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Wed, 22nd February 2017

Anirudh Sethi Report

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Archives of “benchmark” Tag

Moody’s raises outlook on Russia rating to ‘stable’

Moody’s on Friday became the latest ratings agency to lift its outlook on Russia’s credit rating, upgrading it from ‘negative’ to ‘stable’, citing both a fiscal strategy — that is expected to lower the country’s dependence on energy and replenish its savings — and the gradual economic recovery.

The ratings agency had confirmed Russia’s Ba1 rating, which is one notch below investment grade, in April 2016, but assigned it a negative outlook at the time to reflect an erosion of the government’s fiscal savings amid a downturn in crude prices. But on Friday, it said the recovery in the country’s economy following a nearly two-year long recession, alongside the fiscal consolidation strategy, have eased the risks that it had identified last year.

Russia’s deficit-to-GDP ratio is now forecast to narrow by roughly one percentage point per year between 2017 and 2019 and Moody’s said this new target was “achievable” because the government’s “oil price and revenue assumptions are sufficiently conservative”.

Moody’s now believes that the downside risks identified in April 2016 have diminished to a level consistent with a stable outlook. The stabilization of the rating outlook partly reflects external events, and in particular the increase in oil prices to a level consistent with the government’s budget assumptions. The stable outlook also reflects the plans the government has put in place to consolidate its finances over the medium term, and the slow recovery in the economy following almost two years of recession.

Rival raters S&P and Fitch have also boosted their outlook on the country in recent months, as external risks to the oil-producing nation ease.

WTI/RBOB Tumble As US Crude Inventory Hits Record High

Following last week’s massive inventory build (and hope for improved gasoline demand), API reports another much bigger-than-expected build (Crude +9.94mm versus +3.5mm exp) and WTI and RBOB prices tumbled.

API

  • Crude +9.94mm (+3.5mm exp)
  • Cushing -1.27mm (+500k exp)
  • Gasoline+720k
  • Distillates +1.5mm

This wil be the 6th weekly build in a row for crude (and 3rd week of major builds)…

If the DOE data is anything loike the API data then this will be a new record for US crude inventory…

Overnight US Market :Dow closed -6 points.

Stocks closed mixed Thursday as investors shied away from riskier assets amid renewed concerns over U.S. President Donald Trump’s policies and didn’t find much to get excited about in the latest batch of earnings reports from U.S. companies.

The Dow Jones industrial average fell 6.03, or less than 0.1%, to 19,884.91. The Standard & Poor’s 500 index rose 1.30, or 0.1%, to 2280.85 and the Nasdaq composite index fell 6.45 points , or 0.1% to 5636.20.

Investors were rattled by the latest news from the Trump administration, including a phone call in which he warned Mexico’s president he might send in troops and another about a tense exchange with Australia’s leader over refugees. Following the Trump rally in the wake of his election victory last November, stock gains appear to be petering out with investors getting jittery in light of Trump’s dramatic policy announcements since taking office.

Investors are also looking to Friday’s closely watched jobs report, the first that will be under the tenure of President Trump. Economists expect employers created 175,000 jobs in January, and the unemployment rate remained at 4.7%.

Overnight US Market :Dow closed +32 points

Stock indexes wavered between small gains and losses before ending mixed Thursday as investors sized up the latest company earnings news. Consumer goods and industrial stocks climbed the most, while health care and utilities were among the biggest laggards.

The Dow Jones industrial average climbed further above the 20,000 level it passed Wednesday. gaining 32 points, or 0.2% to 20,100.91.

Wall Street came off solid gains from the day before. The Dow Jones industrial average, after topping the magic 20K milestone and staying there, hit a record closing high along with the Nasdaq composite and the S&P 500.

On Thursday the Nasdaq slipped fractionally, losing just 0.02% to 5655.18. Off a little less than 0.1% was the S&P 500, now at 2296.68.

