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CSCO | Can The Nokia Alcatel Lucent Deal Tilt the Market Equation | Nokia HE NOKIA Corporation is nearing completion of its proposed tie up with Alcatel Lucent SA N ALU For the most part the union between Nokia and Alcatel Lucent PA ALUA is as offensive as it is defensive
Nokia is seeking to acquire Alcatel Lucent to boost its telecom equipment business As such the company is both interested in defending its share in the telecom equipment market and taking share from the competition primarily Huawei and Ericsson ST ERICAs
The combination of Nokia and Alcatel Lucent is expected to result in a communications technology powerhouse with strengths in segments such as fixed networks wireless networks applications and analytics among others
However a recent development is threatening to complicate the picture for the combined Nokia In what appears like a reaction to Nokia s pending transformation Cisco Systems Inc NASDAQ O CSCO recently announced collaboration with rival Ericsson The two companies intend to work together in areas that include technology sharing and sales The collaboration between Cisco and Ericsson is expected to yield 1 billion in additional revenues on both sides by 2018
At the same time Cisco seemed to predict chaos for the combined Nokia Cisco s executive chairman John Chambers appears to suggest that Nokia s transformation through Alcatel Lucent buyout will be a long and disruptive process devoid of value Therefore as Nokia tackles complex integration issues Cisco and Ericsson are plotting to take its market share
How can Nokia be promising positive transformation with the acquisition of Alcatel Lucent when competitors have already taken notice of its weakness Does it look like Nokia s management is equal to the challenge ahead Can the deal with Alcatel Lucent tilt market equation in Nokia s favor
Nothing like chaos
First it is important to note that Nokia Corporation ADR NYSE NOK officials have already dismissed the notion that Nokia Alcatel Lucent is a recipe for chaos Instead Nokia sees its combined sales force driving displacement of Ericsson and diluting the value in its joint venture with Cisco But there is more to the integrated Nokia
Strong execution
Nokia Corporation ADR NYSE NOK s management has in the recent times demonstrated excellent strategy execution especially on the operating efficiency front That explains the steady improvements in the company s margins In the last quarter 3Q2015 Nokia Networks operating margins rose to 13 6 exceeding the consensus estimate of 10 2 Operating margins in the quarter improved 10bps YoY and 2 sequentially
The management of Nokia remains confident that the ambitious annual operating margins target of 8 to 11 is attainable
Impressive margins expansion in the last two quarters is only part of the story in Nokia s efficiency drive In the period between 2011 and 2014 the current management team was drove margins improvement at Nokia Networks to 12 2 from just about 1 6
The impressive turnaround happened at a time when the small Nokia Networks appeared to be disadvantageously positioned against larger rivals Ericsson and Huawei
Not only did Nokia Networks defy tough conditions to expand margins but the business also took share from rivals in key markets a trend that should accelerated in the new dispensation
Spreading efficiency gospel
Nokia Networks amazing margins improvement over a short period came on the back of incredibly lean R D budget compared to rivals
Given that Nokia has proven to be a master in cost cutting it is only sensible to assume that the company will work to introduce the efficiency culture in Alcatel Lucent
It is interesting also that Nokia s efficiency drive is set to meet Alcatel Lucent s SHIFT plan which is also about cost cutting Through its SHIFT plan Alcatel Lucent has been able to register impressive margins improvements in the last few years For example margins are estimated to 6 6 this year from negative 1 8 in 2012 Further margin expansion is expected under the SHIFT plan with the possibility of margin ascending to 15 in the next few years
Therefore Alcatel Lucent is coming to improve profitability in the integrated Nokia If the deal with Alcatel Lucent closes in 1Q2016 as anticipated Nokia targets to register 900 million cost synergies by 2018 amount that looks conservative given the cost benefit potential of the combined company
Sales growth
Combining Nokia and Alcatel Lucent is not only going to result in improvement in cost structure but also drive sales growth as the combined entity takes market share from the competition Ericsson is expected to take the heat as the new Nokia goes after its customers with more integrated solutions
Besides the opportunity of pitching its own products and solutions alongside those of Alcatel Lucent Nokia is also set to benefit from a more vibrant R D division A more aggressive R D department should contribute more innovation to drive product differentiation and accelerate market share gain and revenue growth
Additionally a vibrant R D should also drive more efficiency in the combined company thus providing boost to the bottom line as well as the topline
Cash flow narrative
Continued cost curtailment and margins improvements should result in cash flow improvement in the integrated company Nokia has been more aggressive than Alcatel Lucent in driving strong cash flow growth but Alcatel Lucent s SHIFT plan should ultimately give lift to cash flow figures
Shareholder value
Nokia Corporation ADR NYSE NOK has shown interest in returning cash to shareholders It is not currently know what fraction of free cash flow the company intends to return to shareholders in its integrated format but it is likely to be more than rival Ericsson returns to its shareholders
Customers and markets
Nokia Corporation ADR NYSE NOK sells its telecommunications equipment to China Mobile Ltd N CHL Deutsche Telekom DE DTEGn and other global carriers Acquisition of Alcatel Lucent should enhance the company s penetration in the U S Chinese and Indian telecom markets to take advantage of carrier network upgrades In the recent times though unfavorable economic conditions have seemed to soften spending on telecom equipment
Conclusion
Nokia Corporation ADR NYSE NOK has taken lessons from its past M A transactions to ensure that integrating Alcatel Lucent into its system becomes a smooth process In that regard Nokia has structure its marriage with Alcatel Lucent as a takeover rather than a joint venture a format that is expected to eliminate any potential integration hurdles or execution conflicts
Disclaimer The opinions and data expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions The author is not acting in an investment advisory capacity nor is this an investment research report The author s opinions expressed herein address only select aspects of potential investment in securities of the company or companies mentioned and cannot be a substitute for comprehensive investment analysis Any analysis presented herein is illustrative in nature limited in scope based on an incomplete set of information and has limitations to its accuracy The author recommends that potential and existing investors conduct thorough investment research of their own including detailed review of the companies SEC filings and consult a qualified investment advisor The information upon which this material is based was obtained from sources believed to be reliable but has not been independently verified Therefore the author cannot guarantee its accuracy Any opinions or estimates constitute the author s best judgment as of the date of publication and are subject to change without notice |
XOM | Crude Prices Continue To Drop To New Lows | Yesterday the price per barrel of Light Sweet Crude continued to drop to new lows The price of crude has collapsed due to considerable downward pressure being exerted by Saudi Arabia and other OPEC nations
The downturn in the global economy which has seen both China and the European Union experience contractions has led to the demand of oil decrease
The Saudis are concerned that production from non OPEC nations eats away at its market share Saudi Arabia has two main targets in its sights The new upstarts being the United States shale producers and the other be oil pumped from the vast Russian fields
The production of oil from US shale fields has pumped at a much higher cost than that from crude that is extracted by the Saudis Therefore Saudi Arabia has effectively used oversupply as a policy tool to curtail the production of shale oil by producers who in many cases have to service high debt burdens
In the case of targeting Russian production the benefit for Saudi is twofold Not only can the Saudis draw market share away from Russian producers but it can also be used as a financial penalty limiting Russia s involvement in Syria
Using oil as a political tool is not something that is new We had a glimpse of what can be achieved during the oil crisis of the early 1970s when OPEC cut off supply to the West in protest against unaligned policy interests
It would appear that the price of oil will continue to decline due to reasons outside the control of the Saudis
Iran having come to an accommodation over its nuclear programme is now free to ramp up production Furthermore production from Russian fields continues to increase Finally the United States has now ended a 40 year ban on the export of oil
With the demand of oil not increasing the only limiting factor to production being ramped up is where will all this excess supply of crude be stored Refineries are limited to how much crude can be processed and land based storage is already at full capacity Therefore there is a need to begin storing oil offshore within tankers
With so much pessimism over the downward direction of the price of oil one would most probably contemplate levels of US 30 US 25 or even US 20 per barrel However moods can sometimes change very quickly
Searching for clues for when oil will eventual begin to form a base is not an easy task
I am however looking at two areas of interest
Gold Oil RatioThe gold to oil ratio is currently moving around the US 29 00 level whereas back in July 2014 the ratio was placed in the region of US 13 00 At the current level of US 29 00 the gold to oil ratio is at an extreme Either gold is too expensive or oil is too cheap however for what is certain these extremes will at some stage in the medium term be rectified
Big OilBig oil is the major oil companies such as Exxon N XOM BP L BP Shell L RDSa Total N TSS and ENI N E Exxon has experienced a torrid time as share value has collapsed in step with the decline in the price of oil However during the latest leg down in the price of WTI there has been a noticeable price divergence with Exxon now attempting to print a higher low on the weekly time frame If Exxon can now retest and breach the 87 42 level a weekly higher low and higher high formation would be out in place Would this signal that the days of cheap oil is final over
Maybe |
XOM | When Will They Bottom Oil S P 500 Then Exxon Mobil | A full blown bear market in energy resources and energy stocks has been underway since mid 2014 History shows that the price of crude oil typically bottoms before the broad stock market And oil related stocks bottom at the same time or later than the broad market
The monthly chart below shows how oil bottoms several months before the stock market does This provides us with some insight on when we should start to expect a bear market to end in the US stock market
Many traders follow and trade shares of Exxon Mobil N XOM And while the are big money maker I do feel their share price is going to underperform oil for some time Based on my research XOM has acquired many new oil operations which many require 70 per barrel to be profitable This has cost XOM a considerable amount of capital and is now left holding and operating business that are losing money with the current price of oil sub 40 per barrel
Base on my analysis economic data and forecast I feel as though oil will remain low for another 3 9 months below 60 per barrel It will do this for several reasons but what matter to us is that it forced the majority of oil producers to cap and close off well and go out of business While this is taking place stocks and the economy will rebalance through a strong economic recession and a bear market in equities that will last most if not longer than 2016
Take a look at the US stock market average S P 500 index in the chart below While this chart is a very basic and simple looking forecast understand that the stock market internals and market breadth have completely collapsed just as we saw in 2000 and again in 2008 months before the index collapsed and started bear markets
Oil XOM and Stock Trading Conclusion
In short I expect oil to find a bottom during the next 1 3 months Oil services stocks on average are likely to trade sideways and build a basing pattern These oil services stocks will not breakout and rally until the broad stock market has bottomed which I expect to happen late in 2016 or early 2017
Unfortunately oil and oil stocks collapsed so fast without any retest or pause for us to get short and enjoy the ride down for profits I feel trading oil and oil stocks will be choppy and tough in the near year Last week subscribers and I played the Energy Select Sector SPDR N XLE for a quick two day pop of 2 4 return depending on entry and exit These types of plays will continue but the big trend trade in oil and energy are a long way away yet |
XOM | Top 5 things to watch today | Investing com
Oil prices fall back to 33Oil prices fell back towards the 33 per barrel level as investors worried that a huge oversupply in crude was coinciding with a global economic slowdown
Asia lower on weak oil pricesMajor Asian equities closed mostly lower as ongoing weakness in oil prices continued to hit risk sentiment
European shares in the red for 2nd dayEuropean stock markets were down more than 1 as weak oil and disappointing corporate earnings from energy giant BP L BP and Swiss bank UBS weighed
U S stock futures lowerU S stock markets pointed to heavy losses when U S markets opened while Exxon Mobil N XOM UPS and Pfizer were due to report quarterly results ahead of the bell
Euro zone jobless rate fallsThe euro zone s unemployment rate fell to a four year low of 10 4 in December from 10 5 in November |
XOM | Exxon Mobil Q4 EPS 67 cents vs expectations of 63 cents | Investing com The world s largest oil and gas company Exxon Mobil Corporation N XOM reported better than expected fourth quarter earnings ahead of Tuesday s opening bell but figures came in sharply below last year s results due to the persistent slump in oil prices
Exxon said earnings per share came in at 67 cents in the three months ended December 31 above expectations for earnings of 63 cents per share but down sharply from 1 56 in the same period a year earlier
The company s fourth quarter revenue totaled 59 81 billion beating forecasts for sales of 52 36 billion but 31 5 below sales of 87 28 billion in the same period a year earlier
Higher Downstream and Chemical earnings were offset by sharply lower commodity prices in the Upstream
Capital and exploration expenditures were 7 4 billion down 29 from the fourth quarter of 2014
Oil equivalent production increased 4 8 from the fourth quarter of 2014 with liquids up 14 and natural gas down 5 6
While our financial results reflect the challenging environment we remain focused on the business fundamentals including project execution and effective cost management said Rex W Tillerson chairman and chief executive officer
Following the release of the report Exxon Mobil shares shed 0 75 in pre market trade to 75 70 from Monday s closing price of 76 27
Meanwhile U S stock futures pointed to a lower open The blue chip Dow futures shed 102 points or 0 62 the S P 500 futures dipped 13 points or 0 66 while the tech heavy Nasdaq 100 futures fell 29 points or 0 67 |
XOM | Exxon fourth quarter earnings plunge 58 | Investing com Exxon Mobil N XOM reported a 58 drop in fourth quarter earnings on Tuesday and said it would cut spending this year by one quarter amid a prolonged downturn in oil prices
The world s largest publicly traded oil company reported that fourth quarter profit slid to 2 78 billion or 67 cents per share from 6 57 billion or 1 56 per share in the same period a year earlier Analysts on average had expected per share profits of 63 cents
Exxon said it sees capital spending at around 23 2 billion this year a decrease of 25 from 2015
Crude oil prices have dropped about 70 from the 2014 high over 100 barrel
Current prices at around 30 barrel have triggered a wave of spending cuts as oil companies slash investment in new wells and projects to conserve cash |
MRO | Marathon Oil MRO Beats Q1 Earnings Estimates | Marathon Oil MRO came out with quarterly earnings of 0 31 per share beating the Zacks Consensus Estimate of 0 06 per share This compares to earnings of 0 18 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 416 67 A quarter ago it was expected that this energy company would post earnings of 0 13 per share when it actually produced earnings of 0 15 delivering a surprise of 15 38
Over the last four quarters the company has surpassed consensus EPS estimates three times
Marathon Oil which belongs to the Zacks Oil and Gas Integrated United States industry posted revenues of 1 20 billion for the quarter ended March 2019 missing the Zacks Consensus Estimate by 2 43 This compares to year ago revenues of 1 73 billion The company has topped consensus revenue estimates two times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Marathon Oil shares have added about 18 8 since the beginning of the year versus the S P 500 s gain of 17 5
What s Next for Marathon Oil
While Marathon Oil has outperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Marathon Oil was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 16 on 1 42 billion in revenues for the coming quarter and 0 62 on 5 65 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Oil and Gas Integrated United States is currently in the top 18 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
MRO | Marathon Oil MRO Beats Q1 Earnings Estimates | Marathon Oil MRO came out with quarterly earnings of 0 31 per share beating the Zacks Consensus Estimate of 0 06 per share This compares to earnings of 0 18 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 416 67 A quarter ago it was expected that this energy company would post earnings of 0 13 per share when it actually produced earnings of 0 15 delivering a surprise of 15 38
Over the last four quarters the company has surpassed consensus EPS estimates three times
Marathon Oil which belongs to the Zacks Oil and Gas Integrated United States industry posted revenues of 1 20 billion for the quarter ended March 2019 missing the Zacks Consensus Estimate by 2 43 This compares to year ago revenues of 1 73 billion The company has topped consensus revenue estimates two times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Marathon Oil shares have added about 18 8 since the beginning of the year versus the S P 500 s gain of 17 5
What s Next for Marathon Oil
While Marathon Oil has outperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Marathon Oil was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 16 on 1 42 billion in revenues for the coming quarter and 0 62 on 5 65 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Oil and Gas Integrated United States is currently in the top 18 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
MRO | 3 Winning Shorts MRO PDC CLB | Even in this go up no matter what environment of ours some shorts have been performing especially well Here are my top three winners on a percentage basis all of which I m keeping Each is captioned
MRO
Marathon Oil Corporation NYSE MRO entry at 18 75 16 5 profit stop at 16 35
PDC
PDC Energy Inc NASDAQ PDCE entry at 46 23 16 9 profit stop at 40 75
CLB
Core Laboratories NV NYSE CLB entry at 73 25 17 9 profit stop at 63 75 |
MRO | Why Is Marathon Oil MRO Down 12 2 Since Last Earnings Report | A month has gone by since the last earnings report for Marathon Oil MRO Shares have lost about 12 2 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is Marathon Oil due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts Marathon Oil Q1 Earnings Beat on U S E P Segment Marathon Oil reported mixed first quarter 2019 results wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same The company s adjusted income from continuing operations came in at 31 cents per share outpacing the Zacks Consensus Estimate of 6 cents and the year ago earnings of 18 cents a share Notably increased year over year contribution from the U S E P segment along with reduced expenses led to the outperformance Total expenses of the company decreased to 1 126 million from 1 161 million in the corresponding quarter of the prior year Per unit production costs at the United States declined 12 to 5 21 boe However the quarterly revenues of 1 197 million missed the Zacks Consensus Estimate of 1 227 million The top line also decreased 31 from the prior year figure primarily due to weak oil price realizations Segmental PerformanceThe Texas based energy explorer s total net production from the U S and International units in the quarter under review came in at 388 000 barrels of oil equivalent per day Boe d compared with 426 000 Boe d in the year ago period U S E P Marathon Oil s U S upstream segment reported a profit of 132 million reflecting a 5 6 improvement from the year ago figure of 125 million Also net production available for sale of 296 000 Boe d increased from 284 000 Boe d in the first quarter of 2018 The total U S output comprised 60 oil or 177 000 barrels per day bpd up 8 year over year and also within the company s guided range of 175 000 185 000 bpd The improved year over year production especially from the Bakken Northern Delaware and Eagle Ford aided the company s quarterly performance Notably Bakken output came in at 92 000 Boe d mirroring a 24 rise from the year ago level Northern Delaware region recorded production of 26 000 Boe d surging 62 5 from the first quarter of 2018 Meanwhile output levels from Eagle Ford and Oklahoma came in at 105 000 Boe d and 63 000 Boe d compared with 104 000 Boe d and 75 000 Boe d respectively in the year ago quarter Marathon Oil realized liquids crude oil and condensate price of 54 05 per barrel lower than the year earlier level of 62 22 Natural gas liquids NGLs price realizations also declined 31 7 to stand at 15 66 a barrel Meanwhile natural gas realizations increased 13 1 year over year to 2 93 per thousand cubic feet International E P The segment s income decreased from 132 million in the prior year quarter to 61 million in the first quarter due to lower production and weak commodity price realizations Marathon Oil reported production available for sale of 92 000 Boe d down from 114 000 Boe d in the first quarter of 2018 The decrease in output from Equatorial Guinea and the United Kingdom along with the company s exit from Libyan operations resulted in the weaker output Furthermore Marathon Oil realized liquids crude oil and condensate price of 53 93 per barrel reflecting an 18 6 decline from the year earlier quarter While natural gas price realizations came in at 0 48 per mcf down 26 year over year natural gas liquids realizations witnessed a year over year increase in the quarter under review Capex Balance SheetDuring the first quarter Marathon Oil s capital expenditure totaled 569 million Additionally the company generated organic free cash flow of 80 million in the same period As of Mar 31 it had cash and cash equivalents of 1 019 million and long term debt of 5 501 million Debt to capitalization ratio of the company was 31 GuidanceMarathon Oil s 2019 capital expenditure remains intact at 2 6 billion Almost 95 of the capital outlay will be directed toward the shale plays including Oklahoma Bakken Permian and Eagle Ford For 2019 the company expects total output to increase 10 from a year ago level targeting 12 growth in the United States Total oil output in second quarter 2019 is anticipated to be in the band of 200 000 220 000 barrels per day U S oil production is estimated at 180 000 190 000 bpd reflecting a 5 sequential increase from the midpoint of the guided range International oil production is likely to be within the range of 20 000 30 000 bpd amid downtime at Foinaven complex The company s cumulative two year free cash flows for 2019 and 2020 are anticipated to be around 750 million at oil price of 50 a barrel and 2 2 billion at crude price of 60 a barrel
How Have Estimates Been Moving Since Then
In the past month investors have witnessed an upward trend in fresh estimates The consensus estimate has shifted 13 64 due to these changes
VGM Scores
Currently Marathon Oil has a nice Growth Score of B however its Momentum Score is doing a bit better with an A Charting a somewhat similar path the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of A If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising Notably Marathon Oil has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
CSCO | NDX Reverses From Final High Gold Challenges Cycle Bottom | VIX rose above all weekly Model resistance levels except the Cycle Top at 21 92 firmly giving its buy signal The next move calls for a breakout to new highs While traders are anticipating a calmer season ahead the VIX warns the opposite may happen
SPX triggers its Broadening Top formation
The SPX may have triggered its Broadening Top formation while declining beneath Long Term support resistance at 2062 67 The Broadening Top formation has a high degree of reliability and agrees substantially with the lower Head Shoulders formation A loss of further supports beneath today s close may lead to a flash crash much larger than the last
WSJ U S stocks fell Friday helping push major indexes to their first weekly declines in nearly two months
The Dow Jones Industrial Average declined 203 points or 1 2 to 17245 The S P 500 lost 1 1 weighed down by declines in retail stocks and the Nasdaq Composite fell 1 5
For the week the Dow declined 3 7 and the S P slipped 3 6
NDX reverses from its final high
NDX reversed down from point 5 of its Orthodox Broadening Top otherwise known as a 5 point reversal Point 6 which is likely to be near its Cycle Bottom support at 3213 99 may be its next target This may happen in a surprisingly short period of time
Reuters U S stock indexes fell sharply on Friday weighed down by consumer retail and technology stocks after disappointing forecasts from Cisco O CSCO and department store chains for the key holiday shopping season
The Dow and the Nasdaq were off nearly 1 percent while the S P 500 s decline was curtailed as the index held steady near its 100 day moving average
Dow component Cisco fell 6 percent to 26 17 after it gave a weak forecast citing a slowdown in order growth and weak spending outside the United States The stock was the second biggest drag on the S P and the Nasdaq
High Yield Bonds decline to mid Cycle support
The High Yield Index declined through its Long term support at 139 73 and its Broadening Wedge trendline before closing just above mid Cycle support at 137 64 Intermediate term support at 135 30 may be the last support left before challenging its Cycle Bottom Head Shoulders neckline at 122 50 125 00 The Cycles Model suggests a major decline in HY over the next several weeks
SaltLakeTribune How upended have the rules of investing become How s this Investors are talking about whether problems in the market for corporate bonds may spill over into stocks and drag down their prices
That question could have caused smirks years ago Stocks have historically been the riskier investment prone to big swings while bonds just chugged along But analysts say the high yield corporate bond market has become increasingly fragile Conditions may be lining up where investors one day find no buyers for bonds when they look to sell or at least none at a palatable price
The euro bounces within the Flag formation
The euro may be making its Master cycle low at the lower trendline of its Flag formation this week There is good reason to believe that the euro may bounce for the next 2 3 weeks as it seeks the upper trendline of this expanding Flag It is probable that the euro trend toward parity with the USD may resume with a vengeance once this head fake is complete
ZeroHedge But the biggest event overnight came from Europe where Draghi managed to once again jawbone the euro lower by ober 50 pips when he told European lawmakers in a prepared testimony that downside economic risks are clearly visible repeating his October press conference statement adding that the ECB will reexamine degree of accommodation in December as inflation dynamics have somewhat weakened
And the statement that crushed the euro If we were to conclude that our medium term price stability objective is at risk we would act by using all the instruments available within our mandate to ensure that an appropriate degree of monetary accommodation is maintained I e another whatever it takes moment
EuroStoxx repelled at Long term resistance
After challenging weekly Long term resistance at 3485 74 EuroStoxx fell away declining to Intermediate term support at 3339 90 A loss of Intermediate term support may be problematic as a further decline to weekly mid Cycle support at 3259 60 is likely to follow Should that occur EuroStoxx may remain in a decline through the end of the year
Reuters A signal from European Central Bank president Mario Draghi that further policy easing is coming next month drove European markets on Thursday sparking a brief rebound in stocks and pushing the euro and bond yields lower
In an address to the European Parliament Draghi said inflation dynamics had somewhat weakened and that a sustained normalisation of inflation could take longer to achieve than thought
At our December monetary policy meeting we will re examine the degree of monetary policy accommodation Draghi said
The yen may bounce
The yen appears to have reached an early Master Cycle low and completed a bullish Flag formation that implies a target at or above mid Cycle resistance at 90 38 The bounce may last up to three weeks and may even visit the Cycle Top at 105 43
NewsMarkets Japanese assets traded in Europe shrugged off the Bank of Japan s decision to leave monetary policy unchanged earlier on Friday when some observers had expected it to loosen policy to boost sluggish economic growth and weak inflation However yen weakness could be on the cards
Towards the end of the European day the yen was just a tad firmer with the dollar down to 120 41 yen from 121 13 late on Thursday The yield on the 10 year Japanese government bond or JGB was also up only modestly at 0 305 compared with 0 296 late on Thursday Earlier the Nikkei 225 stock market index had actually closed higher up 0 8 at 19 083 10
The Nikkei rose above Long term resistance
The Nikkei rose above the lower trendline of its Broadening Wedge and Long term resistance at 19309 82 closing above both but easing back from its high on Thursday Broadening formations allow throwbacks before the final decline which may reach their targets A probable reversal may be at hand with weakness in the Cycle showing for the next three weeks Should the subsequent decline go beneath mid cycle support at 16980 66 the Nikkei may experience a flash crash taking it to its cycle Bottom support at 12633 87
Reuters Japan s Nikkei share average tumbled on Friday morning snapping a seven day winning streak after a sharp drop in Wall Street and as weaker commodity prices weighed on stocks such as metals companies and trading houses
Underperforming the already weak market was Toshiba Corp OTC TOSYY which dived more than 8 percent after it said its U S nuclear unit Westinghouse had booked losses in the 2012 and 2013 fiscal years It was the fourth biggest loser on the board
The Nikkei dropped 0 9 percent to 19 522 48 in mid morning trade after rising 5 4 percent for the past seven days For the week the index has risen 1 3 percent
U S dollar is repelled at Round Number resistance
The US dollar appears to have been repelled at Round Number resistance and its prior high at 100 00 This usually calls for an imminent pullback to Long term support currently at 96 61 but should a financial event happen it may decline to trendline support at 92 00 The Cycles Model calls for a Master Cycle low near the end of the month
