and many other destinations. The European Central Bank has ordered EU banks to halt dividend payments and buybacks at least until October 2020.
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