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Fri, 26th May 2017

Anirudh Sethi Report

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Archives of “May 11, 2017” Day

OPEC Capitulates, Forecasts Surge In Shale Oil Production As Saudi Output Rises

The biggest highlight in today’s latest monthly OPEC oil market report for the month of May was OPEC finally capitulating to the “shale threat” and raising estimates for for non-OPEC supply growth in 2017 to 950Kbpd from the year prior, 64% or 370k higher than in the April estimate, amid a surge in U.S. output. In context, the outlook for non-OPEC growth is now 4 times higher than when OPEC announced cuts in November.

As shown in the table below, OPEC raised its 2017 U.S. supply growth outlook by 282kbpd in the past month, to 820k bpd.

The OPEC report also noted that OECD Inventories remains 276MM bbl above the five-year average. It also showed OPEC crude output declining by 2k bpd in April to 31.732m b/d according to secondary sources as 7 out of 13 members reduced output, however offset by a rebound in Saudi production to 9.954mmbpd, the highest since January. The biggest m/m changes:

  • Angola +97k b/d;
  • UAE, Libya -62k each
  • Saudi +49.2k b/d m/m to 9.954m b/d: OPEC secondary sources
  • Saudi +46.4k b/d to 9.946m b/d: Saudi direct comms to OPEC

Just These Ten Companies Account For Half % Of The S&P’s 2017 Returns

Two weeks ago – as of April 28 – we presented readers with a striking statistic from Goldman Sachs, showing just how much breadth in the market has collapsed and how dominant a handful of large cap companies have become in terms of both overall profitability and market impact:

 Year to date the top 10 contributors have combined to account for 37% of the S&P 500 index return (more than double their market cap representation of 17%). The concentration among the top five is even greater, with those firms – AAPL, FB, AMZN, GOOGL, and MSFT – accounting for 28% of the return and 12% of market cap

Fast forward less than two weeks later when the breakdown has shifted even more dramatically, and according to the latest breakdown from Goldman, as of May 10, just 10 companies are responsible for half, or 46% to be exact, of the entire S&P’s rally YTD.

Nasdaq’s “Big 5” Stocks Near $3 Trillion Market Cap

Since President Trump was elected – much to the heart-crushing chagrin of the billionaire class in Silicon Valley and its epic funding of Hillary – the big 5 stocks of the Nasdaq (Alphabet, Amazon, Apple, Facebook, and Microsoft) have gained a stunning $675 billion in market cap.

This pushes them near $3 trillion and well over 10% of the entire US equity market…

For context, Bloomberg notes that is more than the total value of stocks in any single equity market worldwide except the five largest: the U.S., China, Japan, Hong Kong and the U.K.

US Indices mixed. Nasdaq closes at another record.

S&P closes near the highs. Bullet proof market.

The US stock market is closing the session with mixed results from the major stock indices.
  • The S&P is closing up at 2.55 point and closing near the highs for the day at 2399.50. The low reache 2392.79.
  • The Nasdaq is closing up 8.5 points to 6129.14. This is another record close for that index. The high reached 6131.64. The low traded at 6103.875.
  • The Dow is the dog. It is closing down -35 points.  At the low, the index was down -91 points.