USB bounces at the Broadening Wedge trendline
The Long Bond bounced at the Broadening Wedge trendline at 151 00 USB has formed a Master Cycle low at the trendline keeping the long term trend intact The 34 year trendline lies at 136 50
IBD Treasuries rose pushing yields to the lowest in a week after data showed U S retail sales increased less than forecast in October and producer prices unexpectedly declined
Yields fell as separate reports showed consumer purchases rose 0 1 in October below the 0 3 median forecast of 84 economists surveyed by Bloomberg and producer prices declined for a second month even as a gain was expected While a gauge of consumer confidence exceeded forecasts an underlying metric showed inflation expectations matched a 13 year low hit in October
Gold is challenging its Cycle Bottom
Gold fell beneath its weekly Cycle Bottom at 1092 60 but hasn t broken beneath its July low at 1072 30 It is possible that an early Master Cycle low may be in the making but there is no clear reversal pattern yet The Cycles Model suggests an alternate pattern with more sustained low at the end of November or early December A decline beneath 1072 30 may bring on the alternate view With the loss of support a lot may happen in the meantime
Bloomberg Gold traded near a five year low as investors sold bullion backed funds amid expectations the U S will increase interest rates this year damping the appeal of the metal
Bullion for immediate delivery slid as much as 0 5 percent and traded down 0 2 percent at 1 082 75 by 2 46 p m in New York according to Bloomberg generic pricing It reached 1 074 25 on Thursday the lowest since February 2010 Gold futures for December delivery lost less than 0 1 percent to settle at 1 080 90
Gold is heading for a third annual loss as investors brace for the first U S interest rate increase since 2006 when Federal Reserve officials meet next month New York Fed President William C Dudley said the conditions for liftoff could soon be satisfied
Crude triggers potential Bearish Flag formation
Crude lost the ongoing battle with Intermediate term resistance at 45 55 and began making new lows not seen since August It appears to have triggered a bearish Flag formation with a minimum target of 26 09 With no further supports at hand crude oil may go into free fall should a financial event occur that may take the price of crude well below the minimum target
WSJ The price of U S oil tumbled near 40 a barrel capping a tumultuous week across commodities
Fresh signs of increasing supplies and slackening demand especially in China pummeled markets from crude oil to coffee to copper The S P GSCI index which tracks the prices of 24 commodities shed 4 this past week to close at its lowest level since August
The declines this week came as a flurry of disappointing economic data came out of China a major consumer of raw materials Meanwhile indications emerged that commodity supplies would remain abundant longer than many investors had expected Another factor was a strengthening dollar which encouraged producers outside the U S to ramp up commodity sales while concerns rose about global demand
Shanghai Index reverses beneath resistance
The Shanghai Index rally peaked on Monday short of Long term resistance at 3744 77 Last week I had called for the reversal by the end of the week so there was no surprise although I was more certain that Long term resistance would be reached The Cycles Model now suggests a decline through the end of November However should the Head Shoulders neckline be breached the decline may extend through early December
ZeroHedge Early in September as Beijing was just coming to grips with the fact that stocks can go down as well as up and that artificially propping up the entire market is well nigh impossible no matter how much money you throw at it we brought you the following rather chilling quote from a fund manager who was summoned by authorities in the midst of what amounted to a witch hunt aimed at anyone thought to be responsible for maliciously taking stocks lower Speaking to a friend the fund manager said the following If I don t come back look after my wife
The Banking Index reverses below Long term resistance
BKX reversed beneath Long term resistance at 73 88 in an abrupt sell off that began on November 6 A further loss of mid Cycle support by mid week may bring the neckline of the Head Shoulders formation in play There seems to be a lack of awareness of the magnitude of this potential decline
Bloomberg The European Central Bank found capital gaps totaling 1 74 billion euros 1 87 billion among nine lenders it tested with the biggest hole at Portugal s Novo Banco SA
Shortfalls amount to 1 74 billion euros resulting from CET1 ratios falling below the threshold of 5 5 percent in the adverse stress test scenario after including impact of asset quality review the ECB said in a statement on its website on Saturday Banks will be required to address remaining shortfalls in a timely manner by issuing capital instruments or undertaking other eligible measures to restore their capital positions to the required levels
ZeroHedge The last 3 days have seen the biggest surge in US energy credit risk since December 2014 blasting back above 1000bps This should not be a total surprise since underlying oil prices continue to languish in not cash flow positive territory for many shale producers but as Bloomberg reports the industry is bracing for a wave of failuresas investors that were stung by bets on an improving market earlier this year try to stay away from the sector It s been eerily silent in energy credit markets warns one bond manager no one is putting up new capital here
The market is starting to reprice dramatically for a surge in defaults
SovereignMan Late last week a consortium of financial regulators in the United States including the Federal Reserve and the FDIC issued an astonishing condemnation of the US banking system
Most notably they highlighted continuing gaps between industry practices and the expectations for safe and sound banking
This is part of an annual report they publish called the Shared National Credit SNC Review And in this year s report they identified a huge jump in risky loans due to overexposure to weakening oil and gas industries
Make no mistake this is not chump change
Bloomberg Greek bank investors are being asked to inject new funds into the lenders for the second time in less than 20 months even as doubt remains that the country will receive the next round of bailout funds
The National Bank of Greece SA and Eurobank Ergasias SA joined Piraeus Bank SA and Alpha Bank AE on Thursday in starting book building processes as they seek to fill part of 14 4 billion euro 15 5 billion hole in their accounts identified by the European Central Bank The state owned Hellenic Financial Stability Fund will contribute the rest from loans from Greece s latest bailout but not before imposing mandatory losses or burden sharing on shareholders and creditors of the banks |
XOM | Energy Extends Market Losses | Stock markets worldwide declined on Tuesday while oil continued to struggle amid renewed concerns over a global supply glut worsened by the recent Organization of the Petroleum Exporting Countries OPEC in which reduced production policies haven t been adopted Crude oil prices fell around 2 during the day later paring some of it losses to settle 0 4 lower at 37 51 a barrel Stock markets were also weighed down by rout in commodities fueled by the significant drop on Chinese exports seen in November marking the 13th consecutive month of declines in export activity
U S stocks extended Monday s declines to close lower in four out the five most recent sessions The Dow Jones Industrial Average fell 162 51 points or 0 92 to trade at 17 568 00 about 20 points higher than its lowest session level Exxon Mobil Corporation N XOM led the decliners with a 2 83 loss The Standard Poor s 500 index closed 13 48 points or 0 65 lower to trade at 2 063 59 led by a 1 9 decline in the materials sector and a 1 5 decline in the energy sector The health care sector was the only sector to buck the downtrend rising 0 2 Despite briefly moving into positive territory the Nasdaq Composite declined 3 57 points or 0 07 to trade at 5 098 24 Declines were limited by a boost in the iShares Nasdaq Biotechnology O IBB ETF which added 1 95
Asian markets also fell as falling commodity prices along with other economic data indicated that reduced demand from China may have curbed high risk assets MSCI s broadest index of Asia Pacific shares outside Japan fell 0 3 moving near its November low Recent data highlighted the woes China s economy is facing as weak trade data on Tuesday reignited concerns over weakening demand in the country Data relerased on Wednesday indicated that Chinese factories were facing a producer price deflation offering another sign that easing measures put in place by the government have yet to restore momentum The Japanese Nikkei dropped 1 1 to touch a three week low despite a surprising rise in the number of domestic machinery orders Shanghai shares pared early losses to close 0 2 higher
This week s major economic data releases continue today with the release of Chinese inflation and German balance of trade data followed by the Bank of England s interest rate decision and U S jobless claims on Thursday To end the week German inflation and U S retails sales data will be released on Friday |
XOM | Oil Sands Could Clean Up Its Image With New Technology | On Saturday December 14 representatives from 193 UN member states and 2 observer states signed an agreement that will see a cooperative effort to limit the global temperature to 2 degrees above pre industrial temperatures The effort is spread across a wide range of contributing factors but one of the major talking points is the oil sands space The space has long held negative connotations a view point compounded by Obama s recent of the Canada Gulf Coast Keystone pipeline Executives in the space however are saying that the Paris summit marked a turning point for oil sands and that the sector now has the opportunity to reinvent itself Let s have a look at what lies behind this reinvention and try to figure out what it means for companies in the oil sands industry
First what is the problem For those not familiar with oil sands they are a mixture of sand clay and bitumen also sometimes water that is too thick to freely pass through pipelines or pumps without being processed Oil sands represent a large portion of global oil reserves with an worldwide resource of 249 billion barrels Gbbl of which 176 Gbbl close to 80 are in Alberta Canada The space is big business for the Canadian economy but there are some serious concerns over its environmental impact concerns that could hold it back in the wake of the Paris agreement
First of all the process produces large amount of greenhouse gasses A study conducted in 2011 by Stanford University academic Adam Brandt concluded that crude derived from oil sands is 22 more carbon intensive that traditional oil well drilling A concurrent study conducted by a California based engineering firm concluded that oil sands crude production creates 12 higher emissions than standard crude production
Second it can be highly destructive to local natural environments One of the biggest oil sands production facilities in the world is the Athabasca oil sands in Alberta Canada At this field the bitumen sits on top of a layer of limestone which allows for surface mining The Athabasca oil sands lie in the middle of the Boreal forest and to allow for surface mining and in turn to allow for access the bitumen miners need to destroy forestry The government in Alberta requires that the company mining the land currently two companies dominate the region Suncor Energy Inc N SU and Syncrude the latter of which is a joint venture between seven companies including Suncor and a host of state owned enterprises restore it to what s called equivalent land capability ELC Restoration qualifies for ELC if the land supports any number of a range of uses post processing and companies have come under fire in the past for reclamation as pasture for bison rather than forestry
Third water use The traditional oil sand conversion process involves high levels of water use estimates put the numbers at up to 4 5 cubic meters of water required to produce 1 cubic meter of synthetic crude Governments in the respective oil sand field territories have imposed strict water use rules on the companies involved in the space and water is generally recycled returned to source after use However this brings with it a host of other issues including the potential for toxic returns to a water source suggest that Suncor and Syncrude will have polluted 1 billion cubic meters of water from the Athabasca River by the end of this decade
So with these issues why are companies like Suncor involved in oil sands when they could be involved in traditional well drilling It s a case of economics The price of oil is a hot topic at the moment and the vast majority of producers are unable to well profitably at 50 barrels never mind the current 35 barrels Suncor s cash operating cost at its Alberta fields was as of March this year a time when oil priced in at between 45 55 a barrel Currently oil sits at a little over 35 a barrel but by nature of the production process as the price of oil drops the cost of production per barrel drops as producers are having to pay less for transport costs machinery running etc With this in mind Suncor is likely still drawing a profit on the barrels it is producing out of Alberta
Additionally we are seeing technological advances in the space that look set to reduce this cost per barrel even further as well as alleviate some of the environmental impact of oil sands processing something that falls in line with the Paris summit agreement Take MCW Energy Group Limited TO MCW for example The company run by the former Exxon N XOM president of Arabian Gulf operations has developed a technology that allows for the processing of oil sands without any water removing the possibility of water source pollution and which uses a solvent to separate the bitumen instead of heat which vastly reduces greenhouse gas emission Because a solvent is used the byproduct of the process is clean sand meaning it automatically meets the ELC criteria Further a report conducted in 2012 suggests the technology can produce at a cost of 24 a barrel
So what s the takeaway here Well oil sands will remain controversial there s no question about that However with the latest Paris summit targeting a 2 degree cap in global temperatures the space has an opportunity to reform its image With technology in the sector improving the environmental impact that oil sand production has in its mining regions and the increasingly attractive per barrel economics oil sand is here to stay and at a time when the entire energy sector is under real pressure from markets there may be opportunity in some of oil sand s constituent companies to pick up an exposure at a discount |
XOM | Energy Lifts Markets Ahead of FOMC | U S stock indexes posted a second consecutive session of gains on Tuesday ahead of the Federal Reserve s Federal Open Market Committee FOMC where the central bank is likely to raise interest rates The energy sector rose sharply lifting major U S benchmarks as investors await the conclusion of the FOMC later today The S P 500 index gained 21 47 points or 1 06 to trade at 2 043 4 as all 10 major sectors close higher The energy sector led the gainers with a 2 9 climb The Dow Jones Industrial Average rose 156 41 points or 0 9 to close at 17 524 91 and the Nasdaq Composite added 43 13 points or 0 87 to close Wednesday s trading session at 4 995 36 Of the Dow s components Exxon Mobil N XOM stood out as the best performer posting a 4 47 climb on the gains seen in energy prices Despite the gains seen in the last two days both the S P 500 and the Dow Jones remain lower on a yearly basis
Crude oil settled above 37 a barrel on Tuesday providing some respite after flirting with multi year lows As of this writing oil was seen trading at 37 15 a barrel down 0 54 in the early Asian trading session Brent oil fell 0 65 to trade at 38 2 a barrel Energy prices tumbled in recent session after a new report from the International Energy Agency IEA has revealed lower demand expectations for next year coming in at around 67 of 2015 s demand In addition the Organization of Petroleum Exporting Countries OPEC has opted to retain high output policies in their effort to maintain their market share The lifting of trade sanctions against Iran will also introduce one of the more productive oil producers in the Middle East further increasing the delicate tension between supply and demand
European shares posted a strong rebound on Tuesday helped by Wall Street s gains on local market deals The U K s FTSE 100 added 1 66 to trade at 5 971 73 U K economic data has shown that consumer price growth has resumed after moving between minor growth and deflation over recent months The German DAX 30 surged 1 79 to trade at 10 321 07 Health care plastics maker Balda gained more than 6 as the company announced that the Italian Stevanato Group had also made an offer to purchase the company The 80 million proposal outbid the current 74 million offer from Heitkamp Thumann The French CAC 40 added 2 06 to trade at 4 565 23
This week s economic data releases continue today with the release of German manufacturing PMI and U K unemployment The Federal Reserve s long awaited FOMC will conclude today The central bank has been long expected to raise interest rates with the market betting on a change in monetary policy this week |
XOM | Global stocks oil climb as cold weather boosts energy demand | By Caroline Valetkevitch NEW YORK Reuters Global equity markets and oil prices climbed for a second day on Friday providing some relief to bruised investors as frigid weather across the United States and Europe boosted energy demand Oil which had tumbled during a recent rout in world markets jumped about 7 percent and traded above 30 a barrel on higher short term demand and as traders cashed in short positions Energy shares led the advance in the benchmark S P 500 U S equity index SPX which was up more than 1 percent in afternoon trading Exxon Mobil N XOM rose 1 7 percent Comments by European Central Bank President Mario Draghi on Thursday suggesting the bank could ease its monetary policy at its March meeting also helped encourage investors bruised by a brutal sell off that began at the start of 2016 I do think that even just to get a couple of days here with neutral rather than downward movement is going to be a positive because it s going to settle some fears said Paul Springmeyer portfolio manager at U S Bank s Private Client Reserve in Minneapolis Long term the stability of the U S economy is really what s at play here and all signs with low inflation and low oil prices are pointing to an ability to move forward and move higher Springmeyer said Brent LCOc1 was last up 7 4 percent at 31 42 set for its biggest one day rise since August 2015 and well above this week s low of 27 10 while U S crude CLc1 rose 7 percent to 31 59 The MSCI All Country World Index MIWD00000PUS rose 2 4 percent while Europe s pan regional FTSEurofirst 300 index FTEU3 jumped 3 0 percent On Wall Street the Dow Jones industrial average DJI was up 159 16 points or 1 percent to 16 041 84 the S P 500 SPX gained 32 24 points or 1 72 percent to 1 901 23 and the Nasdaq Composite IXIC added 101 09 points or 2 26 percent to 4 573 14 Japan s Nikkei N225 surged 5 9 percent the most in more than four months Chinese stocks which had fallen almost 20 percent since the start of the year rose 1 3 percent Investors seized on Draghi s comments and bet that the Bank of Japan might also ease policy further next week while the Federal Reserve goes slow in raising U S rates this year DOLLAR FIRMS The dollar rose boosted by increased expectations of monetary easing by central banks in Europe and Japan as well as strong U S housing data The dollar touched a two week high against the Japanese yen rising 0 7 percent to 118 50 yen The yen has risen nearly 3 percent against the greenback this year as the sell off in oil and global equity markets encouraged traders to seek out the safe haven currency L2N1561A6 U S Treasuries prices fell as a resurgence in oil and stock prices sparked a fresh wave of selling of safe haven government debt Benchmark yields rose further from Wednesday s 3 1 2 month lows
Benchmark 10 year Treasury notes US10YT RR were down 18 32 in price to yield 2 082 percent up 6 basis points from late on Thursday The 10 year yield climbed from 1 939 percent on Wednesday the lowest since early October |
XOM | Exxon sees a world with less carbon but higher cost emissions | HOUSTON Reuters Exxon Mobil Corp N XOM on Monday said efficiencies and increased use of renewable fuels will cut by half the carbon intensity of the world s economy by 2040 but climate policies will increase the cost of greenhouse gas emissions according to the company s latest long term outlook
Exxon and others in the oil industry have been under increasing pressure from shareholders to detail the resilience of their business model to climate change after a global climate agreement reached in Paris in December set the world on a course to transform its fossil fuel driven economy
Because of efforts to reduce greenhouse gases and efficiency gains Exxon sees energy related carbon dioxide emissions peaking around 2030 before starting to decline while emissions in developed countries are seen falling by about 20 percent from 2014 to 2040 it said
The climate accord reached at the recent COP 21 conference in Paris set many new goals and while many related policies are still emerging the outlook continues to anticipate that such policies will increase the cost of carbon dioxide emissions over time said William Colton vice president of Exxon Mobil Corporate Strategic Planning
As policies evolve the Irving Texas company said it continues to assume that climate policies that increase the costs of emissions will reach an implied cost in developed nations of about 80 per tonne in 2040
Exxon said it expects wind power and solar power to see strong growth helped by policies that favor or mandate their use Wind and solar are expected to account for more than 10 percent of global electricity generation in 2040 up from 4 percent in 2014
Still the company sees oil natural gas and coal continuing to meet almost 80 percent of the world s energy needs through 2040
Global liquids output is seen rising to 112 million barrels per day mbpd in 2040 up from 93 mbpd in 2014 with supply growth coming from both non OPEC and OPEC member nations
Most of the supply gains are expected to come from technology driven supplies including so called tight oil locked in rock natural gas liquids and oil sands and deepwater production it said
Tight oil is expected to account for 10 percent of global output by 2040 up slightly from the prior forecast of 7 percent
Exxon which uses the long term outlook to plan its business forecast demand growth of 25 percent by from 2014 to 2040 similar to its views last year |
MRO | Why Is Marathon Oil MRO Up 2 1 Since Last Earnings Report | A month has gone by since the last earnings report for Marathon Oil MRO Shares have added about 2 1 in that time frame underperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is Marathon Oil due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts Marathon Oil Delivers a Stellar Show in Q4Marathon Oil posted posted fourth quarter adjusted income from continuing operations of 15 cents per share surpassing the Zacks Consensus Estimate of 13 cents Better than anticipated performance from the U S Exploration Production E P unit drove the results The bottom line increased from the year ago earnings of 7 cents a share on the back of higher year over year output and improved oil price realizations in the U S E P segment Notably total net production in the quarter came in at 411 000 barrels of oil equivalent per day Boe d compared with 383 000 Boe d in the year ago period Quarterly revenues of 1 765 million surpassed the Zacks Consensus Estimate of 1 440 million Further the top line was up 27 7 from the prior year level Importantly the company generated organic free cash flow of 257 million during the quarter with year to date FCF amounting to 868 million Segmental PerformanceU S E P Marathon Oil s U S upstream segment reported a profit of 159 million reflecting a 109 2 jump from the year ago figure of 76 million Improved year over year production especially from the U S shale plays drove the performance Higher realized prices also contributed to the improved results The company reported net production available for sale of 305 000 Boe d up from 262 000 Boe d in the fourth quarter of 2017 The recorded output was at the higher end of its guidance range The improvement was mainly due to impressive contribution from U S resource plays in Bakken and Northern Delaware Notably Bakken output came in at 94 000 Boe d depicting a 37 rise from the year ago level Further output from Northern Delaware totaled 26 000 Boe d marking a whopping 138 year over year increase The company realized liquids crude oil and condensate price of 56 01 per barrel a tad higher than the year earlier level of 55 46 Natural gas liquids NGLs price realizations also recorded a nominal increase of 4 6 to stand at 24 07 a barrel Natural gas realizations increased 23 4 year over year to 3 27 per thousand cubic feet International E P The segment s income decreased from 118 million in the prior year quarter to 83 million on lower production and weak commodity price realizations Marathon Oil reported production available for sale of 105 000 Boe d down from 121 000 Boe d in the fourth quarter of 2017 The decrease in output was primarily due to a fall in production from Equatorial Guinea and United Kingdom The company s exit from Libyan operations also led to the weaker output Marathon Oil realized liquids crude oil and condensate price of 58 25 per barrel reflecting a 5 decline from the year earlier quarter s 61 32 Further natural gas and natural gas liquids realizations also witnessed a year over year reduction in the quarter under review Costs ExpensesTotal expenses of the company increased to 1 298 million from 1 171 million in the corresponding quarter of the prior year Its exploration expenses in the quarter increased almost 104 y y to stand at 116 million Depreciation and amortization costs also rose to 613 million from the year ago figure of 583 million Capex Balance SheetDuring the quarter Marathon Oil s capital expenditure came in at 677 million Full year capex totaled 2 620 million As of Dec 31 2018 it had cash and cash equivalents of 1 462 million and long term debt of 5 499 million Debt to capitalization ratio of the company was 32 2019 GuidanceMarathon Oil expects 2019 capital expenditure to amount to 2 6 billion almost flat with 2018 s spending Almost 95 of the capital outlay will be directed toward the shale plays including Oklahoma Bakken Permian and Eagle Ford Marathon Oil expects total output in 2019 to increase 10 from a year ago targeting 12 growth in the United States For the first quarter of 2019 the upstream player foresees oil production of 195 215 barrels per day bpd with U S output likely to be in the band of 175 185 bpd International production is likely to be impacted by a planned turnaround activity in Equatorial Guinea The company anticipates its cumulative two year free cash flows for 2019 and 2020 to be around 750 million at oil price of 50 a barrel and 2 2 billion at crude price of 60
How Have Estimates Been Moving Since Then
It turns out fresh estimates flatlined during the past month The consensus estimate has shifted 73 61 due to these changes
VGM Scores
At this time Marathon Oil has a nice Growth Score of B though it is lagging a bit on the Momentum Score front with a C Charting a somewhat similar path the stock was allocated a grade of D on the value side putting it in the bottom 40 for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Marathon Oil has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
MRO | PRT Vs MRO Which Stock Is The Better Value Option | Investors interested in Oil and Gas Integrated United States stocks are likely familiar with PermRock Royalty Trust PRT and Marathon Oil MRO But which of these two stocks is more attractive to value investors We ll need to take a closer look to find out
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions while our Style Scores work to identify stocks with specific traits
Currently PermRock Royalty Trust has a Zacks Rank of 2 Buy while Marathon Oil has a Zacks Rank of 3 Hold This means that PRT s earnings estimate revision activity has been more impressive so investors should feel comfortable with its improving analyst outlook However value investors will care about much more than just this
Value investors also tend to look at a number of traditional tried and true figures to help them find stocks that they believe are undervalued at their current share price levels
The Style Score Value grade factors in a variety of key fundamental metrics including the popular P E ratio P S ratio earnings yield cash flow per share and a number of other key stats that are commonly used by value investors
PRT currently has a forward P E ratio of 4 35 while MRO has a forward P E of 45 27 We also note that PRT has a PEG ratio of 0 87 This popular figure is similar to the widely used P E ratio but the PEG ratio also considers a company s expected EPS growth rate MRO currently has a PEG ratio of 4 28
Another notable valuation metric for PRT is its P B ratio of 1 07 The P B is a method of comparing a stock s market value to its book value which is defined as total assets minus total liabilities By comparison MRO has a P B of 1 19
Based on these metrics and many more PRT holds a Value grade of B while MRO has a Value grade of D
PRT is currently sporting an improving earnings outlook which makes it stick out in our Zacks Rank model And based on the above valuation metrics we feel that PRT is likely the superior value option right now |
MRO | Magellan Cuts Capex Amid Pipeline Construction Uncertainty | Magellan Midstream Partners NYSE MMP recently announced plans to trim its capex budget by 200 million in 2019 amid uncertainties surrounding the construction of Permian Gulf Coast pipeline Notably Magellan had teamed up with Energy Transfer Partners Delek U S Holdings and Marathon Oil NYSE MRO to construct the multi billion dollar pipeline project in a bid to transport oil from Permian Basin to the Gulf Coast region Magellan will also trim its 2020 capital outlay by 250 million As such Magellan now forecasts 2019 spending to total 1 1 billion While the Zacks Rank 3 Hold partnership owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee and tariff based revenues delay in project completions and cost overruns are expected to hamper profitability As it is Magellan is facing pressure in crude oil transportation business wherein operating margin fell more than 8 year over year in the fourth quarter The segment results were hampered by lower rates on the Longhorn pipeline that carries oil from the Permian basin to Houston Worryingly the depressed rates will remain in place until the next adjustment date and therefore act as a drag on the partnership s revenues Nonetheless the company s consistent distribution growth bodes well Markedly in 2018 the partnership s distributable cash flow DCF grew 8 to a record 1 1 billion Based on continued strength in earnings expectations management expects to generate DCF of around 1 14 billion this year and targets annual distribution growth of 5 Stocks Worth a WatchSome better ranked players in the energy space include Antero Resources Corporation NYSE AR NGL Energy Partners LP NYSE NGL and Delek Logistics Partners LP NYSE DKL While Antero Resources and NGL Energy sport a Zacks Rank 1 Strong Buy Delek Logistics carries a Zacks Rank 2 Buy You can seeAntero Resources 2019 earnings are likely to grow 11 year over year NGL Energy s 2019 earnings and revenues are likely to surge 226 85 and 44 32 respectively Delek Logistics 2019 earnings are expected to grow 20 38 on a year over year basis Is Your Investment Advisor Fumbling Your Financial Future See how you can more effectively safeguard your retirement with a new Special Report 4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future |
