Agriculture
USDA said that net Upland Cotton export sales were 288,700 bales this year and 900 bales next year. Open bolls were reported in both regions and Cotton fiber was discolored or else blown out of the bolls due to the rain and winds. On-call positions represent spot cotton sold to or purchased from a merchant, based on New York cotton futures contracts of 500-pound bales. The discolored Cotton is getting a chance to recover now as it has turned dry and the fiber can be naturally bleached by the Sun.
Short sellers have largely been riding high this year, with a handful of notable victories, including Nikola, Wirecard and Luckin Coffee. General Comments: Cotton closed lower on trading tied to the higher US Dollar and the return of the Coronavirus outbreak to the US and Europe. Hurricane Delta moved through the Delta and Southeast a couple of weeks ago and did some damage to Cotton. DJ On-Call Cotton – Oct 29 As of Oct 23.
Short sellers have largely been riding high this year, with a handful of notable victories, including Nikola, Wirecard and Luckin Coffee. General Comments: Cotton closed lower on trading tied to the higher US Dollar and the return of the Coronavirus outbreak to the US and Europe. Hurricane Delta moved through the Delta and Southeast a couple of weeks ago and did some damage to Cotton. DJ On-Call Cotton – Oct 29 As of Oct 23.
Currencies
Source: Bloomberg Despite gains this week, the Dollar was lower on the month (after September’s big surge) for the 6th month lower in the last 7… However, the Australian Dollar continues to buck the trend as 51.96% of traders are currently net-long AUD/USD compared to 56.12% last week. The failure of Congress and the White House to agree on a new stimulus package weighed on the inflation trade and lifted the U.S. dollar index. While the outlook for the euro is grim, the main driver of market flows next week will be the US election and the impact it has on risk appetite.
Any increase in de-dollarization can hurt the dollar’s reputation of being the world’s reserve currency. If Biden wins, stocks are expected to fall and the dollar could weaken. (Note: All dollar values are in Canadian unless otherwise stated) (Source: Company Presentation) On Monday night, MEG released Q3 earnings. If Trump wins, stocks should rally and the dollar could rise.
Euro fell the most this week but that was not a surprise.
Any increase in de-dollarization can hurt the dollar’s reputation of being the world’s reserve currency. If Biden wins, stocks are expected to fall and the dollar could weaken. (Note: All dollar values are in Canadian unless otherwise stated) (Source: Company Presentation) On Monday night, MEG released Q3 earnings. If Trump wins, stocks should rally and the dollar could rise.
Euro fell the most this week but that was not a surprise.
Metals
However, a nearly 6% drop in grades from 9.1 grams per tonne gold to 8.6 grams per tonne gold offset the higher tonnes processed. The gold production remains strong, the production costs are relatively under control, and what is important, the gold price went notably up during Q3. Although the Q3 results were really good, the gold price and also the stock markets are experiencing some weakness right now, which weighs on the gold miners negatively. Finally, the big winter gold rally climaxes in late February on major Chinese New Year gold buying flaring up in Asia.
According to the World Gold Council, from 2015 to 2019 jewelry demand averaged 51% of gold’s overall global demand! While gold production slipped by 2% year-over-year, Pretium delivered 17% revenue growth thanks to one of the highest realized gold (GLD) prices in the sector. Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold.
This gold seasonality is fueled by well-known income-cycle and cultural drivers of outsized gold demand from around the world. However, Pretium is expected to vault past its peers this year with better performance operationally, a higher gold price, and lower interest expense with long-term debt continuing to drop. Finally, while gold production did soften on a quarterly basis, it is actually up marginally year-to-date, with 259,400~ ounces produced vs. 258,200~ ounces last year. Instead, gold’s major seasonality is demand-driven, with global investment demand varying considerably depending on the time in the calendar year.
Certej has reserves of 2.402 million toz gold and 15.555 toz silver.
So legions of husbands are likely to buy their frazzled wives impressive gold jewelry this year. In Q3, Eldorado produced 136,922 toz gold, which is in line with 137,782 toz produced in Q2 and almost 35% more than in Q3 2019. Tocantinzinho has reserves of 1.781 million toz gold and also a completed feasibility study that dates back to 2015. Therefore, after accounting for the $42/oz headwind and the 9% drop in gold ounces sold, the costs are actually nowhere near as bad as they look.
But it would take the gold price to decline significantly for Eldorado to get back to this level. For Eldorado and its shareholders, especially the Skouries project with a projected annual production of 140,000 toz gold, at an AISC of only $215/toz, is important. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities see, as its mined supply remains relatively steady year-round. On the other hand, if the gold price starts recovering, Eldorado should re-test the upper boundary of its trading range somewhere in the $15 area.
According to the World Gold Council, from 2015 to 2019 jewelry demand averaged 51% of gold’s overall global demand! While gold production slipped by 2% year-over-year, Pretium delivered 17% revenue growth thanks to one of the highest realized gold (GLD) prices in the sector. Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold.