It’s been a record-making week on Wall Street. The S&P 500 index and Nasdaq composite closed at all-time highs on Tuesday and Wednesday. The Dow, which tracks 30 major industrial companies, added its own milestone Wednesday after it breached the 20,000 mark for the first time.

The market is getting a general boost from strong company earnings and investor optimism that the Trump administration’s policies on taxes, regulation and trade will be good for business.

Oil  prices jumped as benchmark U.S. crude oil was up $1.07, or 2%, at $53.82 per barrel in New York. Brent crude, used to price international oils, was up $1.08, or 1.9%, at $56.50 a barrel in London.

Overnight US Markets :Dow closed + 113 points.Nasdaq Hits New High

Stocks jumped Tuesday as the S&P 500 and Nasdaq hit new all-time highs and the Dow moved back up toward the 20,000 level.

The Dow Jones industrial averagegained 113 points, or 0.6%, to 19,912.71. The Standard & Poor’s 500 index climbed 0.7% to an all-time closing high of 2280.07. The tech-heavy Nasdaq composite index rose 0.9% to set a new closing record of 5600.96.

Materials and financial companies led the stock indexes higher in afternoon trading as investors sized up the latest round of company earnings news. Energy stocks also rose as crude oil prices headed higher. Health care, phone companies and other high-dividend stocks were among the biggest laggards as bond yields rose.

The heads of General Motors, Ford Motor and Fiat Chrysler Automobiles met with President Donald Trump early Tuesday. Trump wants the automakers to build new factories in the U.S. He’s warned of a “substantial border tax” on companies that move manufacturing out of the country and promised tax advantages to those that produce domestically. GM (GM) shares gained 1%, Ford (F) added 2.4% and  Fiat Chrysler (FCAU) jumped 5.9%.

Trump’s latest moves on trade and regulations have raised concerns over future access to the U.S. market, particularly among Asian countries. Trump signed a memorandum saying the U.S. will withdraw from the trade pact known as the Trans-Pacific Partnership. He also said he would renegotiate the North American Free Trade Agreement.

“The lack of any key U.S. economic data overnight had dealers focused exclusively on the Trump administration’s trade policy and the signing of the executive order to pull out of the TPP,” said Stephen Innes, senior trader at Oanda, of the Trans-Pacific Partnership.

Benchmark U.S. crude  rose 43 cents, or 0.8%, to $53.18 a barrel in New York. Brent crude, used to price international oils, gained 21 cents, or 0.4 %, at $55.44 a barrel in London.

The 10-year Treasury yield jumped to 2.47% from 2.40% late Monday.

Overnight US Market :Dow closed -27 points

U.S. stocks fell Monday as investors pored over the latest crop of company earnings and deal news. Energy companies were down the most as crude oil prices headed lower. Real estate stocks led the gainers. Traders also had their eye on the White House as President Donald Trump reaffirmed plans to slash regulations on businesses and tax foreign goods entering the country.

The Dow Jones industrial average dropped 27.40 points, or 0.1%, to close at 19,799.85. The Standard & Poor’s 500 index slid 6.11, or 0.3%, to 2265.20 and the Nasdaq composite index dipped 2.39, or less than 0.1%, to 5552.94.

At a White House meeting early Monday with business leaders, Trump repeated a campaign promise to cut regulations by at least 75%. He also said there would be advantages to companies that make their products in the U.S., suggesting he will impose a “substantial border tax” on foreign goods entering the country.

Energy stocks took a hit as oil prices fell. Benchmark U.S. crude was down 0.9% to $52.75 a  barrel in New York. Brent crude, used to price international oils, was down 0.4% at $55.28 per barrel in London.

The 10-year Treasury yield dropped to 2.40% from 2.47% late Friday.

In company news:

Oil supply cuts may not be extended after June – Saudi Arabia’s oil minister

Saudi Arabia’s oil minister said that the supply cuts agreed by Opec and non-Opec countries at the end of last year may not need to be extended beyond June, as rising demand and strong compliance should have pushed the market towards balance by then.