MRO | Earnings Preview Marathon Oil MRO Q1 Earnings Expected To Decline | The market expects Marathon Oil MRO to deliver a year over year decline in earnings on lower revenues when it reports results for the quarter ended March 2019 This widely known consensus outlook is important in assessing the company s earnings picture but a powerful factor that might influence its near term stock price is how the actual results compare to these estimates
The stock might move higher if these key numbers top expectations in the upcoming earnings report which is expected to be released on May 1 On the other hand if they miss the stock may move lower
While management s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations it s worth having a handicapping insight into the odds of a positive EPS surprise
Zacks Consensus Estimate
This energy company is expected to post quarterly earnings of 0 07 per share in its upcoming report which represents a year over year change of 61 1
Revenues are expected to be 1 23 billion down 29 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 57 9 higher over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out This insight is at the core of our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for Marathon Oil
For Marathon Oil the Most Accurate Estimate is lower than the Zacks Consensus Estimate suggesting that analysts have recently become bearish on the company s earnings prospects This has resulted in an Earnings ESP of 8 33
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that Marathon Oil will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that Marathon Oil would post earnings of 0 13 per share when it actually produced earnings of 0 15 delivering a surprise of 15 38
Over the last four quarters the company has beaten consensus EPS estimates three times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
Marathon Oil doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
MRO | Marathon Oil MRO To Report Q1 Earnings What Lies Ahead | Marathon Oil Corporation NYSE MRO is set to report first quarter 2019 financial results on May 1 after market close The Zacks Consensus Estimate for the to be reported quarter is pegged at a profit of 6 cents on revenues of 1 22 billion In the last reported quarter the company delivered an impressive positive earnings surprise of 15 38 on the back of better than expected production from its U S Exploration and Production E P segment The company boasts an encouraging earnings surprise history It surpassed estimates in three of the last four quarters with average positive surprise of 6 70 Marathon Oil Corporation Price and EPS Surprise Investors are keeping their fingers crossed and hoping that the company can surpass earnings estimates this time around too However our model indicates that Marathon Oil might not beat on earnings in the to be reported quarter Let s delve deeper and find out the factors likely to impact the upcoming results Factors at PlayFollowing the oil crash toward the end of 2018 that caught everyone off guard WTI crude popped up to 60 55 a barrel in the March quarter of 2019 witnessing the fastest rate of oil price increase since a decade Crude prices rebounded 30 in the first quarter underpinned mainly by OPEC supply cuts and U S sanctions against Venezuela and Iran which bode well for upstream players like Marathon Oil In addition to favorable oil prices the company is expected to realize the benefits of production growth in the United States Driven by key low cost high margin U S resource shale plays like Permian Eagle Ford and Bakken the company expects first quarter U S oil output in the band of 175 185 barrels per day Indicating an increase from 164 bpd in the year ago period While Marathon Oil expects to reap profits from the U S E P segment the international market is likely to bear the brunt of contracting volumes in the first quarter As it is output from the International E P unit has been declining over several quarters and the trend is likely to continue this season as well In fact the firm itself anticipates international production to decline further in the to be reported quarter amid planned turnaround activity in Equatorial Guinea As such the Zacks Consensus Estimate for total output both U S and International is pegged at 396 barrels of oil equivalent per day Boe d suggesting a decline from the year ago figure of 431 Boe d While we expect rebounding oil prices and rising output from the U S E P segment to aid Marathon Oil s first quarter 2019 results dim prospects of the international segment may limit profits Earnings WhisperOur proven model does not conclusively predict that Marathon Oil will beat the Zacks Consensus Estimate in the quarter to be reported This is because it doesn t have the right combination of the two key ingredients a positive and a Zacks Rank 3 Hold or higher for increasing the odds of an earnings beat You can uncover the best stocks to buy or sell before they re reported with our Earnings ESP Earnings ESP which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is 4 78 Zacks Rank Marathon Oil currently has a Zacks Rank 3 Hold which increases the predictive power of ESP But we also need to have a positive Earnings ESP to be confident of a positive surprise Note that we caution against stocks with a Zacks Ranks 4 or 5 Sell rated going into an earnings announcement especially when the company is seeing a negative estimate revision momentum Stocks to ConsiderWhile earnings beat looks uncertain for Marathon Oil here are some companies from the space that you may want to consider on the basis of our model which shows that these have the right combination of elements to come up with a positive surprise in the upcoming quarterly reports Abraxas Petroleum Corporation NASDAQ AXAS has an Earnings ESP of 133 33 and a Zacks Rank 3 The company is anticipated to release quarterly earnings on May 6 C J Energy Services Inc NYSE CJ has an Earnings ESP of 4 76 and a Zacks Rank 3 The company is expected to release quarterly earnings on May 7 Comstock Resources Inc NYSE CRK has an Earnings ESP of 11 11 and a Zacks Rank 2 The company is set to release first quarter earnings on May 9 You can see Zacks Top 10 Stocks for 2019In addition to the stocks discussed above would you like to know about our 10 finest buy and holds for the year Who wouldn t Our annual Top 10s have beaten the market with amazing regularity In 2018 while the market dropped 5 2 the portfolio scored well into double digits overall with individual stocks rising as high as 61 5 And from 2012 2017 while the market boomed 126 3 Zacks Top 10s reached an even more sensational 181 9 |
CSCO | Cisco Charts Show Clear Uptrend In All Time Frames | Clear uptrend in all time frames for Cisco Systems Inc NASDAQ CSCO shares V shaped recovery from the March low has big chances to retest the 30 level again as there is no sign of price weakness Bullish
CSCO 6 months |
CSCO | Cisco Looking Likely To Challenge 8 Year High | Cisco Systems Inc NASDAQ CSCO shares with very good chances to challenge the 8 year high at 30 soon Use 28 support as the stop on long positions
CSCO 4 months |
MRO | Marathon Oil s shares slump as CFO resigns | Reuters Marathon Oil NYSE MRO Corp s shares fell as much as 8 percent on Monday wiping about 1 14 billion from its market value after the oil producer said Chief Financial Officer J R Sult had resigned Marathon said Lance Robertson its vice president of resource plays had also quit the company Sult the company s CFO since September 2013 resigned for personal reasons and Pat Wagner will take over as interim CFO until a successor to Sult is found Marathon said The company promoted Mitch Little to executive vice president of operations to oversee its oil and gas operations Sult and Robertson were very high profile with the investment community and their replacements for the most part are not Wells Fargo NYSE WFC Securities analyst Roger Read wrote in a note Marathon shares were down 7 6 percent at 15 53 in afternoon trading weighed down also by a nearly 3 percent fall in oil prices |
TEVA | U S states accuse Teva other drugmakers of price fixing lawsuit | By Diane Bartz and Doina Chiacu WASHINGTON Reuters U S states filed a lawsuit accusing Teva Pharmaceuticals USA Inc of orchestrating a sweeping scheme with 19 other drug companies to inflate drug prices sometimes by more than 1 000 and stifle competition for generic drugs state prosecutors said on Saturday Soaring drug prices from both branded and generic manufacturers have sparked outrage and investigations in the United States The criticism has come from across the political spectrum from President Donald Trump a Republican to progressive Democrats including U S Senator Elizabeth Warren who is running for president The 20 drug companies engaged in illegal conspiracies to divide up the market for drugs to avoid competing and in some cases conspired to either prevent prices from dropping or to raise them according to the complaint by 44 U S states filed on Friday in the U S District Court in Connecticut A representative of Teva USA a unit of Israeli company Teva Pharmaceutical Industries NYSE TEVA Ltd said it will fight the lawsuit The allegations in this new complaint and in the litigation more generally are just that allegations it said in a statement Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability The 500 page lawsuit accuses the generic drug industry which mainly sells medicines that are off patent and should be less expensive of a long history of discreet agreements to ensure that companies that are supposedly competitors each get a fair share The situation worsened in 2012 the complaint said Apparently unsatisfied with the status quo of fair share and the mere avoidance of price erosion Teva and its co conspirators embarked on one of the most egregious and damaging price fixing conspiracies in the history of the United States the complaint said With Teva at the center of the conspiracy the drug companies colluded to significantly raise prices on 86 medicines between July 2013 and January 2015 the complaint said Representatives of Sandoz another company named in the lawsuit did not immediately respond to a request for comment The drugs included everything from tablets and capsules to creams and ointments to treat conditions including diabetes high cholesterol high blood pressure cancer epilepsy and more they said In some instances the coordinated price increases were more than 1 000 percent the lawsuit said The lawsuit also names 15 individuals as defendants who it said carried out the schemes on a day to day basis The level of corporate greed alleged in this multistate lawsuit is heartless and unconscionable Nevada Governor Steve Sisolak said in a statement According to New Jersey Attorney General Gurbir Grewal more than half of the corporate defendants are based in New Jersey and five of the individual defendants live in the state The lawsuit seeks damages civil penalties and actions by the court to restore competition to the generic drug market Generic drugs can save drug buyers and taxpayers tens of billions of dollars a year because they are a lower priced alternative to brand name drugs Generic drugs were one of the few bargains in the United States healthcare system the lawsuit said However it added Prices for hundreds of generic drugs have risen while some have skyrocketed without explanation sparking outrage from politicians payers and consumers across the country whose costs have doubled tripled or even increased 1 000 or more As a result of the drug companies conspiracies it said consumers and states paid substantially inflated and anticompetitive prices for numerous generic pharmaceutical drugs while the drug companies profited
The lawsuit filed on Friday is parallel to an action brought in December 2016 by the attorneys general of 45 states and the District of Columbia That case was later expanded to include more than a dozen drugmakers |
TEVA | Teva Pharm CFO says company did not conspire to fix prices | JERUSALEM Reuters Teva Pharmaceutical NYSE TEVA Industries chief financial officer on Sunday reiterated that the company has done nothing wrong in the wake of a price fixing lawsuit filed by 44 U S states Mike McClellan told a conference in Israel that the suit was an amended one and not new while stressing it was civil and not criminal There have been no developments in this area he said We take these accusations seriously and we are going to defend ourselves The Israeli company s U S unit and 19 other drug companies conspired to divide up the market for drugs to avoid competing and in some cases conspired to prevent prices from dropping or to raise them according to the complaint filed on Friday in the U S District Court in Connecticut Prosecutors said Teva Pharmaceuticals USA Inc had orchestrated to inflate drug prices sometimes by more than 1 000 and stifle competition for generic drugs The allegations in this new complaint and in the litigation more generally are just that allegations Teva said in a statement Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability
Teva s Tel Aviv listed shares were down nearly 11 percent in afternoon trading |
XOM | Southern states brace for surging Mississippi River flooding | Reuters Residents of southern states along the Mississippi River are bracing for the flooding that has swamped communities from the Ohio River Valley to eastern Oklahoma over the last week causing thousands of evacuations and killing at least 31 people Officials in Louisiana are checking levees daily and Exxon Mobil Corp N XOM has decided to shut its 340 571 barrel per day refined products terminal in Memphis Tennessee as floodwaters threatened to inundate the facility just south of the city s downtown All that water s coming south and we have to be ready for it Louisiana Lieutenant Governor Elect Billy Nungesser told CNN It s a serious concern It s early in the season We usually don t see this until much later Workers in southwestern Tennessee were preparing sandbags on Friday in hopes of limiting damage from the Mississippi when it crests at Memphis next week state emergency management officials said Officials were also examining levees to make sure they would hold We re moving things up high and we ve got our generators out and got some extra water said Dotty Kirkendoll a clerk at Riverside Park Marina on McKellar Lake which feeds off the Mississippi Flooding in the U S Midwest typically occurs in the spring as snowmelt swells rivers Freezing temperatures that have followed the rare winter flooding have added to regional woes Most of the deaths in Illinois Missouri Oklahoma and Arkansas have been caused by people driving into flooded areas after days of downpours The dead included a central Illinois teenager whose body was recovered on Friday near where a truck in which he was riding was found the day before Another teen from the truck was still missing Authorities also continued searching on Friday for country singer Craig Strickland who had gone duck hunting on an Oklahoma lake during stormy conditions His friend Chase Morland was found dead on Monday Twelve Illinois counties have been declared disaster areas and Governor Bruce Rauner on Friday ordered Illinois National Guard troops into flooded areas in the southern part of the state to mitigate flood damage and help with evacuation efforts The Mississippi is expected to crest at Thebes in southern Illinois at 47 5 feet 14 meters on Sunday more than 1 5 feet above the 1995 record the National Weather Service NWS said Flood warnings were also in effect on Friday for parts of Texas Oklahoma the Carolinas Alabama and Kentucky the NWS said while major flooding was occurring on the Arkansas River and its tributaries in that state Dozens have died in U S storms which also brought unusual winter tornadoes and were part of a wild worldwide weather system over the Christmas holiday period that also saw severe flooding in Britain More than 100 000 people were forced to evacuate their homes in areas bordering Paraguay Uruguay Brazil and Argentina after floods due to heavy summer rains caused by El Ni o authorities have said Global weather dominated conversation on social media over the holiday season after the international climate deal in Paris Particularly hard hit in the United States in recent days has been Missouri which has suffered historic flooding Close to St Louis on Friday the Mississippi the second longest river in the United States was falling after reaching near record heights the NWS said The Meramec River which meanders near St Louis and empties into the Mississippi broke height records on Thursday sending a deluge of water over its banks and forcing the closure of two major highways Interstates 55 and 44 reopened on Friday but many other roads remained closed in the St Louis area state officials said causing extreme traffic congestion
Thousands of people evacuated from their homes earlier in the week were waiting to return to their communities and begin the process of cleaning up Hundreds of structures have been damaged or destroyed local officials said |
XOM | Missouri assesses flood damage U S South still imperiled | By Sue Britt EUREKA Mo Reuters Missouri Governor Jay Nixon on Saturday toured communities ravaged by flooding that killed at least 31 people in several states and forced large scale evacuations as the danger of rising waters shifted to Arkansas and beyond Nixon visited Eureka and Cape Girardeau in eastern Missouri where floodwaters caused widespread damage and announced the federal government had approved his request to declare an emergency to help with the massive cleanup and recovery now under way The governor described the scale of the flood damage as other worldly It s almost as if you re living on some other planet he said standing near a growing pile of debris in a park in Eureka about an hour s drive west of St Louis on the banks of the Meramec River which flows into the Mississippi This is just a tiny fraction of the trail of destruction the governor told reporters The National Weather Service reported Mississippi floodwaters in Illinois and Missouri began cresting and receding on Saturday after thousands of people had to be evacuated from their homes earlier in the week when the floods destroyed hundreds of structures Retired Eureka homeowner Tracy Wolf 58 spent the last three days trying to keep water away from the sides of his house with sandbags and out of his basement with vacuums Wednesday night it came in through the windows Wolf said We slept three hours the first night I don t even know what day it is Twelve counties have been declared disaster areas in Illinois where Governor Bruce Rauner on Saturday toured several communities hard hit by flooding On Friday he ordered Illinois National Guard troops into flooded areas to mitigate damage and help with evacuation The floods claimed the lives of at least 31 people in Illinois Missouri Oklahoma and Arkansas most of whom drove into flooded areas after days of downpours Authorities continued searching on Saturday for country singer Craig Strickland of the band Backroad Anthem He had gone duck hunting on an Oklahoma lake during stormy conditions and his friend Chase Morland was found dead on Monday In Thebes Illinois about 125 miles 201 km downriver from St Louis the floodwater was expected to crest at 47 5 feet 14 m on Sunday more than 1 5 feet 0 5 meters above the 1995 record the NWS said Major flooding continued in the state of Arkansas along the Arkansas River and its tributaries Arkansas officials said they expected the river which bisects the state from west to southeast before joining the Mississippi to crest late on Saturday Large swaths of parkland in Little Rock along the river were covered with floodwaters and some homes and farmland in the Arkansas Delta were flooded on Saturday Signs that floodwaters were headed south began to emerge as the NWS issued a major flooding designation on Saturday for Osceola Arkansas where the Mississippi River reached above 35 feet 10 7 m well above the 28 foot flood stage The NWS also on Saturday warned communities in the Southern Mississippi Valley region of potential flooding during the next 10 days Officials in Louisiana are checking levees daily and Exxon Mobil Corp N XOM has decided to shut its 340 571 barrel per day refined products terminal in Memphis Tennessee as floodwaters threatened to inundate the facility just south of the city s downtown
Workers in southwestern Tennessee prepared sandbags in hopes of limiting damage from the Mississippi when it crests at Memphis next week state emergency management officials said |
XOM | Southern Illinois battles flooding as Mississippi River builds downstream | This January 3 story has been corrected in last paragraph to reflect that figure on Exxon Mobil terminal refers to capacity not barrels per day Reuters Residents of flooded areas in far southern Illinois anxiously waited for the swollen Mississippi River to peak on Sunday with hundreds electing to remain in their homes as states downstream prepared for the rising waters About 125 structures were flooded in hard hit Alexander County the southernmost point in Illinois where three families near one breach stayed dry behind sandbag fortifications and private levees county board Chairman Chalen Tatum said The National Weather Service on Sunday canceled a flash flood watch for Alexander and two other Illinois counties where record or near record river levels have threatened levees Days of downpours totaling 10 inches or more in spots pushed the Mississippi and smaller rivers over their banks in several states At least 31 people have died in Missouri Illinois Oklahoma and Arkansas most of them after vehicles drove into flooded areas Nine people have died in the Illinois flooding and a dozen counties have been declared disaster areas there said Patti Thompson spokeswoman for the Illinois Emergency Management Agency In Alexander County officials knocked on more than 500 doors to urge people to leave voluntarily though many stayed Tatum said The voluntary evacuation could run another four days and no injuries or deaths have been reported he said The levees have a lot of pressure on them Tatum said adding that a breach two days ago in a levee west of Miller City in the county has reached a quarter mile wide We hope they hold but I don t want to bet someone s life on it Tatum said many more homes were affected by a flood in 2011 and expressed frustration that already approved buy outs of more than 100 homes and small businesses related to that flooding have been stalled by an Illinois state budget impasse The Mississippi receded further from dangerous levels at St Louis and farther south at Thebes Illinois and Cape Girardeau Missouri on Sunday the NWS said Significant flooding was expected into mid January along the Mississippi River at points downstream from Tennessee to Mississippi Arkansas and Louisiana I hope it s going to slow down said Kristy Morgan an assistant manager of Little General Marathon Gas in Tiptonville a small city in the northwest corner of Tennessee All I know is they have been working around the clock doing sand bagging Morgan said of city and county personnel and emergency agencies in the area The river is expected to crest at the moderate flood stage on Thursday in Memphis Tennessee according to the NWS In Louisiana where crests at some points along the river are not expected until mid January officials are checking levees daily The river is expected to reach major flood stage from Arkansas City Arkansas to Natchez Mississippi the NWS said Islands and camps inside the levee structures would be expected to flood with some backup flooding from rivers that flow into the Mississippi the NWS said Exxon Mobil Corp N XOM said its refined products terminal in Memphis remained closed On Friday the company decided to shut the terminal just south of downtown which has a capacity of 340 000 barrels as flood waters threatened to inundate it |
MRO | Marathon Oil MRO Earnings Expected To Grow Should You Buy | Marathon Oil MRO is expected to deliver a year over year increase in earnings on higher revenues when it reports results for the quarter ended December 2018 This widely known consensus outlook gives a good sense of the company s earnings picture but how the actual results compare to these estimates is a powerful factor that could impact its near term stock price
The stock might move higher if these key numbers top expectations in the upcoming earnings report which is expected to be released on February 13 On the other hand if they miss the stock may move lower
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management s discussion of business conditions on the earnings call it s worth handicapping the probability of a positive EPS surprise
Zacks Consensus Estimate
This energy company is expected to post quarterly earnings of 0 13 per share in its upcoming report which represents a year over year change of 85 7
Revenues are expected to be 1 44 billion up 4 2 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 81 54 lower over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out Our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction has this insight at its core
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for Marathon Oil
For Marathon Oil the Most Accurate Estimate is the same as the Zacks Consensus Estimate suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate This has resulted in an Earnings ESP of 0
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that Marathon Oil will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that Marathon Oil would post earnings of 0 20 per share when it actually produced earnings of 0 24 delivering a surprise of 20
Over the last four quarters the company has beaten consensus EPS estimates three times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
Marathon Oil doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
MRO | Can Marathon Oil MRO Keep The Earnings Surprise Streak Alive | Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report Marathon Oil MRO which belongs to the Zacks Oil and Gas Integrated United States industry could be a great candidate to consider
This energy company has an established record of topping earnings estimates especially when looking at the previous two reports The company boasts an average surprise for the past two quarters of 4 29
For the last reported quarter Marathon Oil came out with earnings of 0 24 per share versus the Zacks Consensus Estimate of 0 20 per share representing a surprise of 20 For the previous quarter the company was expected to post earnings of 0 21 per share and it actually produced earnings of 0 15 per share delivering a surprise of 28 57
Price and EPS Surprise
For Marathon Oil estimates have been trending higher thanks in part to this earnings surprise history And when you look at the stock s positive Zacks Earnings ESP Expected Surprise Prediction it s a great indicator of a future earnings beat especially when combined with its solid Zacks Rank
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank 3 Hold or better produce a positive surprise nearly 70 of the time In other words if you have 10 stocks with this combination the number of stocks that beat the consensus estimate could be as high as seven
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Marathon Oil currently has an Earnings ESP of 2 36 which suggests that analysts have recently become bullish on the company s earnings prospects This positive Earnings ESP when combined with the stock s Zacks Rank 3 Hold indicates that another beat is possibly around the corner We expect the company s next earnings report to be released on February 13 2019
When the Earnings ESP comes up negative investors should note that this will reduce the predictive power of the metric But a negative value is not indicative of a stock s earnings miss
Many companies end up beating the consensus EPS estimate but that may not be the sole basis for their stocks moving higher On the other hand some stocks may hold their ground even if they end up missing the consensus estimate
Because of this it s really important to check a company s Earnings ESP ahead of its quarterly release to increase the odds of success Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported |
MRO | U S E P Segment To Buoy Marathon Oil s MRO Q4 Earnings | Marathon Oil Corporation NYSE MRO is set to report fourth quarter 2018 financial results on Feb 13 after market close The Zacks Consensus Estimate for the to be reported quarter is pegged at a profit of 13 cents on revenues of 1 440 million In the last reported quarter the company delivered an impressive positive earnings surprise of 20 00 on the back of better than expected production from both its U S E P and International segment The company boasts an encouraging earnings surprise history It surpassed estimates in three of the last four quarters with average positive surprise of 65 36 Marathon Oil Corporation Price and EPS Surprise Why a Likely Positive Surprise Our proven model shows that Marathon Oil is likely to beat earnings estimates in the to be reported quarter as it has the right combination of two key ingredients A stock needs to have both a positive and a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold to be able to beat estimates You can uncover the best stocks to buy or sell before they re reported with our Earnings ESP Earnings ESP which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is 2 36 A favorable Earnings ESP serves as a meaningful and leading indicator of a likely positive earnings surprise Zacks Rank Marathon Oil currently holds a Zacks Rank 3 A Zacks Rank 3 when combined with a positive ESP makes us confident of an earnings beat Conversely we caution against Sell rated stocks Zacks Ranks 4 and 5 going into the earnings announcement especially when the company is seeing negative estimate revisions Factors at PlayMarathon Oil s strong inventories of development projects place it well for growth The company has been improving the quality of assets which bodes well for production growth It has successfully established itself in the Delaware Basin and STACK SCOOP resource plays while exiting the oil sands and conventional assets with limited upside Driven by key low cost high margin U S resource shales like Permian Eagle Ford and Bakken Marathon Oil forecasts 30 34 annual growth in 2018 production Management had earlier predicted fourth quarter 2018 U S Exploration Production E P output available for sale in the range of 295 000 305 000 barrels of oil equivalent per day BOE d The Zacks Consensus Estimate for total sales volume at the U S E P segment for the fourth quarter is pegged at 304 000 BOE d which is well above the year ago figure of 262 000 BOE d In addition to expanded production volumes the North American market is likely to benefit from higher commodity price realizations per our model Realized prices in the United States are projected to increase on a year over year basis which might in turn boost Marathon Oil s top line The Zacks Consensus Estimate for average oil price is pegged at 66 a barrel reflecting a 20 jump from the prior year level While the international market is likely to bear the brunt of contracting volumes and lower oil prices we expect the company to easily tide over the international limitations owing to robust performance from the domestic segment Other Stocks to ConsiderMarathon Oil is not the only energy firm looking up this earnings season Here are some other companies from the same space which according to our model also have the right combination of elements to post an earnings beat in the to be reported quarter Concho Resources Inc NYSE CXO has an Earnings ESP of 2 97 and a Zacks Rank 3 The company is set to release fourth quarter earnings on Feb 19 You can see Diamondback Energy Inc NASDAQ FANG has an Earnings ESP of 1 29 and a Zacks Rank 3 The company is expected to release fourth quarter earnings on Feb 19 Chesapeake Energy Corporation NYSE CHK has an Earnings ESP of 6 87 and a Zacks Rank 3 The company is anticipated to release fourth quarter earnings on Feb 27 The Hottest Tech Mega Trend of AllLast year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
