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Msg  66196 of 66440  at  11/11/2019 9:25:44 AM  by

carswell


The Launch Pad


Daily market commentary
The Launch Pad
November 11, 2019
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Today

Stocks along with oil and other commodities are weaker this morning after President Donald Trump poured a little molasses on the trade talk progress. It appears he believes that China wants a deal much more than he does. His comments about not agreeing on rolling back tariffs, despite trade talk progress has sent some mixed messages. He’s set to give a speech on Tuesday which should give more clues as to what exactly he means. For now, stocks are being sold off some. With markets at all-time highs and valuations a little stretched it’s not surprising to see some profit taking.

We’re not seeing a dramatic risk-off type posturing. The bond market is flat this morning and typical safe-have currencies such as the USD and Yen are actually lower. In fact, the best performing currency this morning is the British Pound as they head into the first full week of official election campaign mode.

The epicenter of the market weakness is Hong Kong, with the Hang Seng lower by -2.62%. A protestor was shot by police this morning during the morning commute. The unrest does not seem to be settling down at all and according to Hong Kong’s Lam: violence will not make the government yield to pressure.

November 11th has become a day of dichotomy. While we’re solemnly remembering those that fought bravely for our freedoms, China is busy with Singles Day, a 24 hour shopping event. Alibaba netted $1 billion in the first 68 seconds and $23 billion worth of sales in just the first nine hours. China is the worlds’ largest ecommerce country, and today is the day to top them all.

The big news over the weekend concerns Saudi Aramco’s IPO, which is already starting to raise red flags. A 600-page prospectus was released on Saturday which stated that the state-run giant would sell up to 0.5% of its shares; the deal is expected to value Aramco around $1.5-trillion. The report did not, however, include any third-party valuation on its reserves and failed to detail how much of the company would be floated in total, future commitments from cornerstone investors, or even how the government intends to use the proceeds from the sale. The company can also change its dividend policy without prior notice to its minority shareholders. As for the country’s commitments, the kingdom will be subject to a statutory lockup period for disposing of any shares after the listing for 6 months, and a contractual lockup period for 12 months. Furthermore, Aramco cannot list more shares for the first 6 months after trading initiates and will also be restricted from issuing additional shares for 12 months.

Meanwhile, in Canada, the Conservative government in Alberta announced on Friday that new conventional oil wells could be drilled without consideration to government production limits. The broader production cuts remain in place (for wells that aren’t new), but the goal was to incentivize oil companies to bring new jobs to Alberta. Canada is expecting a 10% drop in wells drilled in 2020, though this may help that number to a some extent. As one analyst put it “It’s definitely going to results in more wells and more jobs… but this is not the start of a boom.”

Jim Rogers, the investing guru who earned a 4,200% return with George Soros, told us everyone should read these 3 books that made a 'huge impression' on his career.

Interesting use of big techs well known company logo’s to shed insight into their companies diversity, or lack thereof.

Diversion: Cool visualization showing the bestselling music artists from 1969-2019.
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Company news

Apple co-founder Steve Wozniak is urging Wall Street regulators to investigate whether the algorithms used in the new Apple credit card discriminate against minorities and genders. He stated that he was able to borrow 10x more than his wife, even though they share banking data. Goldman Sachs is backing off guidance they gave in 2017 that they would generate an extra $5bb in revenue next year. The bank expects to announce a wider range of financial targets in January. It is rumored that Open Text is closing in on a deal to acquire Carbonite Inc. for $1.4bb. It is expected to be an all-cash deal for about $23 a share. Alibaba achieved more than $30.7bb in sales during Singles’ Day. Now the world’s largest shopping day, the 24 hours of sales surpasses the five-day spree that runs from Thanksgiving and ends on Cyber Monday.

Commodities

Markets woke up confused today as U.S. President Trump seemingly brushed off optimism regarding the impending lifting of U.S.-China tariffs; subsequently, oil went for a -1.10% dip, with WTI crude futures trading around US$56.61 at the time of writing. Headlines are mixed this morning. On the demand side, we’re seeing the aforementioned sentiment confusion coupled with softer producer price data from China this weekend. Further, auto sales tumbled for a 16th consecutive month in October. On the supply side, analysts are fretting over whether current crude supplies stand in excess. Saudi Arabia, expectedly, raised its oil output to 10.3mm bpd in October to replenish inventories drawn upon in September. Elsewhere, Iran discovered a new oilfield in the southwest region of it country that has the potential to boost its reserves by about a third (~53mm bbl). Back in America, the Keystone pipeline has returned to service at a reduced pressure, with gradual increases of volumes expected in the near-term.

Gold prices are up slightly as trade uncertainty and bolstered unrest in Hong Kong persist, but still remain under the US$1,500/oz mark; at the time of writing, the spot price for the yellow metal was up +10 bps to US$,1464.30. In other commodities news, the Thai government has asked farmers in 22 provinces to not grow off-season rice. The move comes as the country braces itself for a dry spell amid low water levels in main reservoirs. Off-season growing usually commences in November and harvest begins in February. Egypt has stated that the country has enough strategic imported rice reserves to last until the first week of February. Nonetheless, the country is piling its own cash to buy rice from its local farmers.



Chart of the day

Markets

Quote of the day

In Flanders Fields – John McCrae

In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved, and were loved, and now we lie

In Flanders Fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders Fields.

 


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