This gold seasonality is fueled by well-known income-cycle and cultural drivers of outsized gold demand from around the world. However, Pretium is expected to vault past its peers this year with better performance operationally, a higher gold price, and lower interest expense with long-term debt continuing to drop. Finally, while gold production did soften on a quarterly basis, it is actually up marginally year-to-date, with 259,400~ ounces produced vs. 258,200~ ounces last year. Instead, gold’s major seasonality is demand-driven, with global investment demand varying considerably depending on the time in the calendar year.
Certej has reserves of 2.402 million toz gold and 15.555 toz silver.
So legions of husbands are likely to buy their frazzled wives impressive gold jewelry this year. In Q3, Eldorado produced 136,922 toz gold, which is in line with 137,782 toz produced in Q2 and almost 35% more than in Q3 2019. Tocantinzinho has reserves of 1.781 million toz gold and also a completed feasibility study that dates back to 2015. Therefore, after accounting for the $42/oz headwind and the 9% drop in gold ounces sold, the costs are actually nowhere near as bad as they look.
But it would take the gold price to decline significantly for Eldorado to get back to this level. For Eldorado and its shareholders, especially the Skouries project with a projected annual production of 140,000 toz gold, at an AISC of only $215/toz, is important. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities see, as its mined supply remains relatively steady year-round. On the other hand, if the gold price starts recovering, Eldorado should re-test the upper boundary of its trading range somewhere in the $15 area.
Oil
While Ring should be able to keep afloat even with weak oil prices, it will likely pay a high price from continued dilution the longer weak oil prices continue. There’s no oil price war this time around.In the meantime, global oil inventories will continue to decline as these conflicting signals rage on. This year, the expectation from management is for the firm to generate oil output of between 15.7 million barrels and 15.8 million barrels. Ring may also face additional dilution in the future if oil prices remain low, as a Spring 2021 borrowing base reduction may result in another offering.
A lower valuation such as $500 million at mid-$50s oil would reduce Ring’s upside to around $1.25 per share. The risk for Ring Energy is that oil prices continue to stay around the low-$40s or lower well into 2021 due to the pandemic. The company reported better-than-expected revenue and a net loss that was 37% smaller than the previous quarter, helped by higher oil prices.
While the moves to issue equity appear to have been necessary, continuing dilution will considerably reduce Ring’s upside in the event of oil prices recovering. The only thing the company needs to start working for them is the price of oil. Unfortunately, the biggest driver (the price of oil) is in a tough spot that doesn’t look ready to jump into recovery mode just yet. Crude Value Insights offers you an investing service and community focused on oil and natural gas. What is clear is that Exxon will keep bleeding cash at current oil prices.
However, I do believe this all depends on the price of oil at this point as mentioned earlier. Obviously, if the price of oil doesn’t ever recover, I will be dead wrong and the first to admit it. The oil and gas firm has managed to not only survive recent downturns in pricing, it seems to be thriving in the current environment. The demand impact for Europe has yet to be seen, but oil traders have likely already priced this in by selling first and asking questions later.
I do have other oil exposure to the industry via NuVista Energy (OTCPK:NUVSF), Whitecap Resources (OTCPK:SPGYF), and Trillion Energy (OTCPK:TCFF) that are holding up well given the current market.
Times have been tough recently for oil and gas E&P (exploration and production) firms. But there’s an important distinction here between today and March when oil prices fell off a cliff. Ring Energy’s Q3 2020 operational update met expectations, with production averaging 9,219 BOEPD (88% oil) after bringing shut-in wells back online in June and early July.
A lower valuation such as $500 million at mid-$50s oil would reduce Ring’s upside to around $1.25 per share. The risk for Ring Energy is that oil prices continue to stay around the low-$40s or lower well into 2021 due to the pandemic. The company reported better-than-expected revenue and a net loss that was 37% smaller than the previous quarter, helped by higher oil prices.
While the moves to issue equity appear to have been necessary, continuing dilution will considerably reduce Ring’s upside in the event of oil prices recovering. The only thing the company needs to start working for them is the price of oil. Unfortunately, the biggest driver (the price of oil) is in a tough spot that doesn’t look ready to jump into recovery mode just yet. Crude Value Insights offers you an investing service and community focused on oil and natural gas. What is clear is that Exxon will keep bleeding cash at current oil prices.
However, I do believe this all depends on the price of oil at this point as mentioned earlier. Obviously, if the price of oil doesn’t ever recover, I will be dead wrong and the first to admit it. The oil and gas firm has managed to not only survive recent downturns in pricing, it seems to be thriving in the current environment. The demand impact for Europe has yet to be seen, but oil traders have likely already priced this in by selling first and asking questions later.
I do have other oil exposure to the industry via NuVista Energy (OTCPK:NUVSF), Whitecap Resources (OTCPK:SPGYF), and Trillion Energy (OTCPK:TCFF) that are holding up well given the current market.
Times have been tough recently for oil and gas E&P (exploration and production) firms. But there’s an important distinction here between today and March when oil prices fell off a cliff. Ring Energy’s Q3 2020 operational update met expectations, with production averaging 9,219 BOEPD (88% oil) after bringing shut-in wells back online in June and early July.