MRO | Marathon Oil MRO Beats Q4 Earnings And Revenue Estimates | Marathon Oil MRO came out with quarterly earnings of 0 15 per share beating the Zacks Consensus Estimate of 0 13 per share This compares to earnings of 0 07 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 15 38 A quarter ago it was expected that this energy company would post earnings of 0 20 per share when it actually produced earnings of 0 24 delivering a surprise of 20
Over the last four quarters the company has surpassed consensus EPS estimates three times
Marathon Oil which belongs to the Zacks Oil and Gas Integrated United States industry posted revenues of 1 77 billion for the quarter ended December 2018 surpassing the Zacks Consensus Estimate by 22 55 This compares to year ago revenues of 1 38 billion The company has topped consensus revenue estimates three times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Marathon Oil shares have added about 7 7 since the beginning of the year versus the S P 500 s gain of 9 5
What s Next for Marathon Oil
While Marathon Oil has underperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Marathon Oil was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 03 on 1 37 billion in revenues for the coming quarter and 0 21 on 5 77 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Oil and Gas Integrated United States is currently in the bottom 10 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
MRO | Marathon Oil s MRO Q4 Earnings Beat On U S E P Strength | Marathon Oil Corporation NYSE MRO posted fourth quarter adjusted income from continuing operations of 15 cents per share surpassing the Zacks Consensus Estimate of 13 cents Better than anticipated performance from the U S Exploration Production E P unit drove the results The bottom line increased from the year ago earnings of 7 cents a share on the back of higher year over year output and improved oil price realizations in the U S E P segment Notably total net production in the quarter came in at 411 000 barrels of oil equivalent per day Boe d compared with 383 000 Boe d in the year ago period Quarterly revenues of 1 765 million surpassed the Zacks Consensus Estimate of 1 440 million Further the top line was up 27 7 from the prior year level Importantly the company generated organic free cash flow of 257 million during the quarter with year to date FCF amounting to 868 million Marathon Oil Corporation Price Consensus and EPS Surprise Segmental PerformanceU S E P Marathon Oil s U S upstream segment reported a profit of 159 million reflecting a 109 2 jump from the year ago figure of 76 million Improved year over year production especially from the U S shale plays drove the performance Higher realized prices also contributed to the improved results The company reported net production available for sale of 305 000 Boe d up from 262 000 Boe d in the fourth quarter of 2017 The recorded output was at the higher end of its guidance range The improvement was mainly due to impressive contribution from U S resource plays in Bakken and Northern Delaware Notably Bakken output came in at 94 000 Boe d depicting a 37 rise from the year ago level Further output from Northern Delaware totaled 26 000 Boe d marking a whopping 138 year over year increase The company realized liquids crude oil and condensate price of 56 01 per barrel a tad higher than the year earlier level of 55 46 Natural gas liquids NGLs price realizations also recorded a nominal increase of 4 6 to stand at 24 07 a barrel Natural gas realizations increased 23 4 year over year to 3 27 per thousand cubic feet International E P The segment s income decreased from 118 million in the prior year quarter to 83 million on lower production and weak commodity price realizations Marathon Oil reported production available for sale of 105 000 Boe d down from 121 000 Boe d in the fourth quarter of 2017 The decrease in output was primarily due to a fall in production from Equatorial Guinea and United Kingdom The company s exit from Libyan operations also led to the weaker output Marathon Oil realized liquids crude oil and condensate price of 58 25 per barrel reflecting a 5 decline from the year earlier quarter s 61 32 Further natural gas and natural gas liquids realizations also witnessed a year over year reduction in the quarter under review Costs ExpensesTotal expenses of the company increased to 1 298 million from 1 171 million in the corresponding quarter of the prior year Its exploration expenses in the quarter increased almost 104 y y to stand at 116 million Depreciation and amortization costs also rose to 613 million from the year ago figure of 583 million Capex Balance SheetDuring the quarter Marathon Oil s capital expenditure came in at 677 million Full year capex totaled 2 620 million As of Dec 31 2018 it had cash and cash equivalents of 1 462 million and long term debt of 5 499 million Debt to capitalization ratio of the company was 32 2019 GuidanceMarathon Oil expects 2019 capital expenditure to amount to 2 6 billion almost flat with 2018 s spending Almost 95 of the capital outlay will be directed toward the shale plays including Oklahoma Bakken Permian and Eagle Ford Marathon Oil expects total output in 2019 to increase 10 from a year ago targeting 12 growth in the United States For the first quarter of 2019 the upstream player foresees oil production of 195 215 barrels per day bpd with U S output likely to be in the band of 175 185 bpd International production is likely to be impacted by a planned turnaround activity in Equatorial Guinea The company anticipates its cumulative two year free cash flows for 2019 and 2020 to be around 750 million at oil price of 50 a barrel and 2 2 billion at crude price of 60 Zacks Rank and Key PicksCurrently Houston TX based Marathon Oil has a Zacks Rank 3 Hold Some better ranked players in the energy space are Sunoco LP NYSE SUN Golar LNG Partners LP NASDAQ GMLP and YPF Sociedad Anonima NYSE YPF You can see Sunoco which currently carries a Zacks Rank 2 Buy pulled off average positive earnings surprise of 18 39 in the trailing four quarters Golar currently sporting a Zacks Rank 1 surpassed earnings estimates in each of the trailing four quarters with average of 92 75 YPF Sociedad which currently holds a Zacks Rank of 2 delivered average positive earnings surprise of 210 38 in the trailing four quarters Will You Make a Fortune on the Shift to Electric Cars Here s another stock idea to consider Much like petroleum 150 years ago lithium power may soon shake the world creating millionaires and reshaping geo politics Soon electric vehicles EVs may be cheaper than gas guzzlers Some are already reaching 265 miles on a single charge With battery prices plummeting and charging stations set to multiply one company stands out as the 1 stock to buy according to Zacks research It s not the one you think |
MRO | Marathon Oil MRO Jumps Stock Rises 8 8 | Marathon Oil Corporation NYSE MRO was a big mover last session as the company saw its shares rise nearly 9 on the day The move came on solid volume too with far more shares changing hands than in a normal session This breaks the recent trend of the company as the stock is now trading above the volatile price range of 15 13 to 16 15 in the past one month time frame The move came after the company reported better than expected fourth quarter 2018 results The company has seen two negative estimate revisions in the past few weeks while its Zacks Consensus Estimate for the current quarter has also moved lower over the past few weeks suggesting there may be trouble down the road So make sure to keep an eye on this stock going forward to see if this recent move higher can last Marathon Oil currently has a Zacks Rank 3 Hold while its is negative Marathon Oil Corporation Price A better ranked stock in the Oils Energy sector is Golar LNG Partners LP NASDAQ GMLP which currently carries a Zacks Rank 1 Strong Buy You can see Is MRO going up Or down Predict to see what others think Up or DownZacks Top 10 Stocks for 2019In addition to the stocks discussed above wouldn t you like to know about our 10 finest buy and holds for the year From more than 4 000 companies covered by the Zacks Rank these 10 were picked by a process that consistently beats the market Even during 2018 while the market dropped 5 2 our Top 10s were up well into double digits And during bullish 2012 2017 they soared far above the market s 126 3 reaching 181 9 This year the portfolio features a player that thrives on volatility an AI comer and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs |
CSCO | Cisco Extended Rally Not Dead Yet | The uptrend line of the last impulsive wave works as resistance now Extended rally is not dead yet but investors need to be very cautious at current price levels
Cisco Systems Inc NASDAQ CSCO 3 years |
CSCO | Cisco Sees Clear Uptrend | Clear uptrend in all time frames V shaped recovery from the March low has big chances to retest the 30 level again as there is no sign of price weakness Bullish
Cisco Systems Inc NASDAQ CSCO 6 months |
CSCO | An Option Strategy To Put The Odds On Your Side | OK this one is targeted primarily to option traders but can also be useful to traders who might consider trading options or to traders who are looking for a potential way to improve their investment odds
So let s consider
A A potentally bullish scenario
B The standard way to play it
C An alternative way to play it
In Figure 1 we see ticker Cisco Systems NASDAQ CSCO as of 3 17 15
A In an uptrend above its 200 day moving average
B Bouncing off of an oversold reading my fell to 32 then reversed
Figure 1 Courtesy AIQ TradingExpert
So for argument s sake let s refer to this as a bullish scenario In other words we will hope that the uptrend will reassert itself and look for a way to make money if it does while simultaneously limiting our risk by using an options strategy
The standard approach would be to buy call options which stand to gain if the price of the stock goes up For our example trade we will buy 15 CSCO May 2 call options at 0 60 per contract The particulars appear in Figure 2 and the risk curves for this position appear in Figure 3
Figure 2 Courtesty OptionsAnalysis com
Figure 3 Courtesty OptionsAnalysis com
The cost and maximum risk is 900
With the stock trading at 28 15 the breakeven price is 29 60
There are 59 calendar days left until option expiration
An Alternative Approach The Directional Calendar Spread
Now let s consider an alternative This strategy is typically referred to as a Directional Calendar Spread Here s how I arrived at this trade
At I went to Options Skewfinder and created and save a Wizard a group of settings that can be reused in the future with the settings that appear in Figure 4
Figure 4
From the output screen I took the top ranked trade which involves buying the July 29 call and selling the May 29 call EXCEPT
Instead of trading this position in a 1 x 1 ratio
We will trade it in a ratio of 3 x 2 this creates a position that has limited risk on the downside and unlimited profit potential on the upside See Figure 6
To compare apples to apples we will buy 18 July 29 calls and sell 12 May 29 calls so that the trade costs exactly the same as the long call trade 900
The particulars and the risk curves for this trade appear in Figure 5 and 6
Figure 5 Courtesty OptionsAnalysis com
Figure 6 Courtesty OptionsAnalysis com
There are many similarities and differences between these two trades but there are 4 key things to focus on
1 The long call position does enjoy greater maximum profit potential as it has a higher delta 556 versus 279 for the calendar spread This means that for each dollar the stock rises in price the first trade will gain 556 and the second 279 So if a trader is flat out bullish and desiring to maximize his or her gains this trade will clearly make more money if that outlook proves to be correct
2 The directional calendar spread stands to benefit from time decay i e the fact that option time premiums decline to zero by expiration while the long call stand as to be hurt by time decay We can tell this by the fact that the long call has a Theta value of 11 12 meaning it will lose 11 12 of time value each day while the directional calendar spread has a positive Theta value of 0 28
3 At May expiration the long call position will cease to exist as the May 29 call will expire At May expiration the calendar spread will still hold 9 long July calls which opens up other profit opportunities for example selling June calls and creating another spread position
4 The directional calendar position has a breakeven price at the time of May option expiration of approximately 27 95 I say approximately because a rise in implied volatility for the July call prior to May expiration could result in a higher breakeven price and vice versa The long call position has a breakeven price of 29 60 almost 2 higher than the calendar spread
In other words if CSCO stock is below 29 60 prior to May expiration the position will show a loss assuming of course that is held until expiration the directional calendar spread could conceivably be showing a profit if CSCO is under at 27 95 a share at May expiration
The trade off to consider is this
1 The long call position has the greater profit potential
2 The directional calendar spread has the greater probability of generating a profit
Now let s fast forward to the close on 5 4 15 The price of the stock has risen from 28 15 to 29 17 At this point one can argue that the Long May call position was the better trade The stock rose 3 6 in price which caused the option to rise 41 7 A trader could sell this position right now and reap his or her reward And taking a profit might just be an excellent idea at this point for the following reason
With 11 days left until expiration the stock is currently trading below the breakeven price of 29 60 So if his position is held another 11 days and the stock does not rise from the current price of 29 17 to 29 60 or above then the current open profit of 375 will vanish and the trade end up showing a loss
Figure 7 Courtesty OptionsAnalysis com
Now let s look at the current status and future prospects for the directional calendar spread As of 5 4 15 this trade is also showing a profit but the only 186 or 20 7 So again it can be argued that the May long call has been the better trade But before declaring a winner let s look at the future prospects for the directional calendar spread
As you can see in Figure 8 time decay could help this directional calendar trade a lot as May expiration nears In fact the holder of this position would be perfectly content to see CSCO remain relatively unchanged between now and May expiration as the position profit could soar
Figure 8 Courtesty OptionsAnalysis com
Also remember that when May option expiration hits the holder of this position can either ext the entire position by selling the July calls and either buying back the May calls or letting them expire worthless depending on whether the price of CSCO is above or below the 29 strike price
Summary
OK so hat s a lot to chew on especially if your knowledge of options is limited in fact if your knowledge of options is limited let me say Thank You for slugging it all the way out to the end So let s approach this from two angles
If you are an options person and I think you know who you are
Whether or not you ever employ the Directional Calender Spread strategy is not the primary point The primary point is to always remember that there is usually more than one way to play any give situation In this example buying the call option would have worked out fine and you could cash out 11 days prior to expiration and taken a nice profit and avoid any concerns about giving it back due to time decay
Still the directional calendar spread still has alot of upside potential in the days ahead as time decay may serve to boost profits if CSCO does anything other than fall sharply The holder of this position also has the opportunity to generate additional gains with the July call option portion of this trade
If you are new to options
Hopefully this piece opened your eyes to the possibilities available for traders who know how to do more than just buy shares of stock Or of course your just confused as hell Here s hoping it s the former |
CSCO | Looking Ahead of Wall Street Cisco Systems Shake Shack King Digital | Earnings season is continuing to roll on as three big companies are reporting this week What should investors be looking for
Cisco Systems NASDAQ CSCO
Technology company Cisco Systems will announce its third quarter 2015 earnings results on Wednesday May 13 before the market opens The company is expected to post earnings of 0 53 a share and 11 54 billion in revenue up from 0 46 earnings per share and 11 5 billion in revenue the same quarter a year prior
Cisco System s transition into cloud computing has allowed the company to grow beyond its traditional area of routers and switches In its Q2 2015 report on February 11 of this year Cisco saw a 40 increase in its earnings driven by data relevant product and services Cisco also reported that its Unified Computing System data center platform had been adopted by more than 41 000 customers
However in the third quarter Cisco faced a few hurdles including troubles in its typically well performing switching business inconsistent demand from telecom carriers and its instability in emerging markets Despite this analysts are generally confident on Cisco Systems ability to overcome these headwinds
On average the top analyst consensus for Cisco Systems on is Moderate Buy
Shake Shack NYSE SHAK
Hamburger restaurant chain Shake Shack is set to announce its first quarter 2015 earnings results on Wednesday May 13 after market close Analysts expects the company to post a loss of 0 03 a share
The company currently operates just 63 restaurants in nine different countries with 16 of them located in the metropolitan New York City area The company said it plans to expand slowly with a goal to open 10 new locations in the United States every year as well as add more international locations
Shake Shack shares have not been doing so well lately having fallen more than 12 on Thursday May 7 Investors began to question the stock s valuation back in March due to the measured growth strategy presented by CEO Randy Garutti and Chairman Danny Meyer Consequently excitement for the stock has worn off and the stock has dropped
On average the top analyst consensus for Shake Shack on is Hold
King Digital Entertainment PLC NYSE KING
Mobile game maker King Digital Entertainment is slated to announce first quarter 2015 earnings on Thursday May 14 after market close Wall Street expects the company to post earnings of 0 46 a share up from 0 41 earnings per share the same quarter last year
In the last quarter King Digital posted earnings of 0 57 per share beating analysts estimates by 0 10 but also marking an 11 decrease from the same quarter a year prior The company posted adjusted revenue of 559 2 million down from 601 4 million year over year but coming ahead of analysts consensus estimate of 519 93 million
King Digital received a big boost in downloads for the sequel to its wildly popular game Candy Crush which picked the company up from out of a deepening hole The company has said the success of the second Candy Crush game proves its ability to create popular games and extend the lifespan of its brands
On average the top analyst consensus for King Digital Entertainment on is Hold |
XOM | XOM We Knew Climate Change Was Real Threat But We Didn t Want You To | One of the big complaints about climate change deniers is that they don t fund any genuine primary scientific research into climate change
We are used to deniers extracting out of context passages from existing legitimate climate research and pretending those passages support the denialist position But wait we now know thanks to recent coverage by and the that at least one climate change denier did fund a great deal of legitimate climate research
And what did that research show It showed that climate change is real is caused in great measure by human activities and has the potential to disrupt human society significantly To be fair when Exxon Corp now Exxon Mobil Corp N XOM the world s largest publicly traded oil company engaged in this research in the 1970s and 1980s it was genuinely trying to understand the relationship between carbon dioxide emissions and climate change During that time Exxon scientists collaborated openly with prominent academic and government researchers and were even praised for their commitment and professionalism
But as we all know that openness did not last As the scientific findings became more alarming the company began to see the findings from climate research as a threat to its business Exxon launched a public relations offensive to dispute what climate researchers around the world were discovering an offensive that lasted until 2008 when the company announced that it would end its support for the vast network of climate change denial organizations it had helped to build Whether the company did in fact end that support is disputed
You can read all the gory and disturbing details concerning this turnabout at the sites linked above Some might consider this old news Those who keep up on climate news are certainly familiar with the large denialist apparatus of front groups fake think tanks and public relations firms supported by Exxon and others
What s new is the revelation about how deeply committed Exxon was to actual legitimate scientific investigation and how much it did to further our understanding of climate change including creating some of the most sophisticated climate modeling of the time Those models are similar to models used by climate scientists today But the company now derides such models as useless
Given all this it is hard to overstate how brazen and cynical Exxon s leaders became In the early 1990s even while Exxon spokespersons and Exxon funded front groups were decrying the inadequacy of climate models and downplaying the threat of climate change the company was sponsoring a team of scientists to evaluate how a warming planet might affect exploration opportunities in the arctic as the sea ice melted The prognosis looked good over the long term for turning arctic prospects then inaccessible and risky into profitable operations once the ice began to melt as it has now started to do The company was also interested in how melting permafrost would affect its pipelines and processing facilities which might be in danger of sinking into a landscape softened by warming
But here s the real kicker The team used climate models developed by Environment Canada the Canadian government s environmental agency to create its positive assessments about the eventual accessibility of underwater arctic oil and natural gas deposits So while the company was disparaging climate models it was simultaneously salivating over the oil and gas profits that those very models predicted a warming arctic would make possible from the company s arctic leases And of course the main ingredient for the warming represented in those models was the very carbon dioxide produced when Exxon s oil and natural gas was burned by its millions of customers
Exxon has long used models to predict what it will find underground wherever it is thinking about drilling It uses them to manage its existing oil and natural gas reservoirs It uses models to calculate its reserves and implores its investors and the U S Securities and Exchange Commission to believe the numbers its models spit out For this reason it is completely obvious that Exxon has no genuine objection to models of the physical world except when those models might undermine the company s profitability
Based on the latest revelations climate action group 350 org is by the U S Department of Justice Just what crime Exxon perpetrated is not specified But it s understandable that what the company did feels like a crime
The closest analogy is the cover up by tobacco companies of research they did into the harmful health effects of smoking but which they lied about to the public for many years Those companies ended up getting sued by individuals states and the federal government for health costs associated with smoking But the tobacco companies are still in business and doing quite well
I think those supporting an investigation of Exxon are hoping for criminal charges There is a feeling that the company perpetrated a fraud on the public that it lied about the dangers of its products while insisting on their safety Fraud is indeed a crime However people mostly end up getting sued for it Only a few actually go to jail
It seems doubtful that such a prosecution could ever succeed Exxon makes legal products that work as advertised And so far it s not illegal to do things which change the world s climate It s true that the company has been trying to confuse policymakers and the public about the nature of the scientific research on climate change But the First Amendment protects even people and companies who lie about matters of public policy so long as companies don t lie about their products to the people who buy them
Exxon never explicitly promised that burning oil and natural gas would not affect the world s climate The company merely adopted the legally safe position of saying that the uncertainties surrounding climate change research were great And of course it funded front groups to make it seem as if this message of uncertainty was coming from many places not just one But none of this appears illegal even if it is unseemly
If I worked in the higher echelons of Exxon Mobil today or at any time in the last couple of decades I d be much more worried about being brought before some future international court to answer for what are called crimes against humanity In such a court the protections afforded by U S law would be irrelevant And with the damage inflicted by climate change say by 2030 the public appetite for someone to blame might well be insatiable |
XOM | Unprofitable Metals Prices Close To Bottom | A recent Financial Times made an interesting comparison between our current fall in commodity prices and falls following previous price peaks
The FT says that after commodity prices peaked in 1997 it took 21 months to arrest that fall In 2000 01 it was 13 months After collapsing along with the global economy in 2008 commodities hit the floor in just eight months
Source Financial Times
This time the Bloomberg Commodity Index has been in decline for four years and counting From its most recent peak in May 2011 the benchmark is off by half and scraping the lowest levels of the 21st Century
Picking Market Bottoms
When will it hit bottom and what will that look like This graph is what a recent Economist Intelligence Unit report suggests the trend may look like Yet you have to ask in a world expecting the imminent rise in Federal Reserve interest rates with high levels of corporate and state debt and variable levels of growth around the world are we really going to move from a state of volatility to a situation of slow benign gradual price movements for the next 2 3 years
Source Economist Intelligence Unit
The FT article and the EIU report tend to look at the issue from the asset class point of view suggesting recent cuts in output by major producers such as Glencore L GLEN in metals and ExxonMobil N XOM in oil will work their way through to support prices next year But as metals consumers we know only too well that a metal is capable of going in one direction and another is capable of going in the opposite if the fundamentals are sufficiently diverse
Unprofitable Metals
Prices for many metals are probably close to the bottom simply because the current market price is below the cost of production Glencore has not curtailed production of copper and zinc out of altruism it has done so because the mines it closed are not economically viable
Without courting innuendo I am not going to enter into a long evaluation on the shape of bottoms and whether we can a expect sharp pointy one or a big fat flat one the reality is the shape will depend on the particular metal s supply and demand fundamentals and investors view of those fundamentals |
XOM | Yellen Spikes USD XOM CEO Talks Oil | Janet Yellen piled onto the oil market after telling Congress that a December rate hike was a Live possibility Live it s a December rate hike Maybe Janet Yellen instead of Donald Trump should be on Saturday Night Live because she seems to get a major reaction to saying live It sent a shockwave through the markets causing a big spike in the front end of the treasury yield curve and a spike in the dollar Sure she says a rate hike is data dependent but that s not very helpful to oil prices after a slightly disappointing weekly Energy Information Administration supply report
While refining surged once again it was not enough to overcome another build in overall crude supply and a smaller than expected drawdown in Cushing Oklahoma stocks The crude oil build came in at 2 8 million barrels from the previous week and was on the high end of what the market was looking for In Cushing supply fell 212 000 barrels short of the 500K that we saw in the API report
Now if it weren t for Janet Yellen the market may have rebounded as we are seeing green shots of bullishness in the report We saw refining runs jump to 88 7 of capacity as refiners look to spread out of seasonal maintenance and so took advantage of strong margins
Demand looks strong as well as motor gasoline inventories fell by 3 3 million barrels and distillate fuel inventories decreased by 1 3 million barrels Total commercial petroleum inventories actually decreased by 2 3 million barrels last week This is because gasoline demand is at an average 9 2 million barrels per day up by 2 5 from the same period Distillate fuel demand is 3 9 million barrels per day over the last four weeks up by 8 9 from the same period last year So if you look past the Fed and the headlines we should see a rebound assuming the market realizes that Ms Yellen really is not saying anything different We are data dependent I think she put December for a potential rate hike back on the table not because she believes that they will raise rates but because she does not want the market to price in irrational low rate exuberance forever
Oil traders were watching with much interest when Maria Bartiromo interviewed ExxonMobil N XOM CEO Rex Tillerson yesterday on Mornings with Maria The man that just made the Forbes list of the world s most powerful people gave his outlook for the global oil market While he painted a weak picture on the economy and jobs he also sounded like a CEO that was looking for opportunities that would serve his company for the future
Tillerson said If you look at energy for kind of a proxy for how the economy is going it s pretty sluggish and there s not a lot that we can see on the horizon through next year that s going to change that the U S economy has been sluggish since the downturn of 2009 We ve never really found our legs We have just been kind of sliding along at a very very modest economic rate
In fact he rightly credited U S job growth to the shale revolution If you look at job growth in the U S since about 2010 and 2009 when the shale revolution really began and activity levels really picked up to these very high levels most of the job growth in the United States if you strip out our industry there was no job growth in the U S As we ve had the downturn we are seeing significant job losses there and I think that s why you see it translating into flattening some of the job gains
As far as targeting companies to buy in the energy sector he said valuations are still a little bit out of line with our view of where they should be in order to make an acquisition attractive to us We ll see going forward because there will be a lot of pressure coming on a lot of companies as we enter next year In other words he is watching the energy sector very carefully and when the time is right Exxon will be ready to pounce
He is looking at areas that others are giving up on saying that he still sees attractive opportunities in West Africa and Canada He even said his Canadian Sands plays are doing well even as other companies flee
We ll get a look at the natural gas report today Call me for the latest trades |
XOM | Shell to cut further 2 800 jobs after BG takeover | Investing com Royal Dutch Shell L RDSa expects to slash thousands more jobs to save costs if its takeover of BG Group L BG goes through as planned early next year following a final green light from China
