Daily Close | Forex, Metals, Oil, Agriculture August 17, 2020



Export demand is the primary demand for US Cotton so poor weekly sales means weak overall demand. less General Comments: Cotton closed a little higher for the week and in response to the USDA production reports that showed less production this year. Export demand for US Cotton has been poor for the last few weeks. The hot and dry weather extends north into Oklahoma and western Kansas.


With solid cash flow continuing and now a weaker dollar likely to help short term results, I’m here today to discuss what I think the likely raise will be. A recently weakening dollar will also help with results in the short term, so any extra cash flow can be used for debt repayments. In terms of the Imperial Project, the Fed’s constant goosing of the stock market is only useful to the degree it serves dollar hegemony. Further, a rise in mergers and acquisitions and a weak dollar led to a spike in the stock market.
On that note, a resurgence of currency volatility stands out as one potential catalyst that might fuel a reversal higher by the US Dollar. The fluctuating performances of the euro against the US dollar and other currencies in which the Company does business pose both upside and downside risk. A pessimistic view of the future would be stagflation and a weakening US dollar along with widespread poverty and massive homelessness.
The increase in the current ratio is due to a $714 Million dollar increase from a revolving credit facility for COVID-19. In the past few years, raises have been more muted, as a stronger dollar has significantly pressured the company’s results. The question remains how long the government is going to subsidize unemployment and what this is going to do to the economy and to the US dollar. The Brazilian Financial and Capital Markets Association said local corporations had seven dollar-denominated bond issues in July, totaling $3.7 billion, an increase of 48% from a year earlier.


(Source: Company Presentation) Hecla Mining released its Q2 results last week and reported quarterly gold production of 3.4~ million silver ounces and gold production of 60,000 ounces. Berkshire late Friday disclosed that it held a $565 million stake in Barrick Gold Corp., the world’s second-largest gold miner, at the end of the second quarter. If Buffett liked gold he could easily have bought the metal outright or bought the iShares Gold ETF (GLD) where there’s a lot of liquidity.
Nevertheless, the longer-term outlook for silver remains bullish (as for gold), with a recovery of the $30 per ounce region then heralding further bullish momentum to follow. Every quarter gold prices stay near $2k the company this is a terrific cash flow generating business. London is the focal point, dating back to the first gold rush from Brazil in 1697, according to the London Bullion Market Association, which oversees the market. Even if that happens, which would be a bear market for gold, the all-in-costs could drop because of cost cutting and deflationary pressure within the industry.
Here is how the gold market works, and why prices are on the rise now. If the price of gold goes up this does tend to bring supply online, albeit with a lag, and this pushes the price back down. There are two gold markets, closely linked because investment banks and other big players are active in both. During the quarter, the mine saw a massive bump in production to 470,000~ ounces of silver, up 170% from 174,000~ ounces produced in Q2 2019.
So far Chinese mills have managed to pass on higher iron ore prices and margins are still very healthy, suggesting sentiment will continue to be positive despite inflationary fears. Barrick Gold is one of the largest mining companies in the world. About 10 years of reserves on its balance sheet (that’s usually a highly conservative measure of what’s going to get mined) and currently gold is nearly $2k/ounce. This translated to a more than 10% increase in silver production year-over-year, with the company benefiting from its US-based mines being able to operate without much interruption.
An upward trend in Chinese and German domestic hot rolled steel coil (HRC) prices indicates market recovery from COVID-19-related restrictions in both countries, but at quite different paces.
Unless gold drops to around $950 the company remains profitable. Gold companies can be well-run businesses and from time to time they can be very profitable. I think it’s fair to say that you don’t make this bet if you believe gold is destined to crash.
It has an all-in cost of mining around $950/ounce of gold.