United States
Coronavirus fears are gripping markets, triggering high volatility – and it will get far busier in the election week in the US. Under President Trump, defense spending has increased as was expected but it should also be considered that defense spending budgets is not a clear-cut thing. We note as well that pro forma EPS of $0.17 smashed Wall Street’s expectations of $0.11, while Zendesk’s Q3 free cash flow also grew nearly 4x to $24.9 million. use the “Fed free money” to buy up any potential competitors and then start buying back your own shares, jacking your share price even as sales and profits stagnate.
Well, it appears rich investors must be thinking along the same lines because (NASDAQ: CSCO) was one of their top stocks they added to their portfolios last quarter. In 2016, once it became clear that Hillary Clinton would concede and Donald J. Trump would be the next President, stocks surged. GAAP operating income more than tripled to $778 million in the quarter, while EPS of $0.78 also grew just shy of 3x and smashed Wall Street’s $0.62 estimates.
An expected record economic rebound in the US and around the Globe in the 3rd quarter is quickly rolling over with estimates migrating closer to zero growth by year-end. Nasdaq is back at overnight lows… For example, despite falling by nearly 5% on October 30, a stock like Amazon (NASDAQ:AMZN) is still costly, even compared to itself historically. Markets also expect that this much stimulus will be inflationary because the Fed may have to monetize the new debt.
It would do nothing good to the image of the US as a stable partner, which already has come under significant pressure in recent years. Zendesk Q3 resultsSource: Zendesk Q3 shareholder letter Zendesk’s third-quarter revenue grew 24% y/y to $261.9 million, substantially beating Wall Street’s estimates of $253.7 million, or +21% y/y. Alpha TALKS Wall Street Breakfast is a weekly video covering what moved markets this week (WMMTW), featuring a panel of Seeking Alpha editors.
President Trump already has declared his intent to cut entitlement programs to reduce the national debt, while Biden is likely to increase taxes on the wealthy. Important to note though, that the qualitative test is no longer applicable (since the 2020 CCAR cycle) and the Fed can only object now, on a quantitative basis. In the US it may be stalled until the end of January, but investors will anticipate this confident eventuality and prevent stocks from falling too far.
The failure to pass stimulus in the US and our recent rise in hospitalizations have created modest downward pressure on our stock market.
He may have seen the writing on the wall, covering himself in the case of a Trump victory next week. Net bookings, meanwhile, grew 46% y/y to $1.77 billion and smashed Wall Street’s expectations of $1.70 billion (+40% y/y). My forecast is that Trump will win, and markets will be disappointed at the size (and spending priorities) of any package that results.
Well, it appears rich investors must be thinking along the same lines because (NASDAQ: CSCO) was one of their top stocks they added to their portfolios last quarter. In 2016, once it became clear that Hillary Clinton would concede and Donald J. Trump would be the next President, stocks surged. GAAP operating income more than tripled to $778 million in the quarter, while EPS of $0.78 also grew just shy of 3x and smashed Wall Street’s $0.62 estimates.
An expected record economic rebound in the US and around the Globe in the 3rd quarter is quickly rolling over with estimates migrating closer to zero growth by year-end. Nasdaq is back at overnight lows… For example, despite falling by nearly 5% on October 30, a stock like Amazon (NASDAQ:AMZN) is still costly, even compared to itself historically. Markets also expect that this much stimulus will be inflationary because the Fed may have to monetize the new debt.
It would do nothing good to the image of the US as a stable partner, which already has come under significant pressure in recent years. Zendesk Q3 resultsSource: Zendesk Q3 shareholder letter Zendesk’s third-quarter revenue grew 24% y/y to $261.9 million, substantially beating Wall Street’s estimates of $253.7 million, or +21% y/y. Alpha TALKS Wall Street Breakfast is a weekly video covering what moved markets this week (WMMTW), featuring a panel of Seeking Alpha editors.
President Trump already has declared his intent to cut entitlement programs to reduce the national debt, while Biden is likely to increase taxes on the wealthy. Important to note though, that the qualitative test is no longer applicable (since the 2020 CCAR cycle) and the Fed can only object now, on a quantitative basis. In the US it may be stalled until the end of January, but investors will anticipate this confident eventuality and prevent stocks from falling too far.
The failure to pass stimulus in the US and our recent rise in hospitalizations have created modest downward pressure on our stock market.
He may have seen the writing on the wall, covering himself in the case of a Trump victory next week. Net bookings, meanwhile, grew 46% y/y to $1.77 billion and smashed Wall Street’s expectations of $1.70 billion (+40% y/y). My forecast is that Trump will win, and markets will be disappointed at the size (and spending priorities) of any package that results.
Europe
Germany and France announced national lockdowns, and experts urged UK Prime Minister Boris Johnson to follow suit. But what Christine Lagarde had said earlier today was that the European system is “losing momentum more rapidly than expected.” Macron’s perceived attacks on triggered a personal insult from Turkey’s President Erdogan. First, Chief EU Negotiator Michel Barnier extended his stay in London, signaling progress had been made.
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