The acquisition which was announced on April 8 and is biggest in the sector in a decade has been cleared by China s Ministry of Commerce Shell said on Monday after earlier approvals from Australia Brazil and the European Union
Shortly after announcing the green light from China Shell issued a statement saying it expected to cut about 2 800 roles globally from the combined group
The combination will transform Shell into the world s top liquefied natural gas trader and a major offshore oil producer focused on Brazil s rapidly developing sub salt oil basin that would rival Exxon Mobil N XOM s position as the world s biggest international oil company |
XOM | Sanders says U S Fed hijacked by bankers | WASHINGTON Reuters Democratic presidential candidate Bernie Sanders lambasted the Federal Reserve on Wednesday as an institution that has been hijacked by the very bankers it regulates and called for banning bank executives from regional Fed governing boards The populist Sanders last week criticized the Fed s decision to raise interest rates and acknowledged proudly in a Saturday night debate that Wall Street won t like him in the White House Wall Street is still out of control Sanders wrote in a New York Times opinion piece Seven years after large U S banks were bailed out by the Treasury Department because they were too big to fail the banks have become even bigger leaving taxpayers at risk of another bailout he said To rein in Wall Street we should begin by reforming the Federal Reserve Sanders wrote Unfortunately an institution that was created to serve all Americans has been hijacked by the very bankers it regulates The chief executives of the largest banks in America serve on Federal Reserve boards he said likening that to the chief of Exxon N XOM Mobile running the Environmental Protection Agency He said banking executives should be barred from serving on the boards of the Fed s regional banks and board members should be nominated by the president and chosen by the Senate Sanders blamed the Fed s decision last week to raise interest rates on pressure from bankers and said that as a rule the Fed should not hike rates until unemployment is lower than 4 percent Sanders relentless focus on the ills of Wall Street has kept pressure on Democratic front runner Hillary Clinton who has had friendlier relations with corporate America and received significant campaign donations from big banks second only to Republican presidential contender Jeb Bush During the last Democratic debate a moderator cited a 2007 Fortune magazine cover titled Business Loves Hillary and asked whether corporate America should love her in 2016 Everybody should Clinton quipped In the opinion piece Sanders called for full and unredacted transcripts of Federal Open Market Committee meetings to be released within six months instead of the current five years He also said the Government Accountability Office should conduct a full and independent audit of the Fed
The sad reality is that the Federal Reserve doesn t regulate Wall Street Wall Street regulates the Fed Sanders wrote |
MRO | Why Is Marathon Oil MRO Down 10 1 Since Last Earnings Report | A month has gone by since the last earnings report for Marathon Oil MRO Shares have lost about 10 1 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is Marathon Oil due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important drivers Marathon Oil Q3 Earnings Beat on Higher Output Oil PriceMarathon Oil posted third quarter adjusted income from continuing operations of 24 cents per share surpassing the Zacks Consensus Estimate of 20 cents The better than expected performance was driven by higher than anticipated production from both its United States Exploration Production E P unit and the International segment Precisely the U S E P output available for sale in the quarter under review totaled 304 000 barrels of oil equivalent per day Boe d surpassing the consensus estimate of 300 00 Boe d Output from international operations came in at 115 000 Boe d topping the consensus estimate of 110 000 Boe d The bottom line also turned around from the year ago quarter s loss of 8 cents on the back of higher year over year output and improved oil price realizations along with lower costs Notably total net production in the quarter came in at 419 000 Boe d compared with 394 000 Boe d in the year ago quarter Quarterly revenues of 1 667 million also surpassed the Zacks Consensus Estimate of 1 501 million Further the top line was up 33 1 from the prior year level Importantly the company generated organic free cash flow of 320 million during the quarter with year to date FCF amounting to 632 million Segmental PerformanceUnited States E P Marathon Oil s United States upstream segment reported a profit of 201 million against a loss of 38 million a year ago Higher oil prices and production improved the segment s results The company reported production available for sale of 304 000 Boe d up from 245 000 Boe d in the third quarter of 2017 The output also surpassed the higher end of the company s guidance range The improvement was mainly due to impressive contribution from U S resource plays in Eagle Ford Bakken and Northern Delaware The company realized liquids crude oil and condensate price of 68 51 per barrel 46 8 higher than the year earlier level of 46 65 Natural gas liquids NGLs price realizations also recorded a year over year increase of 34 5 to stand at 28 07 a barrel However natural gas realizations decreased 5 9 year over year to 2 55 per thousand cubic feet International E P The segment s income increased from 104 million in the prior year quarter to 116 million in the third quarter of 2018 on higher crude realizations Marathon Oil reported production available for sale of 115 000 Boe d down from 149 000 BOE d in the third quarter of 2017 The decrease in output was primarily due to a fall in production from Equatorial Guinea and United Kingdom The company s exit from Libyan operations also led to weaker output However Marathon Oil realized liquids crude oil and condensate price of 64 08 per barrel reflecting a 25 rise from the year earlier quarter s 51 23 per barrel However natural gas and natural gas liquids realizations witnessed a year over year reduction in the quarter under review Costs ExpensesImportantly total expenses of the company also reduced 24 6 to a total of 1 244 million in the third quarter of 2018 compared with 1 624 million in the corresponding quarter of the prior year Its exploration expenses in the quarter reduced almost 81 y y to stand at 56 million Depreciation and amortization costs also declined to 626 million from the year ago figure of 641 million Capex Balance sheetDuring the quarter Marathon Oil s capital expenditure came in at 691 million As of Sep 30 2018 it had cash and cash equivalents of 1 564 million and long term debt of 5 498 million Debt to capitalization ratio of the company was 31 3 2018 Guidance RaisedMarathon Oil expects its third quarter 2018 United States E P output available for sale in the range of 290 000 300 000 Boe d International E P output is expected to remain within 105 000 115 000 BOE d down from the second quarter level owing to planned maintenance in the United Kingdom and Equatorial Guinea Driven by robust third quarter performance it increased its full year production guidance to 405 000 415 000 Boe d from prior expectation of 400 000 415 000 Boe d The company also hiked its guidance for annual resource play oil and Boe growth from prior expectation of 28 32 to 30 34 with capital expenditure budget remaining intact at 2 3 billion
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates The consensus estimate has shifted 14 58 due to these changes
VGM Scores
At this time Marathon Oil has a strong Growth Score of A though it is lagging a bit on the Momentum Score front with a B Following the exact same course the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of A If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably Marathon Oil has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
CSCO | Cisco Shares Filled Upside Gap From February | Cisco Systems Inc NASDAQ CSCO shares filled the upside gap from February as they found Fibo support late last week The daily trend is still down but the longer term trend is rather neutral as price is moving sideways during the last 4 months A close above 28 50 would reinforce the bullish scenario while a close below 27 50 would open the door to month lows 26 CSCO daily chart 4 months |
CSCO | Cisco Technical Preview Trend Is Neutral | Cisco Systems Inc NASDAQ CSCO shares found support and rebounded after filling their February gap a few sessions ago The trend is neutral at current levels as price has been moving sideways in a renge between 26 and 30 during the last 4 months There is resistance Friday s high 28 62 before 29 29 25 and 29 50 A close below 27 50 would open the door to 5 month lows 26 CSCO daily chart 4 months |
CSCO | Does Cisco Belong In Your Dividend Portfolio | The NASDAQ Composite crossed 5 000 this year reaching that threshold for the first time in 15 years It s been a long road but investors in the index can finally put the dot com boom and bust behind them
But not all of the high flyers from the late 1990s have regained their former glory It s hard to believe but Cisco Systems NASDAQ CSCO was once one of the most valuable companies in the world
Today it doesn t even rank in the top 50
And while Cisco stock has been rallying for the past four years more than doubling since bottoming out in mid 2011 its price is still 65 below its old bubble high
Cisco Systems stopped exciting momentum investors a long time ago and will probably never again be a growth dynamo Its routers and switches have become commoditized products and face increasing pressure from cheaper software based alternatives But this slower growing more mature Cisco stock is starting to get attention from a different corner of the market Dividend hunters
A Friendly Face For Income Investors
Cisco declared and paid its first quarterly dividend in 2011 at 6 cents per share and has since become a dividend raising machine This quarter Cisco raised its dividend for the fifth time in four years to 21 cents per share That s a 250 increase in just four years
Let s play with the numbers a little here Cisco s annual dividend of 84 cents works out to a current dividend yield of 3 Had you bought shares of Cisco stock just before its first dividend in 2011 and held on to it until today your yield on cost would be just shy of 5 For those unfamiliar with the term yield on cost is the current annual dividend divided by the original purchase price It s a useful metric for long term dividend investors investing primarily for income
Seen by itself Cisco s 3 dividend is not wildly compelling Yes it is significantly better than the 10 Year Treasury yield and the dividend yield on the S P 500 both of which offer about 1 9 But it is also significantly below the level of many REITs MLPs oil majors and other higher yielding corners of the market So if you re buying Cisco stock for its dividend you had better be confident that its high rate of dividend growth will continue
Well we may not see 250 growth every four years going forward but I do expect Cisco to be one of the biggest raisers among its large cap peers
When Cisco decided to pay its first dividend it essentially made a new pact with shareholders Henceforth Cisco would be committed to rewarding its patient shareholders with dividends equal to at least 50 of its annual free cash flow
On that count Cisco actually has a little catching up to do Over the trailing 12 months its free cash flow has totaled 2 12 per share That puts its current dividend at about 40 of free cash flow Another popular metric for dividend sustainability the dividend payout ratio also indicates that Cisco has a little wiggle room to keep raising its dividend Cisco s current dividend payout ratio is a very reasonable 45
Of course ultimately Cisco s ability to keep raising its dividend will hinge on its ability to grow its earnings And on that count Cisco s prospects aren t looking bad Last quarter Cisco beat analyst earnings estimates and offered upbeat guidance going forward Even in a more competitive environment Cisco has managed to double its revenues over the past decade
Bottom Line
Cisco s competitive pressures will not be going away overnight and it will probably see continued margin erosion for the foreseeable future I should emphasize again that this is not a high growth company But Cisco stock would make a nice addition to a diversified dividend stock portfolio
Charles Lewis Sizemore CFA is the chief investment officer of investment firm Sizemore Capital Management |
CSCO | The Week Ahead Economic Spring Thaw On The Horizon | In the absence of real data it is easy and tempting to speculate Unlike last week the week ahead featured an avalanche of data more in both quantity and importance than we have seen in a month With some recent significant reports showing economic improvement we expect a change of focus
It is time for an economic spring thaw
Prior Theme Recap
In my last WTWA I predicted a weeklong quest for new market worries I even named a few candidates Helped by early week selling this forecast proved to be very accurate Veteran CNBC anchors who had obviously not read my primer on volatility made silly statements like the Dow was down triple digits earlier but now is in the green Oh it is now down three points A worried viewer is a loyal viewer Don t touch that dial A quick review of shows Yemen Fed commentary biotechs semis energy transports and others too numerous to mention
And a surprise a fresh omen
Doug Short s pictures are always Read his full weekly snapshot post for informative long term charts and an analysis of drawdowns
Feel free to join in my exercise in thinking about the upcoming theme We would all like to know the direction of the market in advance Good luck with that Second best is planning what to look for and how to react That is the purpose of considering possible themes for the week ahead
This Week s Theme
The upcoming week has interesting calendar effects
It combines end of month and start of month data a combination of important reports
It is holiday shortened but with a twist The market rarely is on holiday while the government is in action but this week is an exception The employment situation report will be released as usual on Friday There also will be Fed conference presentations
I expect position squaring in front of Friday s news
Significant reports from last week home sales retail sales and initial jobless claims all showed an economic uptick This combination of factors may create a more positive focus for market pundits I expect many to be asking
Will there be an economic spring thaw
The Viewpoints
No excuses Winter occurs every year The economic weakness continues
This winter was exceptional Seasonally adjusted data have not done justice to the cold weather effects
The most important data employment and retail sales have shown strength
As always I have some additional ideas in today s conclusion But first let us do our regular update of the last week s news and data Readers especially those new to this series will benefit from reading the
Last Week s Data
Each week I break down events into good and bad Often there is ugly and on rare occasion something really good My working definition of good has two components
The news is market friendly Our personal policy preferences are not relevant for this test And especially no politics
It is better than expectations
The Good
There was some good news last week
Compromise in the House Party leaders Boehner and Pelosi huddled up and on Medicare reforms It is good to see a solution for an issue that has required an annual doc fix in Medicare payments It is even more important that there is some ability for leaders to compromise when action is needed
Michigan sentiment strengthened and beat expectations No one captures the whole picture as well as
Earnings expectations seem to have bottomed Brian Gilmartin tracks this closely for the S P 500 and still He also which have been better than usual
Overall corporate profits remain strong Scott Grannis has emphasized this for several years He
To fully understand this argument I recommend reading a series of over the past 5 6 years I m using the same charts over and over and making the same basic argument which is that corporate profits have been extraordinarily strong for years but the market has been and is still unwilling to assign an unusually high multiple to those profits This tells me that equities could be fairly valued at current levels and at the very least they do not appear to be overvalued
Hotel occupancy is strong has the story about a possible new record This confirms my anecdotal experience in New Orleans where hotels and restaurants were busy and lively
Initial jobless claims improved back below the three handle
New home sales solidly beat expectations an annualized growth of 539K the good start to the year helped by the reduced number of distressed sales
European economies are improving Here is one of the
The Bad
There was also a little discouraging economic news although less than market results would suggest
FedSpeak tilted hawkish and signaled the possibility of a faster path for rate increases Even Yellen provided some support
Durable goods fell 1 4 while a small gain was expected takes a close look adjusting for both population and inflation
Q414 GDP disappointed some observers who expected a positive revision to the 2 2 increase Some thought it was better than it looked Most were more skeptical Doug Short and Steven Hansen at
High frequency indicators were mixed but leaning negative according to New Deal Democrat s
The trucking index declined in February Some are concerned about Dow Theory readings from the transport sector
The Ugly
Yemen The initial impact has been a spike in oil prices which has hurt consumers without really helping energy companies The threat is even greater now that Saudi Arabia and other Gulf Cooperation Council states have joined in the air strikes has an interesting analysis
Quant Corner
Whether a trader or an investor you need to understand risk I monitor many quantitative reports and highlight the best methods in this weekly update For more information on each source
Recent Expert Commentary on Recession Odds and Market Trends
Bob Dieli does a subscription required after the employment report and also a monthly overview analysis He follows many concurrent indicators to supplement our featured C Score
An update of the regular ECRI analysis with a good history commentary detailed analysis and charts If you are still listening to the ECRI three years after their recession call you should be reading this carefully Doug has the latest interviews as well as discussion Also see Doug s summary of key indicators
has developed an array of interesting systems Check out his site for the full story We especially like his confirming that there is no recession signal He gets a similar result from the chart below Georg continues to develop new tools for market analysis and timing including a to and from the S P 500 I am following his results and methods with great interest You should too
A variety of strong quantitative indicators for both economic and market analysis While we feature the recession analysis Dwaine also has a number of interesting market indicators He recently noted an although the levels are still not yet worrisome Recently Dwaine introduced a that is much more sophisticated than the popular Shiller CAPE method It also provides a much less worrisome conclusion 13 7 returns through the end of 2016
points out that April has been the best month for the DJIA since 1950 Those following seasonal trading methods will spend the month getting ready to sell in May Jeff is one of the few who actually does this honestly My observation is that a Venn diagram of the sell in May and buy in October disciples has almost no overlap
has an interesting interactive chart snapshot below showing the effect of government spending combining all levels on GDP When state and local effects are included it has been a significant drag
The Week Ahead
It will be a huge week for economic data
The A List includes the following
Employment report F The biggest news of the week but no trading until Monday
ISM index W Interesting combination of concurrent and leading indicators
Initial jobless claims Th The best concurrent news on employment trends with emphasis on job losses
Personal income and spending M February data but important
ADP employment W Good independent read on private employment
Auto sales W New highs See
Consumer confidence T The Conference Board version reflects employment and consumer spending
The B List includes the following
Pending home sales M Less important than new home sales but everything about housing remains important
Construction spending W February data but important
Factory orders Th February data and a volatile series
Crude oil inventories W Maintains recent interest and importance
Trade balance Th Feb data will be part of Q1 GDP calculation
A daily dose of FedSpeak is on tap including Chair Yellen on Thursday and also two presentations on Friday
How to Use the Weekly Data Updates
In the WTWA series I try to share what I am thinking as I prepare for the coming week I write each post as if I were speaking directly to one of my clients Each client is different so I have five different programs ranging from very conservative bond ladders to very aggressive trading programs It is not a one size fits all approach
To get the maximum benefit from my updates you need to have a self assessment of your objectives Are you most interested in preserving wealth Or like most of us do you still need to create wealth How much risk is right for your temperament and circumstances
My weekly insights often suggest a different course of action depending upon your objectives and time frames They also accurately describe what I am doing in the programs I manage
Insight for Traders
Felix switched to bullish from neutral for the three week market forecast There is still extremely high uncertainty reflected by the percentage of sectors in the penalty box Our current position is still fully invested in three leading sectors mostly because there have been good opportunities in spite of the volatility For more information I have posted a further description You can sign up for Felix s weekly ratings updates via email to etf at newarc dot com
Felix did not enter the hedge 20 000 in cash and prizes but he is making a daily appearance to mention a top sector
Our best trader article this week comes from Mike Bellafiore has a list of lessons that includes some familiar ideas He adds value with a link to a strong article for each lesson Traders can profitable spend a few hours reviewing these links
Insight for Investors
I review the themes here each week and refresh when needed For investors as we would expect the key ideas may stay on the list longer than the updates for traders Major market declines occur after business cycle peaks sparked by severely declining earnings Our methods are focused on limiting this risk Start with our and follow the links
We also have a new page summarizing many of the If you read something scary this is a good place to do some fact checking
One of my recurrent themes for investors is to turn the page whenever the see a story about the aging bull or a prediction that the market is due for a major correction
Bull markets do not die of old age This economic cycle the basis for the stock market cycle features a sharp decline and a very gradual recovery It could continue for years Dr Ed joins in on this theme
A long expansion is a persuasive argument for buying stocks even though forward P Es are historically high Investors are likely to be willing to pay more for stocks if they perceive that the economic expansion could last let s say another four years rather than another two years The more time we have before the next recession the more time that earnings can grow to justify currently high valuations
If a recession is imminent stocks should obviously be sold immediately especially if they have historically high P Es based on the erroneous assumption that the expansion s longevity will be well above average Bull markets don t die of old age They are killed by recessions
Other Advice
Here is our collection of great investor advice for this week
Featured Commentary
If I were to recommend a single source this week it would be the with Legg Mason s Bill Miller Watching the entire piece will be six minutes well spent Miller no relation is a value investor who famously beat the market for ten consecutive years He has a great process to underscore the excellent long term results Here are three points you should get from the interview
There are plenty of cheap stocks He mentions several and features four of which we own two
He likes biotech and homebuilders
Investors should not worry about the initial Fed moves Worry when policy switches from neutral to tightening not from accommodative to neutral Miller says that this first step might take several years If there is a tantrum it will be a temporary move and a buying opportunity
Some great investment opportunities have no current earnings or low earnings with great growth potential biotech This is an interesting perspective from a value investor
And a humorous note CNBC puts up the wrong stock symbol and chart causing a 1 pop in the mistake A bit later they post the correct information Those doing the interview did not know of course and no correction was made Trying to trade these TV interviews is a losing proposition especially
Personal Finance
Professional investors and traders have been making Abnormal Returns a daily stop for over ten years The average investor even if busy should join with a weekly trip on Wednesday Tadas always has first rate links for investors in this
Stock Ideas
Chuck Carnevale continues his series on retirement ideas taking a at Cisco NASDAQ CSCO He uses the analysis to illustrate some of the new features of his indispensable FastGraphs tool It is a standard part of our analysis of stock candidates and this is an easy way for you to see the features
Your stock picks are probably biased by familiarity with certain companies and products A great company is not necessarily a great investment If you have a March Madness bracket you might appreciate this lesson about the most popular picks why popular may not have edge in your pool Enjoy the interactive chart and remember for next year
Methods
This from Adam Grimes is about trading but it is equally true for investors You can always find a justification for whatever action you want to take You need to ask what could prove you wrong
Karl Popper was one of the greatest thinkers of the 20th century scientist philosopher and philosopher of science At the risk of oversimplifying one of his most important ideas provides the foundation for modern scientific thought ideas can never be proved only disproved We need to focus not on finding things that support our ideas but we should look for pieces of information that contradict An idea is only meaningful insomuch as it can be disproved
Energy Stocks
Ed Yardeni does not see a real bottom in prices until there is better balance in supply and demand
Biotech Stocks
Frothy
Contrast will Bill Miller above who cites biotech names as possibly the best stocks ever No chart can capture the scientific or market potential Short term trading often depends upon psychology
Economic Worries
why concerns are exaggerated when it comes to the magnitude of student debt
Rising rates at least in early stages
Bond Funds
about the stretch for yield in unconstrained bond funds many traps
I m from the government
and I m here to help you Dodd Frank s watchdogs have a summary of the bearish case about stocks The warns to look out below
The report shows no balance or awareness about the debate over valuation methods Your tax dollars at work
Final Thought
Watching for the spring thaw involves separating data from noise
Last week I explained why the popular market worries are not very convincing The Bill Miller interview included his statement that there have been 16 corrections of 3 or more during the current bull market In each of these his fund experienced redemptions Whenever we have a spate of selling even if the underlying fundamentals have not changed some people have been primed to sell
Some are playing the due theory while ignoring actual data see discussion above on old age and bull markets
Some are using trailing stops which confuses their investing with trading
Some are convinced by the every changing wall of worry
Some believe the bubble talk and sell at the first sign of a dip
Investors who have been out of the market have similar concerns keeping them in cash bonds or dangerous bond proxies
It is not that complicated if you stick with the fundamentals
There is little chance of recession in the next year Recessions occur at business cycle peaks and are associated with the big market declines
Earnings expectations have been hit by the energy sector and the strong dollar but remain OK Some of these effects have probably peaked
An improving US economy is fundamentally good for stocks The Fed is on track to remain accommodative for years
Foreign central banks are on a mission to stimulate probably now including the Chinese
There is a long list of well documented worries providing plenty of fear
Investors must use fundamental methods that recognize both opportunity and danger It is not simply a matter of time And especially you cannot treat every market blip as the start of the big one |
TEVA | Perrigo s Slump Drags Israel Stocks to Biggest Drop Since 2011 | Bloomberg A record decline for generic drugmaker Perrigo Company Plc dragged Israel s main stock index to its biggest decrease in more than seven years
The TA 35 Index fell as much as 5 3 percent the biggest session decline since 2011 on a closing basis Perrigo s loss of 30 percent contributed the most to the decline
The sell off in Tel Aviv follows a slump in Perrigo s shares in New York on Friday when they declined by the most since 1994 after Irish tax authorities hit the company with an unexpected 1 8 billion tax assessment The company said it will fight it
Teva Pharmaceutical NYSE TEVA a drugmaker also traded in Israel was set to record its biggest loss in more than a year as it fell by almost 7 9 percent as of 12 01 p m local time Bank Hapoalim BM and Bank Leumi Le Israel BM also slipped at least 3 2 percent each Perrigo extends drop this year to 53 percent set for the worst full year decline since its shares started trading in Israel in 2005 The TA 35 was poised for yearly loss of 4 0 percent its biggest annual drop since 2011 About 29 million shares composing the index changed hands in Tel Aviv on Sunday about 70 percent more than the 30 day average for the same period |
TEVA | Florida biotech billionaire settles SEC stock manipulation case | By Jonathan Stempel NEW YORK Reuters Florida biotechnology billionaire Phillip Frost has agreed to pay 5 52 million to settle U S Securities and Exchange Commission civil charges over his alleged role in pump and dump schemes that left investors with virtually worthless stock The settlement requires Frost the chairman and chief executive of Miami based Opko Health Inc O OPK to pay a 5 million fine and about 523 000 representing alleged ill gotten gains and interest according to a Thursday filing in Manhattan federal court Frost also accepted restrictions on trading penny stocks Opko agreed to pay a 100 000 fine in a related settlement Neither defendant admitted or denied wrongdoing in agreeing to the settlements which will end potentially expensive contentious and time consuming litigation Frost said in a statement provided by Opko Court approval is required A lawyer for Frost had no immediate additional comment Frost was among 10 people and 10 associated entities charged by the SEC on Sept 7 with involvement from 2013 to 2018 in the manipulation of three companies share prices The SEC accused various defendants of buying large blocks of penny stocks at steep discounts promoting the shares and then quietly selling their stock at inflated prices generating more than 27 million of improper gains Frost was allegedly involved in two of the schemes the SEC said Now 82 Frost is worth 1 9 billion Forbes magazine said on Thursday He had been chairman and chief executive of Ivax Corp before selling that drugmaker for 7 4 billion in 2006 to Israel based Teva Pharmaceutical NYSE TEVA Industries Ltd TA TEVA where he later served as chairman |