Khalid al Falih, speaking at an industry event in Abu Dhabi, struck a bullish pose saying the cuts, which began on January 1, would have their “full impact by the first half” of 2017.

“We don’t think it’s necessary given the level of compliance…and given the expectations of demand,” Reuters reported.

He added, however, that the group could still extend the six-month deal “if there was a need”.

Brent crude, the international oil benchmark, was up 38 cents at $55.83 a barrel by 10am London time while US benchmark West Texas Intermediate gained 32 cents to $52.69 a barrel.

Overnight US Market :Dow closed -63 points (Intraday was down 180 pts )

Stocks dipped Thursday but finished off early, sharp lows, giving back  gains from the day before.

The Nasdaq composite, off 0.3%, snapped a seven-day winning streak and posted its first loss of 2017.

Losing as much as 180 points earlier, the Dow settled for a 63-point loss, 0.3% lower, to 19,891 even. The S&P 500 slipped 0.2%.

Financial, industrial and technology stocks were down the most, while phone company and real estate stocks edged higher. Investors were turning their focus to the next wave of corporate earnings reports in the weeks ahead.

Banks and other financial companies were down as the yield on the 10-year Treasury note fell. Lower yields mean lower interest rates on loans and lower profits for banks. The yield on the 10-year Treasury slipped to 2.35% from 2.37% late Wednesday.

Benchmark crude oil finished up 76 cents, or 1.5%, to $53.01 a barrel in New York.

In Europe, Germany’s DAX ended down 1.1%, while France’s CAC 40 lost 0.5% despite new data showing eurozone industrial production jumped 1.5% in November. Britain’s FTSE 100 ended flat. In Asia, Japan’s benchmark Nikkei 225 dropped 1.2%. Hong Kong’s Hang Seng dipped 0.5%, while Australia’s S&P/ASX 200 slipped 0.1%. South Korea’s Kospi bucked the trend to rise 0.6%.

Overnight US Market :Dow closed +99 points. 46 pts short to cross 20k;Nasdaq at new high

Stocks ended higher Wednesday — and the super-hot Nasdaq notched another new high — in a volatile session that saw sharp swings after President-elect Donald Trump met with the press in a news conference for the first time in six months.

The Dow Jones industrial average climbed 99 points, or 0.5% to 19,954.28, while the S&P 500 ended up 0.3% to about a point and half shy of its record closing high of 2276.98.

It was the seventh winning session in a row for the Nasdaq composite, which gained 0.2%. It notched a new closing high of 5563.65, a dozen points above the previous record set the day before.

Health care stocks got hit after Trump criticized the industry moving production overseas as well as the bidding process for drugs. Energy stocks continued their strength as oil prices headed higher.

The health care sector was the biggest loser among the S&P 500 sectors. Trump said the government has to create new bidding procedures for the pharmaceutical drug industry “because they’re getting away with murder.” The remarks sent the S&P health care sector down 1.7%. Several pharmaceutical companies slumped, with Endo International (ENDP) falling 9%, the biggest decliner in the S&P 500. Perrigo (PRGO) lost 7% and Mallinckrodt (MNK) tumbled 7%.

Energy stocks were the biggest winners as oil prices jumped. Benchmark U.S. crude rose rose $1.43, or 2.8%, to $52.25 a barrel in electronic trading. Shares of Exxon Mobil rose 0.8%.

Bond prices rose after Trump’s news conference, sending the yield on the 10-year Treasury note down to 2.37% from 2.38% Tuesday.

US oil output to rise 1.3% in 2017, EIA says

US oil production has turned a corner after a long period of weak petroleum prices, the government said, with volumes rising for the first time since early 2015.

The Energy Information Administration forecast that oil output from the US will increase 1.3 per cent to 9m barrels per day in 2017, abandoning an earlier prediction of a 0.9 per cent fall.

In the first forecast for 2018 in its monthly Short-Term Energy Outlook, the statistical agency said US crude production will rise another 3.3 per cent, or 300,000 b/d, to 9.3m b/d. Production hit bottom last September, EIA said.