Source: EIA, HFI Research If you look at our US oil production matrix, US oil production has recovered back to ~11.7 mb/d. With valuations still completely disconnected with oil market fundamentals, we think investors should be positioned to take advantage of the oil bull market. So, the contrarian view is that US oil production rebounded much higher in July and August, and the consensus has a much lower figure. Our contrarian view on US oil production is that the rebound observed in July and August so far is way higher than what the consensus is estimating.
With all that said and done, US oil production has dropped a total of ~1.3 mb/d over the last 5 months or a decline of ~260k b/d per month. The company acts as a toll operator and its cash flow has been mostly protected from the collapse in oil prices. Another very important thing to keep in mind is that monthly US oil production decline is between ~250k b/d to ~300k b/d. For those thinking that the drop would immediately impact US oil production, you are being far too optimistic.
Our forecast for year-end is for US oil production to end around ~10.7 mb/d. That equates to roughly 70% of expected 2021 crude oil production. Predicting exact oil prices is a fool’s game in which I don’t indulge, so I’m not going to give you a price target for crude. So, while US oil production did surprise to the upside in the near-term, the decline will continue unabated. In the old model rigs would rise and fall pretty much in line with the price of oil.
Permian shale oil producer (PXD) recently announced a pretty solid Q2 EPS report highlighted by generating $165 million in free-cash-flow (~$1/share). Oil prices fell in the Spring as traders correctly bet that lockdowns would dent demand. USO which leverages the futures contract for WTI is another way to play a rising oil price. Baker Hughes You can see from the departure of the two curves at the end of April some new forces at work in the oil market.
UCO is a double leverage investment that yields spectacular returns on a basket of NYMEX crude futures when oil is rising.
Plus, Middle East oil products, European gas sector summer maintenance and coal-fired generation margins. Then there was the negative price scare in April when oil storage was near its peak.

United States

This time of year I would be expecting dividend increases from my two bank stocks, but the Fed prevented them from doing so this year. In September of last year, rumors circulated around the investment community, and reported by the Wall Street Journal (link,) that Groupon (GRPN) approached Yelp about an acquisition. The Fed whining about the need to prop up the economy via the stock market’s melt-up is an annoyance that these camps can no longer tolerate.
Per the Wall Street Journal, in 2015, Yelp once hired bankers to explore a sale (link) but for unknown reasons the process did not end in a sale. AMD has a very low margin product line (less than 20% GM) in game-console sales mainly to Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE). The US weather situation is mixed, with good rains noted in the Southeast and good conditions in the Midsouth. (Source: Nasdaq BlackBerry institutional data, seen here) The largest holder of the stock, Primecap Management, sold just under 3.5 million shares.
However, its future seems to be increasingly tethered to its ability to successfully navigate mergers and acquisitions (M&A) as well as a substantial judgment in a lawsuit against (NASDAQ:AAPL). However, it appears that CNBC’s survey might have been limited in scope in terms of the number of Wall Street executives offering a response. They’ve vowed not to let his fate be dictated from the outside or external interference in a crisis increasingly drawing in the US, Europe, and ally Russia.
On Monday at least 10 Wall Street firms initiated coverage on the company, which went public in July, with eight of the firms giving Jamf a buy-equivalent rating. As the media has reported, President Trump has sidelined headline-hogging Anthony Fauci in favor of Atlas, the former Stanford University Medical Center chief of neuroradiology. The US debt clock figures on employment are not encouraging (U.S. National Debt Clock : Real Time). 2019 cement consumption on the Italian market was 18.1m tons or 39% of the peak level, while in the US, 81%; and Germany, 97%.
If Trump continues to “go after the Postal Service,” he continued, it could lead to “the risk of a huge mess.” South Dakota and Sweden did virtually nothing to lock down or restrict their populations and they actually fared better than lockdown states in the US. Insurance risks in the US for damage resulting from natural disasters not covered by insurance are mostly unchanged.
He has been quoted in a variety of financial news publications, such as CNBC, the Wall Street Journal, and the New York Post.
All other industrialized countries besides the US have controlled the pandemic. An article by Barron’s noted that Trump does have the power to get the FDA to fast track a vaccine.


Six firms, including University of Oxford, Sinovac, Wuhan Institute of Biological Products/Sinopharm, Beijing Institute of Biological Products/Sinopharm, Moderna/NIAID, and BioNTech/Fosun Pharma/Pfizer are already in Phase 3 clinical trials.


Yet AUD and NZD do not share the kind of idiosyncratic risks that GBP does (with regard to Brexit), and thus broader economic and market factors more effectively apply.