TEVA | FDA OK s Teva s generic Sabril | The FDA approves Teva Pharmaceutical Industries TEVA 1 4 generic version of Lundbeck s OTCPK HLUYY 0 5 seizure med Sabril vigabatrin Now read |
XOM | U S stocks inch up as geopolitical tensions spark energy fueled rally | Investing com U S stocks rebounded amid an energy fueled rally after Turkey rattled global markets by downing a Russian jet on the Syrian border on Tuesday morning
Equity markets worldwide initially tumbled after reports surfaced that a Turkish F 16 jet plane shot down a Russian jet along the Turkish province of Hatay the latest in a line of global disturbances in recent weeks The major indices though rallied in the afternoon session after U S president Barack Obama and France president Francois Hollande soothed markets by taking an aggressive stance against any actions that could result in an escalation of current tensions in Syria
The Dow Jones Industrial Average gained 19 51 or 0 11 to 17 812 19 extending gains from the previous session while the NASDAQ Composite index inched up 0 33 or 0 01 to close at 5 102 81 The S P 500 Composite index meanwhile rose 2 55 or 0 12 to 2 089 14 as six of 10 sectors closed in the green Stocks in the Energy and Basic Materials sectors led while stocks in the Consumer Services Financials and Utilities industries lagged
Energy stocks dominated the Dow as Exxon Mobil Corporation N XOM and Chevron Corporation N CVX both rose sharply on the session ExxonMobil finished just below Pfizer Inc N PFE as the day s top performer after surging 1 61 or 2 01 to close at 81 89 Crude prices are sensitive to any signs of geopolitical strife in the Middle East which is home to five of the top 10 crude producers in the world The worst performer was Walt Disney Company N DIS which fell 1 43 or 1 20 to 117 99
A host of travel stocks weighed on the indices after the U S State Department issued a global travel warning ahead of the Thanksgiving holiday The New York Stock Exchange s ARCA Airline index tumbled more than 2 4 as shares in Delta Air Lines Inc N DAL United Continental Holdings Inc N UAL American Airlines Group O AAL and Southwest Airlines Company N LUV all fell by more than 2 5 on the day The reverberations were felt in other segments of the travel industry as Marriot International O MAR Avis Budget Group Inc O CAR Royal Caribbean Cruises Ltd N RCL and Priceline com Incorporated O PCLN also closed down by more than 1 The warning comes in the wake of terrorist attacks in Paris and Mali over the last several weeks
The biggest gainer on the NASDAQ was Keurig Green Mountain Inc O GMCR which gained 3 13 or 6 85 to 48 85 Keurig finished just ahead of Dollar Tree Inc O DLTR which rose 4 61 or 6 63 to 74 16 as the discount store reported stronger than expected revenue resulting from its deal with Family Dollar N FDO The worst performer was Electronic Arts Inc O EA which fell 1 92 or 2 78 to 67 06
Keurig was also the top performer on the S P 500 ahead of Chesapeake Energy Corporation N CHK which soared 0 35 or 6 81 to 5 49 Shares in the Oklahoma based energy company are still down by more than 75 over the last 12 months The worst performer was Patterson Companies Inc O PDCO which fell 2 98 or 6 13 to 45 65 after the dental equipment and veterinary pharmaceutical company missed analysts expectations with its quarterly results on Tuesday
On the New York Stock Exchange advancing issues outnumbered declining ones by a 1 885 1 188 margin |
XOM | Exxon taps high profile lawyer to fight N Y climate change probe | By Sarah N Lynch WASHINGTON Reuters Exxon Mobile Corp N XOM has hired a star attorney in an aggressive response to mounting scrutiny over the company s climate change disclosures according to people familiar with the matter They identified the attorney as Theodore V Wells Jr co chair of the litigation department at the law firm Paul Weiss Rikfind Wharton Garrison LLP New York Attorney General Eric Schneiderman began an investigation about a year ago into whether Exxon lied to investors about how climate change risks could hurt its bottom line Schneiderman s office hit Exxon with subpoenas last month demanding a trove of financial records emails and other documentation The company is tentatively due to respond to the requests by mid December the sources said The company has not been charged in the matter and it is unclear where the probe will lead But Exxon s decision to hire such a heavy hitter signals it views the matter seriously Wells this year investigated the New England Patriots in the Deflategate ball tampering scandal for the National Football League He also previously represented former New York Governor Elliot Spitzer and Scooter Libby a former official in the administration of President George W Bush Exxon has also retained Paul Weiss partner Michele Hirshman a former deputy New York attorney general and federal prosecutor to help with its defense the people said Environmental groups have asked the U S Justice Department to investigate the company after several news outlets reported earlier this year that Exxon executives had downplayed warnings on global warming by the company s own scientists Democratic presidential candidate Hillary Clinton and several members of Congress have said they would welcome a federal probe The Justice Department has declined to comment on the issue Exxon has said it has worked transparently for years on climate science and has properly disclosed business risks Wells and Hirshman did not respond to requests for comment A spokeswoman for the law firm did not respond to requests for comment Wells previously represented Exxon in environmental defense matters including a recent 225 million settlement with the New Jersey Department of Environmental Protection The New York investigation is being conducted by the attorney general s office under the Martin Act a broad ranging state law that covers both criminal and civil charges
The law lets the state bring a claim against a company for misrepresenting or omitting material facts about securities offerings without the state needing to prove that the company intentionally deceived investors That standard makes it easier to bring a case than if it had to prove intent The state s consumer fraud laws which could also be potentially invoked in the matter additionally do not require prosecutors to prove consumers were harmed |
XOM | U S stocks surge 2 as strong jobs report bolsters case for rate hike | Investing com U S stocks soared more than 2 erasing all of their losses from the previous day s sell off as the release of a strong monthly jobs report possibly solidified an interest rate hike by the Federal Reserve later this month
On Friday morning the U S Department of Labor reported that nonfarm payrolls in November increased by 211 000 on a monthly basis following a robust report a month earlier that firmly placed December lift off from the Fed on the table Investors received further evidence of considerable improvements in the labor market when the Labor Department revised gains from October by 27 000 to 298 000 The unemployment rate remained steady at 5 0
The Dow Jones Industrial Average surged 369 96 or 2 17 to 17 847 63 finishing with one of its strongest one day moves in three months It came one day after the Dow fell as much as 300 points after European Central Bank president Mario Draghi spooked markets worldwide by implementing limited easing measures at a closely watched meeting The NASDAQ Composite index also posted solid gains on the day gaining 104 74 or 2 08 to 5 142 27
The S P 500 Composite index meanwhile added 42 07 or 2 05 to 2 091 69 as nine of 10 sectors closed in the green Stocks in the Health Care Financials and Telecommunications industries led each gaining more than 2 on the session Stocks in the energy sector lagged The S P closed the week with one of its best single day moves in nearly two months
The top performer on the Dow was Apple Inc O AAPL which gained 3 81 or 3 31 to 119 01 after iPhone supplier Avago Technologies topped analysts forecasts with its per share earnings The worst performer was Exxon Mobil Corporation N XOM after OPEC failed to place a cap on its production ceiling at its semiannual meeting in Vienna Had the world s largest oil cartel unveiled a plan to curb output energy stocks potentially could have received a considerable boost with a resulting spike in crude prices Shares in ExxonMobil N XOM inched up 0 36 to 78 69
The biggest gainer on the NASDAQ was semiconductor manufacturer Skyworks Solutions Inc O SWKS which rose 4 63 or 5 55 to 88 07 following the reports surrounding Avago Technologies The worst performer was Keurig Green Mountain Inc O GMCR which fell 2 66 or 4 90 to 51 64 Shares in the major coffee company have plunged more than 60 over the last 12 months
The top performer on the S P 500 was Newmont Mining Corporation N NEM which jumped 1 63 or 8 70 to close at 20 36 as global commodities rebounded on Friday In the futures market both gold and silver soared by more than 2 in Friday s session after the dollar rebounded from its biggest loss of the year on Thursday The worst performer was NRG Energy Inc N NRG which plummeted more than 15 one day after CEO David Crane resigned in the face of the utility s persistent stock woes
On the New York Stock Exchange advancing issues outnumbered declining ones by a 2 010 to 1 052 margin |
XOM | Wall St ends choppy session lower weighed by China oil | By Sinead Carew Reuters U S stocks fell in a choppy session on Tuesday as lower oil prices pressured energy stocks for a fifth day and weak Chinese trade data reignited fears of a global slowdown Crude prices hovered near 7 year lows after U S crude dipped below 37 per barrel and Brent fell below 40 for the first time since early 2009 on fears that global oil producers will pump even more crude in a saturated market Data released overnight showed China s imports fell for the 13th consecutive month with an 8 7 percent decline in November compared with a year earlier The China data added pressure to the energy and materials sectors as it sparked fears about a global recession and demand worries for commodities The sustained U S crude price below 40 is a bit of a shock to investors said Tim Ghriskey chief investment officer of Solaris Group in Bedford Hills New York China has been for some time the buyer at the margin Traditionally they would come in when prices were down and buy inventory very shrewdly The Dow Jones industrial average DJI fell 162 51 points or 0 92 percent to 17 568 the S P 500 SPX lost 13 48 points or 0 65 percent to 2 063 59 and the Nasdaq Composite IXIC dropped 3 57 points or 0 07 percent to 5 098 24 The Dow Jones Transport Average index DJT fell 2 8 percent its biggest one day percentage decline since Aug 24 in another sign investors are anxious about economic growth prospects said Peter Cardillo chief market economist at First Standard Financial in New York Oil major Exxon N XOM fell 2 8 percent and was the biggest drag on the S P The S P energy sector fell 1 5 percent in its fifth straight day of declines and has fallen 10 4 percent since Dec 1 Some investors expect oil soon to bounce back and reverse broader market sentiment I suspect we could be in for a nice rally in spite of the fact the Fed is likely to raise interest rates next week Cardillo said The U S Federal Reserve had cited macroeconomic uncertainty in its decision to hold rates steady at its September meeting But most analysts think it will go ahead with a rate hike at its meeting on Dec 15 16 Nine of 10 major S P 500 sectors fell with a 1 9 percent fall in the raw materials index leading the decline The S P s health sector was the sole gainer with a 0 2 percent increase for the day Declining issues outnumbered advancing ones on the NYSE by 2 078 to 1 014 for a 2 05 to 1 ratio on the downside on the Nasdaq 1 678 issues fell and 1 130 advanced for a 1 48 to 1 ratio favoring decliners The S P 500 posted eight new 52 week highs and 34 new lows the Nasdaq recorded 26 new highs and 180 new lows
More than 7 5 billion shares changes hands on U S exchanges compared with the 6 87 billion average for the last 20 sessions according to Thomson Reuters data |
MRO | Will US E P Unit Buoy Marathon Oil s MRO Q3 Earnings | Marathon Oil Corporation NYSE MRO is set to report third quarter 2018 financial results on Nov 7 after the closing bell The Zacks Consensus Estimate for the to be reported quarter is pegged at a profit of 20 cents on revenues of 1 501 million The Zacks Consensus Estimate for earnings has moved south by a penny over the past month However its earnings estimates of 20 cents signal a turnaround from a loss of 8 cents per share incurred in the year ago quarter Further revenues are also expected to record year over year growth of 19 8 in the to be reported quarter Notably in the last reported quarter the company delivered weaker than expected earnings on high operating expenses Nonetheless Marathon Oil displays a sound earnings history having gone past estimates in three of the last four quarters with average positive surprise of 71 07 Marathon Oil Corporation Price and EPS Surprise Let s take a look at the factors that are likely to impact its performance in the to be reported quarter Factors at PlayMarathon Oil s strong inventories of development projects place it well for growth The company has been improving the quality of assets which bodes well for production The company has successfully established itself in the Delaware Basin and STACK SCOOP resource plays while exiting the oil sands and conventional assets with limited upside Management had earlier predicted third quarter 2018 U S Exploration Production E P output available for sale in the range of 290 000 300 000 BOE d Even the Zacks Consensus Estimate for total sales volume at the U S E P segment for the third quarter is pegged at 300 000 barrels of oil equivalent per day BOE d which is well above the year ago figure of 244 000 BOE d Along with expanded production volumes the North American market is likely to benefit from higher commodity price realizations Notably oil prices were fueled by concerns over U S sanctions on Iran OPEC s efforts to tighten the market and strong global demand The Zacks Consensus Estimate for realized prices in the United States is projected to increase on a year over year basis which might boost Marathon Oil s top line The Zacks Consensus Estimate for average oil price is expected to jump 47 9 from the prior year level to 66 a barrel Nonetheless the company is expected to bear the brunt of receding output from international E P activities Notably the Zacks Consensus Estimate for net sales volumes from international operations is pegged at 11 000 Boe d which is below the year ago level of 165 000 Boe d In fact in the last reported quarter the company had forecast weaker output from international operations for the quarter to be reported Marathon Oil expects International E P output to remain within 105 000 115 000 BOE d down from the second quarter level owing to planned maintenance in the United Kingdom and Equatorial Guinea Hence while we expect Marathon Oil s U S Production and Exploration segment to buoy the company s earnings lower volumes from international operations may limit overall profits Earnings WhispersOur proven model does not conclusively show that Marathon Oil is likely to beat earnings estimates in the to be reported quarter as it does not have the right combination of two key ingredients A stock needs to have both a positive and a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold to be able to beat estimates You can uncover the best stocks to buy or sell before they re reported with our Earnings ESP Earnings ESP which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is 0 00 This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 20 cents Zacks Rank Marathon Oil currently holds a Zacks Rank 2 Though a Zacks Rank 2 increases the predictive power of ESP the company s 0 00 ESP makes surprise prediction difficult We caution against Sell rated stocks Zacks Ranks 4 and 5 going into the earnings announcement especially when the company is seeing negative estimate revisions Stocks to ConsiderHere are a few firms from the energy space that you may want to consider on the basis of our model These have the right combination of elements to post an earnings beat in the quarter to be reported TC Pipelines LP NYSE TCP has an Earnings ESP of 13 29 and a Zacks Rank 1 The firm is expected to release third quarter earnings on Nov 8 You can see Summit Midstream Partners LP NYSE SMLP has an Earnings ESP of 64 00 and sports a Zacks Rank 1 The partnership is anticipated to release quarterly results on Nov 8 Jagged Peak Energy Inc NYSE JAG has an Earnings ESP of 12 05 and a Zacks Rank 3 The company is anticipated to release quarterly numbers on Nov 8 Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
MRO | Marathon Oil MRO Beats Q3 Earnings And Revenue Estimates | Marathon Oil MRO came out with quarterly earnings of 0 24 per share beating the Zacks Consensus Estimate of 0 20 per share This compares to loss of 0 08 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 20 A quarter ago it was expected that this energy company would post earnings of 0 21 per share when it actually produced earnings of 0 15 delivering a surprise of 28 57
Over the last four quarters the company has surpassed consensus EPS estimates three times
Marathon Oil which belongs to the Zacks Oil and Gas Integrated United States industry posted revenues of 1 67 billion for the quarter ended September 2018 surpassing the Zacks Consensus Estimate by 11 05 This compares to year ago revenues of 1 25 billion The company has topped consensus revenue estimates three times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Marathon Oil shares have added about 8 3 since the beginning of the year versus the S P 500 s gain of 3 1
What s Next for Marathon Oil
While Marathon Oil has outperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Marathon Oil was favorable While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 2 Buy for the stock So the shares are expected to outperform the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 24 on 1 56 billion in revenues for the coming quarter and 0 77 on 6 10 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Oil and Gas Integrated United States is currently in the top 9 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
MRO | Marathon Burns Lower Keep Watch For Near Term Relief | Summary
Marathon Oil NYSE MRO traded 4 lower on Friday morning
This occurred as crude oil finished off its seventh consecutive week of losses
However our read of the stock s market cycles suggests it is close to a cycle bottom and is due for a modest bounce
Crude oil CL futures fell 7 on Friday and by 30 since early October as market participants continue to express concern about an oil glut This is the result of continued robust supply in the face of the economic weakness that affects much of the globe
OPEC and other countries will meet in early December to consider limiting their production in an effort to prop up oil prices In the meantime the dip in prices is affecting the energy sector broadly with the Energy Select Index XLE NYSE XLE down by 3 today and Marathon Oil down by 4
In analyzing the market cycles for MRO we can see the stock is in the declining phase of the shorter of its two cycles However we believe the stock is at a Fibonacci support zone as this cycle begins to wind down As such we are expecting a bounce with an 18 60 target
For more from Slim or to learn about cycle analysis check out the askSlim Market Week show every Friday on our YouTube channel |
CSCO | Analysts Weigh in on Arista Networks Following Q4 Results | Shares of Arista Networks NYSE ANET jumped 5 in after hours trading on Thursday February 19th after the company beat analysts expectations for the fourth quarter of 2014 and forecasted higher revenue for the current quarter Highlights from the report include GAAP earnings of 0 43 per share exceeding analysts estimates of 0 32 and increasing 87 year over year The company also beat analysts revenue consensus of 166 77 million posting a total of 173 51 million in revenue and marking a 51 increase from the same quarter a year prior Revenue for the full fiscal year of 2014 came in at 584 1 million representing a 61 7 year over year increase Jayshree Ullal Arista President and CEO stated We are pleased with our annual revenue growth in 2014 of 61 7 over 2013 with broad customer momentum across our key verticals Our pioneering innovations in EOS in combination with our flagship 7000 series spine and spline models have made cloud networking transition a reality Arista Networks has forecasted revenue for the first quarter of 2015 to range between 164 172 million while analysts expect 165 95 million Analysts also expect the company to post earnings of 34 per share Arista Network s stellar fourth quarter came as a surprise to analysts and investors alike who believed the company s legal expenses from its lawsuit with Cisco Systems NASDAQ CSCO O would take a toll on its profits In December 2014 Cisco Systems announced plans to file two lawsuits against Arista Networks for copyright infringement and violating 14 patents Cisco claimed that Arista even egregiously plagiarized user manuals down to the last grammatical error A handful of analysts weighed in on Arista Networks on February 19th following the company s Q4 results with ratings all across the board Credit Suisse analyst reiterated an Outperform rating on Arista Networks with a 90 price target highlighting the company s growth opportunity potential in the IT Hardware and Networking landscape In addition the analyst listed three reasons Arista has a competitive edge 1 it allows the company to ride the commodity curve and Moore s Law 2 it provides customers the agility needed for today s networking environments and 3 it makes the TCO price competitive by enabling not only lower capex but opex as well Garcha concluded These factors should drive share gains which are supported by Arista s strong and broadening customer traction Overall Kulbinder Garcha has a 50 success rate recommending stocks and a 8 5 average return per recommendation On the other hand Goldman Sachs NYSE GS analyst reiterated a Neutral rating on Arista Networks but raised her price target from 69 to 75 She noted Given record short interest heading into the print 7 of shares short we are not surprised by the sharp move higher though we remain Neutral due to the valuation and risks Simona Jankowski has an overall success rate of 63 recommending stocks and a 13 8 average return per recommendation Similarly Raymond James analyst Simon Leopold reiterated a Market Perform rating on Arista Networks but did not issue a price target He noted We suspect sentiment had turned more cautious ahead of the report with worry fueled by Cisco s lawsuit and white box competition neither of which seems to be affecting sales With higher estimates and a pull back from the highs we see the shares fairly valued with a 2016 PEG of 1 9x Overall Simon Leopold has a 67 success rate recommending stocks and a 9 4 average return per recommendation On average the top analysts consensus for Arista Networks on TipRanks is Hold To see more recommendations for Arista Networks visit TipRanks today |
XOM | Asian Shares Get JOLT ed | Asian shares get JOLTed
Mixed signals from the US Job Openings and Labor Turnover Survey JOLTS data have led to renewed volatility in Asia as uncertainty over whether the Fed will hike rates next week gripped markets The JOLTS job openings came in noticeably above consensus forecasts at 5 753 000 However other important elements for the Fed were less impressive The hiring rate eased to 3 5 from a previous 3 7 and the quit rate was unchanged at 1 9 The data release provides a familiar lack of clarity over whether the Fed will hike next week with this probability unchanged at 28
The Nikkei has given back almost half of its impressive gains yesterday on renewed concerns about Fed rate hikes Short positions on the Nikkei dropped to 37 4 on Wednesday after sitting at 41 2 on Tuesday further demonstrating that yesterday s rally was driven by short covering
China
The continued divergence of monthly CPI and PPI inflation data out of China provides a great insight into the problematic dichotomies of the transition into New Normal growth The CPI number came in ahead of forecasts for 1 8 growing at 2 year on year in August While the PPI declined for its 42nd straight month declining 5 9 far worse than the expectations for a 5 5 decline and its lowest reading since 2009
The key take away is that inflation will not get in the way of any further monetary policy easing by the People s Bank of China PBoC The increase in the CPI was largely due to the food component which rose 3 7 largely off the back of the 16 7 increase in pork prices However non food CPI was flat at 1 1 and actually eased to 1 8 from 2 0 in annualised quarter on quarter terms
But the 5 9 decline in PPI does serve to underline the severe problems facing China in dealing with its industrial over capacity The frequent boosts to Chinese equities by announcements of SOE restructuring and consolidation can distract from the seriousness of the task at hand China is currently undertaking the largest restructuring of its state owned sector since the Zhuada Fangxiao literally grab the big do away with the small reforms of the late 1990s Those reforms resulted in a vast amount of job losses a process that is happening again in China although not reflected well in China s problematic employment data The fangxiao do away with the small component can be most problematic in China where you have entire townships from the socialist era built around a major industrial factory The closure of factories not only results in job losses but also removes the raison d tre for the township in the first place
The resilience seen in a number of the CPI components does point to strong elements of China s economy though The services sector and the Chinese consumer continues to provide strength to the economy in a number of categories It is these elements of the Chinese economy that are important to the growth story of a number of companies listed on the ASX Cochlear ASX COH Bellamy s Australia ASX BAL Treasury Wines ASX TWE CSL Ltd ASX CSL and Blackmores ASX BKL among others These companies all stand to benefit from well executed plays into China s New Normal economy
While the poor showing of Australian resources and related businesses clearly shows the other side of the coin in China s transition Judging by the performance of the PPI the downturn in China s industrial sector still has quite a way to run even with some likely further fiscal boost in the second half of the year
Australia
The ASX took the poor lead from the US markets overnight and continued to run with it today falling 2
The market was relatively nonplussed by the labour data although it did provide some strength to the Aussie dollar which rallied 0 6 on the release The Reserve Bank of Australia RBA will be gratified by the unemployment rate shrinking to 6 2 from 6 3 This means that it is moving back in line with the expectations for the unemployment rate to average around 6 for the next 18 months or so For those calling for the RBA to cut rates again attention will now turn to activity data The RBA expects GDP to grow 2 25 this year If forthcoming activity data begin to threaten this assumption speculation on further rate cuts is likely to be seen by further declines in the Aussie dollar
After a flurry of excitement in the energy sector on Woodside s ASX WPL bid for Oil Search ASX OSH the sector has been the worst performer on the ASX down 3 1 on the back of renewed oil price weakness The prospects for further merger and acquisition M A activity still linger however as OSH reportedly met with ExxonMobil NYSE XOM this week its partner in the PNG LNG Project with many speculating that a competing offer may be forthcoming This did not seem to buoy OSH s share price as it declined 3 1 Recent chatter about asset sales from Santos ASX STO also failed to support its shares today as they declined 4 3
However it was the poor showing of the banks that hurt the index the most today What the banks giveth they can taketh away The strong performance of the banking sector yesterday 3 5 was a primary factor in driving gains in the index But that bounce looks like it may have been short covering related as banks declined 2 6
Ahead of the European open we are calling the FTSE 6170 59 DAX 10166 137 CAC 4598 66 IBEX 9903 134 and MIB 21844 282 |
XOM | Indicative Moving Averages It s Different This Time | I m getting uncomfortable pounding on the same theme over and over again there s only so many times I can point out the large looming topping patterns across the board so I thought I d mix things up a bit and just get off the price bars entirely and catch up on a trio of exponential moving averages to show how things have turned south irrespective of the gargantuan quadruple point rally on the Dow Here are the Dow Industrials
The even more important Dow Composite
And the S P 500
I ll be the first one to admit that the moving averages looked very similar to this in October 2011 after which time we simply kept soaring higher But dare I say it it s different this time OK OK stop throwing rotten vegetables at me I m serious
Even more enticing to me is the shape of the energy sector which has been simply nuked
I have vastly expanded my short holdings over the course of this week and if we finally start re weakening this week I m going to augment my favorite positions As I suggested my favorite sector is once again energy as giants like Exxon NYSE XOM are exhibiting topping patterns that strike me as once a generation type opportunities |
MRO | Oil slightly higher after touching 3 week low | Investing com Oil futures nudged higher in the early part of Monday s Asian session after crude touched a three week low last week On the New York Mercantile Exchange light sweet crude futures for August delivery inched up 0 05 to USD93 74 per barrel in Asian trading Monday after settling down 1 3 last Friday to close the week at USD93 89 a barrel Oil prices plunged 3 on Thursday after Fed Chairman Ben Bernanke said the central bank could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014 if the economy picks up as the central bank expects The central forecast 2013 U S economic growth of 2 3 to 2 6 while adding it expects the unemployment rate to drop to between 6 5 and 6 8 by the end of 2014 Since the U S is the world s largest oil consumer those numbers are pivotal to oil demand but the forecasts may not be robust enough for some traders to send oil higher China the world s second largest oil consumer is perhaps even more of a concern Last week China s HSBC preliminary manufacturing purchasing managers index fell to 48 3 in June from 49 2 in May as new orders declined indicating that the slowdown in manufacturing is worsening Elsewhere Iraq said it exported 76 9 million barrels of oil last month or 2 48 million barrels per day a 5 drop from April s numbers Iraq an OPEC member cited poor weather and pipeline sabotage as reasons for the output decline China s Sinopec that country s second largest oil producer will reportedly pay USD1 52 billion for Marathon Oil s Angolan offshore oil and gas field Marathon is based in Texa Meanwhile Brent futures for August deliver fell 0 27 to USD100 66 per barrel on the ICE Futures Exchange |
MRO | European stocks mostly higher on easing hopes Dax up 0 27 | Investing com European stocks were mostly higher on Monday as expectations for further easing measures by the European Central Bank continued to support ahead of the central bank s monthly policy meeting later in the week
During European morning trade the DJ Euro Stoxx 50 edged up 0 10 France s CAC 40 dipped 0 06 while Germany s DAX added 0 27
Data on Friday showing that the annual rate of inflation in Italy and Spain slowed in May added to expectations that the ECB will take steps to tackle low consumer price growth which is threatening the fragile recovery in the euro zone
Last week ECB President Mario Draghi said the bank was aware of the risks of persistently low inflation and was prepared to take steps to get euro zone inflation back to its target the latest indication that the bank is on course to ease monetary policy next week
Financial stocks were broadly higher as French lender Societe Generale PARIS SOGN added 0 13 while Germany s Deutsche Bank XETRA DBKGn and Commerzbank XETRA CBKG gained 0 29 and 0 52
BNP Paribas PARIS BNPP underperformed however plummeting 1 69 still pressured by news U S authorities are seeking more than 10 billion from the bank to settle investigations into dealings with sanctioned countries
Among peripheral lenders Italy s Unicredit MILAN CRDI and Intesa Sanpaolo MILAN ISP added 0 12 and 0 61 respectively while Spain s BBVA MADRID BBVA rose 0 23
Elsewhere Det norske oljeselskap OSLO DETNOR surged 5 86 after the oil exploration and development group agreed to buy Marathon Oil Corporation NYSE MRO s Norwegian business for 2 7 billion
Air France KLM PARIS AIRF added to gains up 2 50 following reports the airline company will start a 1 billion cost cutting program in 2015
In London commodity heavy FTSE 100 rose 0 19 supported by sharp gains in the mining sector
Shares in Glencore Xstrata LONDON GLEN jumped 1 35 and Rio Tinto LONDON RIO advanced 1 47 while Randgold Resources LONDON RRS climbed 0 85 and Bhp Billiton LONDON BLT rallied 1 02
Barratt Developments LONDON BDEV was also on the upside with shares gaining 1 72 after the stock had its buy rating restated by Deutsche Bank last week
In the financial sector stocks were mostly higher HSBC Holdings LONDON HSBA added 0 11 and Barclays LONDON BARC inched 0 02 higher while Lloyds Banking LONDON LLOY eased up 0 04 The Royal Bank of Scotland LONDON RBS underperformed down 0 49
In the U S equity markets pointed to a steady open The Dow 30 futures pointed to a 0 09 rise S P 500 futures signaled a 0 05 gain while the Nasdaq 100 futures indicated a 0 02 uptick
Later in the day the Institute of Supply Management was to publish a report on U S manufacturing activity |
MRO | European stocks remain broadly higher eyes on ECB Dax up 0 21 | Investing com European stocks remained broadly higher on Monday as expectations for further easing measures by the European Central Bank continued to support ahead of the central bank s monthly policy meeting later in the week
During European afternoon trade the DJ Euro Stoxx 50 gained 0 23 France s CAC 40 inched up 0 05 while Germany s DAX added 0 21
Data on Friday showing that the annual rate of inflation in Italy and Spain slowed in May added to expectations that the ECB will take steps to tackle low consumer price growth which is threatening the fragile recovery in the euro zone
Last week ECB President Mario Draghi said the bank was aware of the risks of persistently low inflation and was prepared to take steps to get euro zone inflation back to its target the latest indication that the bank is on course to ease monetary policy next week
Financial stocks turned mixed as Societe Generale PARIS SOGN dipped 0 07 and BNP Paribas PARIS BNPP plummeted 1 47 in France while Deutsche Bank XETRA DBKGn slid 0 34 and Commerzbank XETRA CBKG climbed 0 47 in Germany
BNP Paribas was still pressured by news U S authorities are seeking more than 10 billion from the bank to settle investigations into dealings with sanctioned countries
Among peripheral lenders Italy s Unicredit MILAN CRDI and Intesa Sanpaolo MILAN ISP gained 0 41 and 0 66 respectively while BBVA MADRID BBVA rose 0 21 and Banco Santander MADRID SAN eased 0 03 in Spain
Elsewhere Det norske oljeselskap OSLO DETNOR surged 6 58 after the oil exploration and development group agreed to buy Marathon Oil Corporation NYSE MRO s Norwegian business for 2 7 billion
Air France KLM PARIS AIRF added to gains up 1 92 following reports the airline company will start a 1 billion cost cutting program in 2015
In London commodity heavy FTSE 100 rose 0 30 still supported by sharp gains in the mining sector
Shares in Glencore Xstrata LONDON GLEN jumped 1 46 and Rio Tinto LONDON RIO advanced 1 64 while Randgold Resources LONDON RRS and Bhp Billiton LONDON BLT gained 0 90 and 0 75 respectively
Barratt Developments LONDON BDEV also remained on the upside with shares surging 2 32 after the stock had its buy rating restated by Deutsche Bank last week
In the financial sector stocks were mixed HSBC Holdings LONDON HSBA inched up 0 05 and Barclays LONDON BARC added 0 14 while Lloyds Banking LONDON LLOY and the Royal Bank of Scotland LONDON RBS retreated 0 53 and 0 61
Also in the U K Markit research group said the manufacturing purchasing managers index ticked down to 57 0 in June from a reading of 57 3 the previous month in line with expectations
In the U S equity markets pointed to a steady open The Dow 30 futures pointed to a 0 12 rise S P 500 futures signaled a 0 06 gain while the Nasdaq 100 futures indicated a 0 01 uptick
Earlier Monday Markit said that Spain s manufacturing PMI rose to 52 9 this month from 52 7 in May in line with market expectations
Italy s manufacturing PMI slipped to 53 2 in June from a reading of 54 0 compared to expectations for a fall to 53 7
Later in the day the Institute of Supply Management was to publish a report on U S manufacturing activity |
XOM | Exclusive How Kurdistan bypassed Baghdad and sold oil on global markets | By Dmitry Zhdannikov LONDON Reuters Iraq s semi autonomous region of Kurdistan has for the first time detailed its secretive oil exports operations and said it plans to sell more whether Baghdad likes it or not as it needs money to survive and fight Islamic State The region s minister for natural resources Ashti Hawrami said that to avoid detection oil was often funneled through Israel transferred directly between ships off the coast of Malta and decoy ships used to make it harder for Baghdad to track Kurdistan says it had been forced to bypass Baghdad and begin exporting oil directly because the latter refused to respect budgets in 2014 and 2015 The current and former Iraqi central governments have both said the Kurds have failed to respect deals to transfer agreed volumes of oil to Baghdad Kurdistan is entitled to 17 percent of Iraqi s overall budget and argued it needed stable revenues to pay its bills support over a million of refugees fleeing the war in Syria and Iraq finance its Peshmerga army fighting against Islamist militants Kurdistan is exporting over 500 000 barrels per day bpd of oil or every seventh barrel of OPEC s second largest exporter and believes that Baghdad has now accepted at least in part direct Kurdish exports going to as many as 10 countries Effectively we have been financially discriminated against for a long time By early 2014 when we did not receive the budget we decided we need to start thinking about independent oil sales Hawrami told Reuters With new pipelines completed the Kurdistan Regional Government KRG still needed to find buyers for its oil effectively one large tanker every two days Most customers were scared of touching it with Baghdad threatening to sue any buyer Large oil companies including Exxon Mobil N XOM and BP L BP have billions of dollars worth of joint projects with Baghdad The scale was huge And it was a totally new game for us Buyers wanted the KRG to lease its own crude cargo ships We knew nothing about the shipping or sea transportation industry said Hawrami The KRG engaged a veteran oil trader Murtaza Lakhani who worked for Glencore L GLEN in Iraq in the 2000s to assist finding ships He knew exactly who would and who wouldn t deal with us He opened the doors to us and identified willing shipping companies to work with us said Hawrami Hawrami says it is premature to disclose the names of traders shippers and buyers of Kurdish oil Lakhani also declined to comment on the names of buyers and shippers Iraq has filed a lawsuit against Greek shipping company Marine Management Services for its role in Kurdish exports Market sources have said several trading houses including Trafigura and Vitol have dealt with Kurdish oil Both Trafigura and Vitol declined to comment on their role in oil sales Some buyers took tankers to Ashkelon Israel where it was loaded into storage facilities to be resold later to buyers in Europe Kurdish oil was also sold offshore Malta via ship to ship transfers helping disguise the final buyers and thus protect them from threats from Iraqi state firm SOMO It was a high stakes game A ship would dock off Malta waiting for another to arrive to take a cargo to a final destination Sometimes two ships would be sent one sailing off empty and another full to complicate cargo tracking Everyone suddenly became a ship tracking expert So we had to raise our game too But one thing was proven correct when oil is out it flows said Hawrami The region plans to increase exports to as much as 1 million barrels and wants also to become a significant gas exporter which would put it firmly on the global energy map BUDGET DISPUTE Disputes over budget have been at the center of developments of the past two years We simply cannot afford returning to the old arrangements with Baghdad and widening the financial gap again Hawrami said We would accept a real budget that Baghdad can commit to without conditions but we don t want to be part of a theoretical budget which isn t worth the paper it is written on he added Hawrami says the 2014 Iraqi state budget required Kurdistan to export 400 000 bpd of oil which was simply technically non feasible at the time due to a lack of export routes and pipelines Kurdistan received 500 million in state budget allocations in January 2014 instead of 1 0 billion 1 2 billion foreseen by the state budget and then from February budget transfers were cut further and then stopped by March 2014 Baghdad demanded oil we didn t have Our delegation led by prime minister Nechervan Barzani went to Baghdad to try to find out what was going on But they were not interested in hearing our arguments and continued with their decision to cut our budget he said So we had to get our act together and speed up the completion of pipelines By May 2014 the basic infrastructure was completed and we were ready for independent sales By the time the new pipeline from Kurdistan to the Turkish Mediterranean coast replacing the old Saddam era link was ready the region was effectively broke It had limited cash it was falling behind with salary payments to state employees including the army just when Islamic State seized large parts of central Iraq and of Kurdistan itself The region was hundreds of millions of dollars in arrears to companies such as Genel L GENL and DNO OL DNO which have been developing fields in Kurdistan Gradually buyers and traders started using their own ships for Kurdish oil but Baghdad filed a court case in the United States threatening to sue anyone who touched it A cargo was stuck in the United States for several months before sailing back to Europe and being resold there Since then no Kurdistan oil has crossed the Atlantic Another cargo was stranded in Morocco SOMO also sent warnings to all major clients in Europe and Asia Looking back the whole of 2014 was a huge success as we only had two ships in difficulty one in the U S and one in Morocco We managed to finish the year 2014 with only one month of salaries behind said Hawrami That was a pretty extraordinary achievement as we had ISIS attacking our soil over a million of Syrian refugees and displaced Iraqis All of that burden came and we hadn t seen a cent from Baghdad Independent oil sales in 2014 allowed Kurdistan to borrow about 3 billion including from Turkey and trading houses We had a remarkable change in relations with Turkey It has been very strategic and they have been incredibly supportive Hawrami said ECONOMIC INDEPENDENCE Hopes of better ties emerged at the end of last year after a new government led by Haider al Abadi came to power in Baghdad instead of Nouri al Maliki It was a new atmosphere We hoped it would allow us to put our differences behind us said Hawrami In December 2014 Baghdad and Erbil signed a deal under which Kurdistan would transfer some average 550 000 bpd to Iraqi state oil firm SOMO over the course of 2015 while receiving 17 percent of Iraqi budget or over 1 1 billion a month The deal began to unravel almost immediately Baghdad said Erbil was not transferring the agreed volumes and sent only 200 million in January instead of 1 1 billion Between January and by June it transferred around 2 billion in total to Erbil less than 40 percent of what the Kurds had expected In February 2015 we went again to Baghdad only to discover that they have thrown their budget out of the window and were simply working with cash in hand We told them that our state salaries constitute some 750 million half of this to security and Peshmerga so how could we live on just a third of our budget But they told us cash in hand is all we have because of the collapse in oil prices and inability to fill the deficit in the budget By March we came to a conclusion that we had no option but to start independent oil sales again Baghdad is firm in asserting it is abiding by the constitution The party that did not abide by the text of the agreement is the regional government and not the federal government said Saad al Hadithi spokesman for Prime Minister Haider al Abadi We had hoped the agreement that was made a year ago was the beginning of a new stage of cooperation and coordination but unfortunately what happened is that the regional government did not export the agreed upon amount to SOMO Hadithi said Hawrami says as of November 2015 the number of countries taking Kurdish barrels has risen to around 10 declining to name them Reuters has reported Kurdish oil making it to countries such as Israel and Hungary Independent sales have been allowing the KRG to generate some 800 million 850 million a month from July to enable it to pay salaries and ongoing costs to oil companies like Genel However the crash in oil prices since 2014 meant the gap in finances was much more difficult to close As of November the country is still three months behind with salary payments but Hawrami says he is hoping to close the gap by pushing production up in 2016 while also looking to sell some assets and infrastructure to raise liquidity As of today the KRG still owes 3 billion to its 2014 lenders but Hawrami says he hopes it could be paid back or at least significantly reduced over the course of 2016 Another task would be a meaningful cut of state spending such as fuel subsidies in 2016 and an attempt to increase non oil revenues Hawrami says he is seeing early signs that Baghdad is gradually removing its opposition to independent oil sales SOMO is still threatening to sue buyers of Kurdistan oil but appears compliant with Erbil s handling of the Kirkuk oilfield which is not under the authority of the KRG but whose exports of 150 000 bpd have been handled for months by the Kurds via Turkish ports
If you ask any Kurd they will always tell you that their main dream is independence Hawrami said But at the government level the main policy focus has been economic independence We are aspiring to solve our own problems and we have enough resources to do it |
MRO | Marathon Oil MRO Q1 Earnings Top On Crude Price Strength | Marathon Oil Corporation NYSE MRO posted first quarter adjusted income of 18 cents per share turning around from the year ago quarter s loss of 7 cents The bottom line was also ahead of the Zacks Consensus Estimate of 15 cents The strong numbers are attributed to higher production from the U S E P segment and recovery in crude prices In particular total quarterly output rose 20 6 year over year to 398 000 oil equivalent barrels per day BOE d Quarterly revenues of 1 733 million comfortably beat the Zacks Consensus Estimate of 1 347 million and also rose from the prior year quarter level of 1 072 million Marathon Oil Corporation Price Consensus and EPS Surprise Segmental PerformanceUnited States E P Marathon Oil s United States upstream segment reported a profit of 125 million turning around from the loss of 79 million a year ago Higher oil prices and production improved the results Marathon Oil reported production available for sale of 284 000 BOE d up from 208 000 BOE d in the first quarter of 2017 The improvement was mainly due impressive contribution from U S resource plays in Eagle Ford Bakken Oklahoma and Northern Delaware The company realized liquids crude oil and condensate price of 62 22 per barrel 28 4 higher than the year earlier quarter s level of 48 46 per barrel Natural gas liquids price realizations also witnessed a year over year increase of 18 7 to stand at 22 95 a barrel However natural gas realizations decreased 14 2 year over year to 2 59 per thousand cubic feet Mcf International E P The segment s income increased 42 from the prior year quarter to 132 million Substantially higher liquids realizations led to the profit growth Marathon Oil reported production available for sale excluding Libya of 114 000 BOE d down from 122 000 BOE d in the first quarter of 2017 The decrease in output could be blamed on planned turnaround activity in Equatorial Guinea The company realized liquids crude oil and condensate price of 66 23 per barrel reflecting a 31 4 rise from the year earlier quarter s level of 50 41 per barrel Also natural gas realizations were up 18 2 year over year to 65 cents per thousand cubic feet Mcf However natural gas liquids realizations fell to 1 83 a barrel compared with 3 86 per barrel in the first quarter of 2017 Costs ExpensesThe company s exploration expenses in the quarter came in at 52 million higher than 28 million in the year earlier quarter Moreover Marathon Oil s total quarterly cost and expenses rose 16 1 to 1 161 million compared with the prior year quarter Capex Balance sheetDuring the quarter Marathon Oil s capex stood at 618 million As of Mar 31 2018 Marathon Oil had cash and cash equivalents of 2 490 million and long term debt of around 5 723 million Debt to capitalization ratio of the company was 31 2 GuidanceMarathon Oil expects second quarter 2018 United States E P output available for sale in the range of 270 000 280 000 BOE d and International E P output within 115 000 125 000 BOE d For the full year Marathon Oil forecasts 25 30 annual growth in U S shale plays up from the prior guidance of 20 25 Full year capital expenditure budget remains intact at 2 3 billion Zacks Rank Key PicksMarathon Oil currently carries a Zacks Rank 3 Hold Meanwhile one can opt for some better ranked energy players like Bellatrix Exploration Limited TO BXE Canadian Natural Resources Limited TO CNQ and China Petroleum Chemical Corporation or Sinopec NYSE SNP each sporting a Zacks Rank 1 Strong Buy You can see Bellatrix s 2018 earnings are expected to witness year over year growth of 16 06 Canadian Natural s 2018 earnings are anticipated to witness year over year growth of 151 09 Sinopec s 2018 earnings are expected to witness year over year growth of 56 01 5 Medical Stocks to Buy NowZacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia AIDS muscular dystrophy hemophilia and other conditions New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline Early investors could realize exceptional profits |
XOM | iFOREX Daily Analysis September 02 2015 | The dollar moved lower against against most major currencies on Tuesday after data showed that manufacturing activity in the U S expanded at the slowest rate in more than two years in August and as concerns over growth in China continue to pressure the markets The Institute of Supply Management said its manufacturing index fell to 51 1 from 52 7 in July It was the lowest reading since May 2013 and was below economists forecasts of 52 6 In a separate report Markit said the final reading of its manufacturing index fell to 53 from 53 8 in August This was the lowest level since October 2013 The weak data added doubts on whether the Federal Reserve will hike interest rates in September Manufacturing activity in China contracted at its fastest rate in three years in August while service sector activity also slowed The reading rattled equity markets throughout the euro zone as the U K s FTSE 100 the German DAX and the French CAC all fell by more than 2 3 In the euro zone data on Tuesday showed that manufacturing growth also slowed in August The euro zone manufacturing index fell to 52 3 last month from 52 4 in July as solid growth in Germany the Netherlands and Spain was offset by fresh contractions in France and Greece Wall Street fell sharply on Tuesday due to a worsening outlook for global equities demand For today in the euro area Spain is to report on the change in the number of people unemployed the U K is to publish data on construction sector activity and the U S is to release the monthly ADP nonfarm payrolls report as well as data on factory orders For the week ahead Investors were looking ahead to Friday s U S jobs report for August for more clues on the timing of the long awaited rate hike
EUR USD
The Euro gained against the dollar on Tuesday extending gains from the previous two days after China s global equity markets took another hit from weak manufacturing data in August which renewed fears of further recession in the world s second largest economy The world s second largest economy is on pace for its slowest expansion in nearly a decade amid sharp decreases in exports and structural shifts in its productivity capital and workforce The pair was also supported by weak manufacturing data in the U S reported by the Institute of Supply Management which fell to the lowest level since May 2013 The currency pair fluctuated within a range between 1 1208 and 1 1332 before settling above 1 13 for the first time in 5 days For today in the euro area Spain is to report on the change in the number of people unemployed The U S is to release the monthly ADP nonfarm payrolls report as well as data on factory orders
Pivot 1 123 Support 1 123 1 12 1 1155 Resistance 1 135 1 14 1 144 Scenario 1 Long positions above 1 123 with targets 1 135 1 14 in extension Scenario 2 Below 1 123 look for further downside with 1 12 1 1155 as targets Comment The pair has broken above a declining trend line and remains on the upside
Oil
Oil prices posted a sharp drop on Tuessday after posting the largest three day increase since February 2011 West Texas Intermediate crude rose by more than 8 on Monday to levels above 49 only to drop back down again on Tuesday covering most part of Monday s rise and ending the day below 45 Oil prices retreated after data from industry group the American Petroleum Institute on Tuesday showed U S crude stocks surged by 7 6 million barrels to 456 9 million in the week to Aug 28 Analysts in a Reuters poll expected just a 32 000 barrel gain Weaker than expected U S manufacturing data from the Institute for Supply Management which slowed to its lowest level since May 2013 also weighed on oil prices For today official inventory data will be released by the U S Energy Information Administration later on Wednesday
Pivot 47 Support 41 75 40 55 39 8 Resistance 47 49 4 52 Scenario 1 Short positions below 47 with targets 41 75 40 55 in extension Scenario 2 Above 47 look for further upside with 49 4 52 as targets Comment The RSI lacks upward momentum
Dow Jones
U S stocks fell broadly on Tuesday as weak U S and Chinese manufacturing data and sharp losses in crude oil prices erased nearly all of the gains from the recent rise in stocks The Dow Jones Industrial Average and the S P 500 each fell by nearly 3 while the NASDAQ Composite index moved into negative territory for 2015 posting one of biggest daily declines for the year In the S P 500 all 10 sectors closed in the red Stocks in the Energy Financials Technology and Basic Materials industries all fell by more than 3 Exxon Mobil Corporation NYSE XOM ended Tuesday s session as the worst performer on the Dow after losing 4 47 Markets will now be focusing on further economic data from the U S for clues on whether the Fed rate hike will actually take place in September For today stock traders will be watching on the monthly ADP nonfarm payrolls report from the U S as well as data on factory orders
Pivot 17570 Support 15370 14765 14200 Resistance 17570 18350 18650 Scenario 1 Long positions above 16055 with targets 16790 16945 in extension Scenario 2 Below 16055 look for further downside with 15580 15330 as targets Comment Even though a continuation of the consolidation cannot be ruled out its extent should be limited |
XOM | Corn Higher Oil Lower NatGas Trading On Weather Patterns | This will be my first and last report this week and I will return next Monday
In the overnight electronic session the September Corn contract is currently trading at 354 which is 4 cents higher The trading range has been 354 to 353 so far Seems to be a strong market early as we head into harvest and investors may be looking at yields or a reason for farmers to sell premium
On the Ethanol front there were no trades posted in the overnight electronic session The October contract settled at 1 454 and is showing 1 bid 1 436 and 1 offer 1 455 so far
On the Crude Oil front we are trading lower with weaker China imports down 13 4 or 6 29 million barrels per day Say what you want to say even with a slowdown China s economy is still moving Another bullish factor is the closure of the largest crude distillation unit at Exxon Mobil s NYSE XOM 502 500 barrels per day refinery in Baton Rouge Louisiana In the overnight electronic session October Crude Oil is currently trading at 4530 which is 75 points lower at this writing The trading range has been 4594 to 4414 so far The stock market is flying and the dollar is lower which could infuse a hot rally
On the Natural Gas front the October contract is currently trading at 2 684 which is 029 cents higher in the overnight electronic session The trading range has been 2 702 to 2 641 so far which is mainly trading on weather patterns |
XOM | USD JPY Oil M As Recall Late 1990s | The growing parallels between 2015 and 1998 among global market forces soaring US dollar plummeting oil prices prices rising equities escalating market volatility and flattening US yield curve have been bolstered by the emergence of mergers and takeovers in the oil and gas industry as falling energy prices force Big Oil to seek economies of scale through strategic tie ups
This week s announced merger by Royal Dutch Shell NYSE RDSa to buy BG Group LONDON BG for 70bn in the first oil and gas mega merger in over a decade is the year s biggest buy out and the largest in the oil sector since Exxon NYSE XOM paid 82 bn for Mobil in 1999
Remember When
Not only have oil prices dropped 60 from the highs of summer 2014 but they are largely anticipated to lose more ground or at least remain under 60 for most of the year The motives vary For independent non international companies the race to bolster preserve balance sheet strength combines with the need to overcome higher breakeven oil prices This also includes national oil companies getting help from the host nation to acquire or partner with independent oil companies for strategic purposes
USD strength and EM dependence
The FX similarities also raise questions The 28 rise in the US dollar index from its May 2014 lows is the biggest since the advances of 1998 2002 and 1995 1998 when the strong dollar weighed on emerging markets finances Nations which previously pegged their currency to the rising USD lost via deteriorating trade competitiveness forcing them to devalue their currencies and further driving up the soaring cost of their state and corporate debt which were taken in US dollars Today most emerging markets are better prepared for the USD bull market thanks to the use of local currency bond markets and larger holdings of central bank FX reserves estimated to have grown nearly 6 folds from 2003 to 2013
But concerns linger with the amount of foreign currency chasing EM investments at a time when macro dynamics have faltered Brazil Russia and China are among the major EMs to be in or nearing recessions EM investors have shown greater differentiation among markets no longer selling entire EM baskets in a single swoop as was the case throughout the 1990s But any amplification in the cause of contagion could become a problem in and of itself A soaring dollar may no longer be a force at the detriment of EM paper and global equities but further intensification in USD dynamics could make the difference between a soft landing and a recession
The minutes of the March FOMC meeting had their share of commentary on the strong dollar citing further appreciation of the dollar and recent weakness in spending and production data as reasons revising down GDP growth and an assessment that the headwinds that have been holding back the recovery will continue to exert some restraint on economic activity at that time that weak real activity abroad and the recent appreciation of the dollar are likely to continue to restrain U S net exports for some time
USD cyclicality and BoJ complacency
The notion that USD JPY will extend its appreciation toward the 130s and beyond is based on the logical premise that the Bank of Japan stands ready to step up its monthly asset purchases as early as this month to stem the tide of slowing inflation This time it s different reasoning is further backed by diverging policy paths between the Fed and the BoJ Yet even if the Fed mustered the courage to raise rates this year unlikely it will keep rates in hold for an extended and volatile period throughout which further USD strength will likely weigh on oil prices as was the case in in 1998 which would only complicate the BoJ s reflation objective
It has been 37 months since USD has begun its 57 appreciation against JPY compared to the 85 appreciation of the 1990s which lasted 40 months
Will the similarity repeat itself in magnitude or duration |
XOM | Global Markets Buoyed By China s New Market Intervention | Chinese markets Sophie s Choice
Global markets have been buoyed by China s new market intervention and the announcement from the China s Ministry of Finance MoF that they will speed up fiscal spending Japanese markets have been the standout performer in Asia today seeing a record daily rise off the back of plans to cut corporate tax rates
Having said that the methods by which the Shanghai Composite SHCOMP is rising are somewhat concerning Volumes in China s futures markets have fallen dramatically since their reopening after the holiday for the World War II commemoration A range of new restrictions from increased margin requirements to limits on high frequency trading HFT have served to throttle liquidity in the Chinese futures market
The futures markets were previously free of some of the restrictions of China s cash markets such as being able to buy and sell a stock on the same day In this way despite having a far smaller pool of investors it provided key signals to trading in the cash markets
This apparently marked the Chinese futures markets as a source of volatility to be quelled It appears China has taken a Sophie s Choice and decided that the futures markets must be killed in order for the cash markets to live This appears to also be supported by some judicious buying to support the markets as well The late session surge yesterday was driven by the large cap Red Chips a fairly strong indication of government buying
This flip flop of policies regarding support for the Chinese stock market surely has only served to further damage investor confidence in the markets quite apart from the exact level it is trading at It is difficult to know how this will play out going forward or how long the government expects to continue these policies But it is difficult to be confident of any upturn in the Shanghai Composite until it takes another trip down to at least the 2850 level
Moves on the SHCOMP have been supported by the MoF s statement to urge the implementation of fiscal policy The construction and materials sector has been the best performing on the index up 3 1 with a number of companies perceived to benefit from increased fiscal spending trading up 10 the inter day limit
Fresh fiscal stimulus is not the issue facing China in 2H it is getting their already promised fiscal spending targets delivered Banks and provinces have been reticent to spend as borrowing costs have risen and credit has been difficult to come by The main issue has been moving previously issued local government financing vehicle LGFV debt onto the government s balance sheet through the issuance of provincial bonds
Banks baulked at the low yields on offer in the newly issued debt and had to be forced by the government to buy them This process has sucked up a lot of liquidity and made banks and provinces less inclined to spend Direct intervention by the MoF and other government ministries is likely the only way to get fiscal funds flowing and meet this year s targets
Japan
The Japanese market has seen an impressive 5 55 rally today its strongest one day performance since 2008 Prime Minister Shinzo Abe announced plans for dramatic cuts to corporate tax rates He stated that he planned to initially cut the current corporate tax rate of 35 by 3 3 and push it down into the twenties over several years until it reaches as level that compares favourably in the international context
The market was no doubt buoyed by this news alongside renewed Chinese stock market support and fiscal spending as well as further weakness in the yen However the Nikkei 225 was also partly just very oversold and primed for a rally on short covering alone The percentage of stocks trading below their 200 day moving average had reached 20 4 its lowest level since mid 2012
With the temporary calm in global markets investors were obviously seeing a good point to cover shorts or invest in stocks at knocked down valuations particularly in high growth potential stocks Better valuations in high growth stocks saw the healthcare sector lead the index gaining 6 3
Hong Kong
The H share market and the Hang Seng Index HSI have similarly seen strong gains Trading on the HSI was buoyed by positivity in the region and also by more energy sector related buy out announcements as Li Ka Shing s Cheung Kong Infrastructure Holdings offered to buy out sister company Power Assets Holdings Both stocks rallied more than 7 on the announcement
But it was the H share market that attracted the most interest as it rose for the first time in 17 sessions Similar to the Nikkei the market almost could not have looked more oversold at the moment The percentage of companies trading below their 200 day moving average in the past few weeks reached 0 2 Its lowest level since 2009 The index was clearly primed for a short covering rally especially as it was one of the best places to short Chinese companies listed on the Mainland
Australia
The ASX has responded well to improved global sentiment rising 1 6 But the real standout has been the banks which have risen 3 4 All of the Big Four banks have seen their stock price drop by 10 or more since August This saw their price to earnings ratio drop below their long term averages Despite concerns over refinancing needs and new capital requirements the compelling yield available in banking stocks clearly has meant that investors are happy with the current pricing Standing buy orders on the Big Four banks seem to be sitting around the level where they bottomed in late August Any return to these levels will likely re entice buying of the stocks The yield differential between Aussie stocks and bonds is has widened dramatically in recent times and yield hungry investors are clearly looking to high yield stocks to transition into
Yesterday Woodside ASX WPL offered an all share buyout for Oil Search ASX OSH at a 13 premium to its Monday closing price This deal is unlikely to be successful at this price but has opened the door for Woodside to increase its offer or for other entrants to make an offer Any successful offer for Oil Search likely would need to value it at 9 00 10 00 a share or a 30 50 premium from its Monday closing price which is where its share price was trading in mid 2014
It is interesting to look at where the stocks are trading today in the wake of this announcement OSH has largely been trading around the offer price level clearly indicating some uncertainty over the likelihood of the deal going through WPL s share price has gained 1 4 similarly indicating that investors don t believe the deal will go through
Fortescue ASX FMG and Santos ASX STO also saw solid gains in their share price today on expectations that they are planning asset sales
There is clearly growing M A sentiment in the energy and related sectors at the moment as we enter the lower end of the commodities cycle It may still be a bit early to fully kick off but quality targets are likely to be the ones most attractive to early movers Oil Search clearly falls into this category with its stake in the low cost and high growth potential PNG LNG Project
If you look at some recent deals in the energy sector you would expect any successful offer for Oil Search to be significantly higher Shell s NYSE RDSa buyout for BG Group LONDON BG earlier in the year was at a 50 premium to its share price Overnight Canada s Emera TO EMA offered to buy Teco Energy NYSE TE for a 48 premium to its share price seeing the stock rally 25
A range of other entrants could be enticed to bid for Oil Search The most obvious would be ExxonMobil NYSE XOM who is its partner in the PNG LNG Project Total who operates the Papuan LNG project could also potentially be enticed Not to mention any other foreign oil companies or energy focussed private equity companies who could also be interested
Oil Search has traditionally been a very highly priced company with its long term average P E at 44 6 and P B at 2 8 Even with the recent rally in the stock its P E is at 19 4 and P B at 1 7 which clearly makes it a compelling target
Oil Search does look like one of the most likely buyout targets in the energy sector on the ASX and if any deal is to go through its stock does seem likely to rise further
Ahead of the European open we are calling the FTSE 6215 132 DAX 10421 373 CAC 4657 103 IBEX 10000 62 and MIB 22248 636 |
MRO | US STOCKS Futures fall as dollar drags commodities | Pfizer results in line
Dollar advances drags commodities
Futures off Dow 54 pts S P 5 8 pts Nasdaq 9 25 pts
By Chuck Mikolajczak
NEW YORK May 3 Reuters U S stock index futures fell
on Tuesday as strength in the dollar pressured commodity prices
and investors eyed a possible pullback in equity prices after a
recent run up
The dollar hobbled near a three year trough against a
currency basket undermined by loose U S monetary policy But
analysts said the fall looked overextended due to extreme short
positioning
The dollar index measured against a basket of major
currencies was last up 0 5 percent at 73 311
Shares of mining company Freeport McMoRan Copper Gold
Inc and big metal exchange traded funds for silver and gold
including the iShares Silver Trust and the SPDR Gold Trust
edged lower in premarket trading
Brent crude fell 1 1 percent to 123 77 a barrel and
U S crude futures shed 1 2 percent to 112 32
S P 500 futures fell 5 8 points and were below fair
value a formula that evaluates pricing by taking into account
interest rates dividends and time to expiration on the
contract Dow Jones industrial average futures dropped 54
points and Nasdaq 100 futures lost 9 25 points
The benchmark S P 500 has risen 4 3 percent since April
18 when it hovered near the technical support level of 1 300
Pfizer Inc added 0 1 percent to 21 05 premarket after
the drugmaker reported quarterly results roughly in line with
expectations and said it expects to complete a review of which
units to keep by the second half of the year
Other companies expected to post earnings include Comcast
Corp MasterCard Inc Marathon Oil Corp and Cephalon Inc
At 10 a m EST the Commerce Department releases March
factory orders Economists in a Reuters survey expected a 1 9
percent rise compared with a 0 1 percent drop in February
European shares slipped after a strong recent run
weighed by mining stocks on the back of lower metals prices
while Asian shares were also dragged down by miners
U S stocks slipped Monday as an early bounce from Osama
bin Laden s death gave way to questions about the longevity of
the market s recent rally |
MRO | US STOCKS Futures lower as dollar gain hits commodities | Pfizer dips as results roughly in line
Dollar advances drags commodities
Futures off Dow 51 pts S P 6 7 pts Nasdaq 9 75 pts
For up to the minute market news see STXNEWS US
Adds quote updates prices
By Chuck Mikolajczak
NEW YORK May 3 Reuters U S stock index futures fell
on Tuesday as strength in the dollar pressured commodity prices
and investors eyed a possible pullback in equity prices after a
recent run up
The dollar hobbled near a three year trough against a
currency basket undermined by loose U S monetary policy But
analysts said the fall looked overextended due to extreme short
positioning For details see ID nLDE7420UV
The dollar index measured against a basket of major
currencies was last up 0 4 percent
Shares of mining company Freeport McMoRan Copper Gold
Inc and big metal exchange traded funds for silver and
gold including the iShares Silver Trust and the SPDR
Gold Trust edged lower in premarket trading
Brent crude fell 1 1 percent to 123 77 a barrel
and U S crude futures shed 1 percent to 112 40
Basically the dollar is a little bit higher so that is
weighing on risk this morning said Peter Cardillo chief
market economist at Avalon Partners in New York
Now we are seeing a little bit of divergence We are
beginning to see perhaps a little bit of a pullback in
commodity prices and a dollar that might be in for a short term
bounce so that cuts into risk
S P 500 futures fell 6 7 points and were below fair
value a formula that evaluates pricing by taking into account
interest rates dividends and time to expiration on the
contract Dow Jones industrial average futures dropped
51 points and Nasdaq 100 futures lost 9 75 points
The benchmark S P 500 has risen 4 3 percent since April 18
when it hovered near the technical support level of 1 300
Pfizer Inc fell 1 1 percent to 20 80 premarket
after the drugmaker reported quarterly results roughly in line
with expectations and said it expects by the second half of the
year to complete its review of which company businesses are
appropriate to keep ID nN03286398
Other companies expected to post earnings include Comcast
Corp MasterCard Inc Marathon Oil Corp
and Cephalon Inc
At 10 a m EST 1400 GMT the Commerce Department releases
March factory orders Economists in a Reuters survey expected a
1 9 percent rise compared with a 0 1 percent drop in
February
European shares fell nearly 1 percent at midday as
investors locked in profits following an eight session winning
streak for a key index with declines in automakers and
heavyweight miners weighing on the market Asian shares were
also dragged down by miners EU ID nL3E7G30CR
U S stocks slipped Monday as an early bounce from Osama
bin Laden s death gave way to questions about the longevity of
the market s recent rally
Reporting by Chuck Mikolajczak editing by Jeffrey Benkoe |
TEVA | Toxin at heart of drug recall shows holes in medical safety net | By Alexandra Harney and Ben Hirschler SHANGHAI LONDON Reuters A toxin inadvertently produced in the manufacture of a widely prescribed medicine but not spotted for years raises questions about regulators ability to detect risks in a sprawling global drug supply chain increasingly reliant on factories in China China s Zhejiang Huahai Pharmaceutical SS 600521 which produces bulk ingredients for drugmakers told its customers in late June it had found NDMA in its valsartan an off patent blood pressure drug originally developed by Novartis S NOVN The discovery means that some of the 10 billion pills containing valsartan sold worldwide last year to prevent heart attacks and strokes had traces of N nitrosodimethylamine NDMA classified as a probable human carcinogen No one has been reported as sickened by the toxin once used in the production of liquid rocket fuel Regulators and industry experts say the toxin almost certainly was introduced when Huahai changed the way it produced valsartan in 2012 a modification that was signed off on by the European body that sets standards Subsequent inspections by European U S and Chinese regulators also found no problem Everyone failed the company the inspectors the FDA U S Food and Drug Administration the Europeans the Chinese said Philippe Andr an independent pharmaceutical auditor who inspected two Huahai facilities last August and found no critical concerns It s a system failure Reuters was unable to determine how Huahai first discovered the problem In a July 7 statement released through the Shanghai Stock Exchange it said it detected the toxin during the optimization and evaluation of its manufacturing process A Novartis spokesman told Reuters that its generic drugs arm Sandoz spotted the NDMA in the course of intensive testing to prepare for expanding its purchases of valsartan He declined to comment further including on the identity of the manufacturer or when the tests took place Two other smaller bulk suppliers Zhejiang Tianyu Pharmaceutical SZ 300702 and a unit of India s Hetero Drugs have since also discovered traces of NDMA in some of their valsartan The three companies declined to comment to comment about the case For a graphic on heart drug widely used click REDUCE WASTE Huahai said in a document released through the Shanghai Stock Exchange it changed the production process to reduce waste and improve yields The NDMA impurity was produced in trace amounts during the normal manufacturing process according to the company s current registered process it said in a statement on July 24 All changes in the company s valsartan manufacturing process have been approved by each country s drug regulator and the company manufactures in compliance with legal and regulatory standards The European Medicines Agency EMA regulator which first publicly raised the alarm in a statement on July 5 told valsartan suppliers in a subsequent memo dated July 16 that the NDMA may have been connected to the combined use of the solvent dimethylformamide and sodium nitrite The FDA is also going on that hypothesis said Janet Woodcock director of its Center for Drug Evaluation and Research She stressed the investigation was still going on This NDMA was not what you look for in an inspection Woodcock said in an interview If you don t test for this you re not going to have an idea that it s in there and you re not going to see it on an inspection The European Directorate for the Quality of Medicines EDQM responsible for setting manufacturing standards told Reuters it was aware the solvent was being used when it approved the changed process but that NDMA as a by product was unexpected and not tested for Detecting NDMA would have required gas chromatography coupled with mass spectrometry a very sensitive level of testing an EDQM spokeswoman said These techniques are not normally used routinely to test pharmaceutical products she said RECALLS Built by Novartis into the 6 billion a year brand Diovan valsartan s European and U S patents expired in 2011 and 2012 Global sales totaled 10 4 billion pills last year including combination products healthcare data consultancy IQVIA estimates People with high blood pressure typically take one pill daily and heart failure patients two More than 50 companies around the world making finished tablets from the tainted valsartan have recalled products in recent weeks according a Reuters analysis of national medicines agencies records They include major generic drug manufacturers such as Teva Pharmaceutical NYSE TEVA Industries TA TEVA Ranbaxy Laboratories and Sandoz Based on the average NDMA impurity detected at Huahai of 60 parts per million ppm the EMA says there could be one additional case of cancer in every 5 000 people taking the highest dose for seven years The contamination puts a spotlight on manufacturers in China and India which supply more than two thirds of all active pharmaceutical ingredients used in medicines industry executives estimate China accounts for the lion s share Huahai founded in 1989 and listed in Shanghai in 2003 was one of the first Chinese companies to get drugs approved in the U S market The FDA has inspected the site that made the contaminated valsartan three times since 2010 its records show European inspectors also visited regularly The provincial branch of the Chinese FDA CFDA also inspected Huahai facilities 10 times in connection with new drug applications between January 2016 and June 2018 the national online database shows SCRUTINY U S and European regulators have increased scrutiny of Chinese and Indian drug factories after the adulteration of the blood thinner heparin sickened hundreds and caused the deaths of at least 81 Americans in 2007 and 2008 The CFDA is also on alert Last month it revealed that Changsheng Bio technology SZ 002680 a vaccine maker had fabricated data and sold ineffective vaccines for children It also found that a diphtheria tetanus and pertussis vaccine sold by the state owned Wuhan Institute of Biological Products was substandard The fact that international inspections do not appear to have detected the NDMA contamination alarms Anders Fuglsang a former European medicines regulator who runs a pharmaceutical consultancy in Denmark
We need to ask ourselves how it is possible despite pharmacopoeias and agency guidelines inspection programs with coordination across continents a system of public quality control and companies complying with all rules that a nasty carcinogen can find its way into our drugs and be there for years without anyone noticing he said |
TEVA | FDA OKs Teva s opioid dependence med Cassipa | The FDA approves Teva Pharmaceutical Industries NYSE TEVA Cassipa buprenorphine 16 mg and naloxone 4 mg sublingual film for the maintenance treatment of opioid dependence new dosage strengths compared to branded and generic offerings Shares are up a fraction after hours Now read |
XOM | New York investigating Exxon over climate statements source | Reuters The New York attorney general has launched an investigation into whether Exxon Mobil Corp N XOM misled the public and shareholders about the risks of climate change Attorney General Eric Schneiderman subpoenaed the company on Wednesday evening demanding extensive financial records emails and other documents a source familiar with the investigation said on Thursday Exxon on Thursday said it was weighing a response to the subpoena The company has included information about the business risk of climate change for many years in its quarterly filings corporate citizenship report and in other reports to shareholders company spokesman Richard Keil said The New York Times first reported the news on Thursday The Exxon investigation might expand to other oil companies according to the people with knowledge of the case though no additional subpoenas have been issued the newspaper said Sources told the New York Times that the attorney general s investigation began a year ago and encompasses company filings dating back to the 1970s Last month a broad array of environmental groups demanded the U S Department of Justice investigate Exxon after reports by Inside Climate News and the Los Angeles Times said the company s own scientists raised worries about global warming decades ago only to see their findings doubted by executives However Ken Cohen vice president of public and government affairs at Exxon has accused environmental groups of deliberately cherry picking facts He said on Thursday that for nearly 40 years the company has worked with governments and universities to develop climate science in a transparent way Since 2009 the company has supported what it calls a revenue neutral carbon tax as the preferred policy for reducing emissions Coal miner Peabody Energy Corp N BTU had been under investigation by the attorney general for two years over whether it properly disclosed financial risks related to climate change but has not resulted in any charges or other legal action against the company the NYT report added Only within the last five years has the U S Securities and Exchange Commission required companies to disclose climate risks to investors and Exxon has made the appropriate filings It is unfortunate that interest groups can fuel political expediency to cause investigations to occur where there should be none said Jacob Frenkel a former SEC lawyer and partner at Shulman Rogers in Washington
Climate risks for oil companies are normally thought to include among other things a crackdown by governments on carbon emissions that might hurt oil sales |
XOM | NY attorney general wields powerful weapon in Exxon climate case | By Mica Rosenberg NEW YORK Reuters A near century old statute that gives New York state prosecutors unusually broad authority to prosecute securities fraud could prove a powerful weapon as Attorney General Eric Schneiderman probes Exxon Mobil Corp N XOM over whether the oil firm mislead the public and shareholders about the perils of climate change The 1921 Martin Act a wide reaching state law was dusted off in the early 2000s by former New York Attorney General Eliot Spitzer who used it to aggressively go after Wall Street firms Since then it has been used to prosecute large scale Ponzi schemes major investment banks accused of misleading investors and other cases Now Schneiderman is wielding the statute in his probe of Exxon the world s largest publicly traded oil company according to a source familiar with the matter The source said other state laws could be used as well Schneiderman subpoenaed Exxon on Wednesday demanding extensive financial records emails and other documents to probe the company s knowledge and disclosures about climate change going back to the 1970s In response to the probe Exxon has said it has worked on climate science in a transparent way for nearly 40 years and has regularly disclosed the business risks of climate change to investors for years The investigation comes on top of reports last month by Inside Climate News and the Los Angeles Times that the company s own scientists had raised concerns about global warming decades ago that the company executives contradicted Under the Martin Act the state must prove that a company deceived the public by misrepresenting or omitting a material fact in the offering of securities Lawyers say the act is unique in that no proof of intent to deceive is required to bring a claim and prosecutors do not even need to show that anyone was in fact defrauded The act allows for criminal as well as civil charges New York State s highest court ruled in 1926 that it covers all deceitful practices contrary to the plain rules of common honesty The act is one of the broadest anti fraud statutes ever devised at least in a democratic society wrote Eric Dinallo a chief prosecutor under former Attorney General Spitzer in the New York University Journal of Legislation and Public Policy It has been used to extract large monetary penalties from finical institutions said Jim McGuire a litigation partner at the Dechert law firm in New York The Martin Act is a nearly empty vessel into which the AG can pour virtually any content that he wants McGuire said Exxon did not comment on Friday when asked about the Martin Act CALLS FROM CONGRESS U S congressman have called for the U S Department of Justice and the Securities and Exchange Commission to investigate the claims against Exxon as well saying the company s alleged failure to disclose scientific findings was similar to tobacco companies that concealed the harms of smoking Democratic California representatives Ted Lieu and Mark DeSaulnier along with other lawmakers asked the U S Department of Justice and Securities and Exchange Commission to investigate Exxon In interviews they said they hoped other state attorneys general would follow New York s lead My view is that this should be even more serious than tobacco if it s the whole world that s being harmed said Lieu Lieu also circulated a letter to lawmakers citing an investigation by the Union of Concerned Scientists a U S non profit organization that said other oil companies also had spread misinformation about global warming Both the SEC and the U S Attorney General s office in California declined to comment on whether they were pursuing investigations of their own over Exxon s climate statements Unlike the Martin Act in New York prosecutors would have to overcome a far higher bar to bring a federal case said McGuire who previously served as chief counsel to former New York Governor George Pataki Federal securities fraud under SEC rules require a showing of scienter a legal term for intent or knowledge of wrongdoing Daniel Riesel a white collar defense attorney at Sive Paget Riesel said that the tobacco cases actually highlighted the challenges in bringing federal enforcement actions against companies over climate change claims The tobacco companies knew they were selling a product that was killing people and they failed to disclose that said Riesel who specializes in environmental matters Here it s not as stark You d have to be able to show that Exxon had knowledge knowledge that couldn t be questioned that their activity was going to contribute to global warming in a way that would materially hurt the company he said Oil and gas lawyers in Houston the world s energy capital said they did not expect Schneiderman s probe to widen much if at all to other companies or states
While Exxon and other major oil companies may have business in New York state scores of other independent U S exploration and production companies have no operations there and probably could not be targeted because of jurisdictional questions the lawyers said |
XOM | Invest Like Henry Kissinger | I ve always acted alone Americans like that immensely
Henry Kissinger
Have you seen Henry Kissinger lately At 92 he s as fluent as ever on foreign affairs It makes you wonder whether even at this advanced stage of life he could do a better job managing American foreign policy than our current leaders
This brings me to Ukraine Russia and China They look like a beautiful mess right now but within a reasonable period American foreign policy will gravitate back to a Kissinger dictum America can only afford one big power adversary at a time
At this time the one adversary is clearly China In short the whole Ukraine Crimea Russia fiasco could ve and should ve been avoided
Unfortunately Ukraine is a prisoner of geography and history It s a bridge between East and West a classic buffer state The country will always need to balance closer ties to Europe with good relations with Russia and this practical consideration should be reflected in American diplomacy Pushing Russia closer to China is certainly not in American interests
Lord Palmerston once said Nations have no permanent friends or allies they only have permanent interests Thus the probability is on the side of U S Russia relations improving in the long run The stakes are simply too large and the logic of some sort of rapprochement too clear and convincing
In fact while headlines have created a perception of a crisis in U S Russia relations the reality is that diplomats on both sides are working hard on alliance management As an emerging bond trader active in Russia put it to me A lot of this is elaborate political theatre
Russia Is Dirt Cheap and Unloved
I believe that the gap between perception and reality is where fortunes are made and Russia is the perfect example Despite the country s reputation as being a non competitive monopolistic economy there were over 21 300 foreign capital enterprises operating in Russia by the end of the second quarter And American companies invested 1 18 billion in Russia in 2014 nearly double the 667 2 million recorded in 2013
What s more Russia s stock market is trading at astoundingly cheap valuation multiples right now We know the reasons economic sanctions imposed by Western democracies falling energy prices and finally the falling ruble which is down sharply against the dollar this year
The stocks in the Market Vectors Russia ETF NYSE RSX are trading at an 80 discount to the S P 500 Index and at less than 65 of break up value
Howard Marks of Oaktree Capital puts price and value at the center of his book The Most Important Thing
For a value investor price has to be the starting point It has been demonstrated time and time again that no asset is so good that it can t become a bad investment if bought at too high a price
And there are few assets so bad that they can t be a good investment when bought cheap enough
Plus we don t need a miracle to profit from the situation either An American hedge fund trader active in Russian markets put it to me this way Things don t have to turn around in Russia for me to make money They just have to get a little bit better
This is the key If energy prices stabilize or rise if the situation in Ukraine improves if the ruble bounces back any one of these catalysts could spark a sharp rally
RSX is down 32 over the past year and has pulled back 16 from its recent peak in mid May So it s a good time to get ready to pull the trigger on one of the largest oil and gas companies in the world Lukoil OTC LUKOY
Lukoil exceeds even Exxon Mobil NYSE XOM in total proven oil reserves Even more impressive the company has remained free cash flow positive during the entire past decade The company also has a very low risk of government intervention with a professional board and management at the helm
Despite this Lukoil is trading at 37 of break up value and 4 4 times trailing earnings Right now I d nibble on a position and take a more sizable stake when a clear uptrend develops in the stock
Like Kissinger don t fear acting alone Investing in undervalued even hated stocks when they turn is the most consistent way to build substantial wealth
Good investing |
MRO | Eq Guinea targets LNG expansion European market | Equatorial Guinea aims to supply electricity to Cameroon
Targeting European gas market
Possible 4 billion expansion of Malabo hub
By David Lewis
MALABO March 25 Reuters Equatorial Guinea is forging
ahead with a gas gathering project that it hopes will double the
country s output deepen links with gas hungry European nations
and provide electricity to Cameroon a senior official said
Germany s E ON Ruhrgas Spain s Union Fenosa and Portugal s
Galp Energia will help state gas company Sonagas complete a
draft gas master plan for Equatorial Guinea by the end of the
summer Gabriel Obiang Lima deputy mines and energy minister
told Reuters late on Tuesday
The consortium known as 3G is central to a drive by
sub Saharan Africa s third largest oil producer to tap into its
own and regional natural gas reserves most of which are lost
due to flaring from wells
This conference is the green light for them to start having
negotiations and contacts with the operators in Equatorial
Guinea Lima said on the sidelines of the Equatorial Guinea Gas
Conference
By the end of the summer we will definitely have the
initial draft If things go to plan we could even talk about a
final investment decision by mid next year he said referring
to the master plan Lima is the son of President Teodoro Obiang
Nguema Mbasongo
Equatorial Guinea produces 3 7 million tonnes of liquefied
natural gas LNG from its first processing train that started
production at its Punta Europe terminal in May 2007
Asked by how much 3G would increase output Lima said
Being very conservative I would say one more LNG train
Although still early in its conception Lima said the
project is expected to cost a minimum of 4 billion and would
include an LNG plant pipeline and other projects linked to
energy production from gas
We want to do an integrated project Equatorial Guinea
is more gas prone than oil prone he said
U S COMPANIES
Equatorial Guinea s oil production has lept from virtually
nothing to around 380 000 barrels per day during the last decade
alone Most of the companies that have invested in the Gulf of
Guinea state are from the United States
U S company Marathon Oil is a major force in the country s
LNG production as the operator and 60 percent owner of joint
venture EG LNG
Like oil world gas prices have plummeted during the global
slowdown and are as much as 50 percent down on their peaks of
last July
However Lima said he believed Europe which has seen fears
for longer term gas supplies stoked by geo political tensions in
Eastern Europe would be central to his country s future
They are consumers he said of Germany and Spain If the
market is going to sign long term contracts we will secure it
for them
Equatorial Guinea has been in talks with Gulf of Guinea
neighbours Nigeria and Cameroon about the possibility of buying
their gas to then export from the Malabo hub
Relations between the nations have often been strained with
Cameroon and Equatorial Guinea still not agreed on their
maritime border Gunmen who attacked the presidential palace in
Malabo last month are suspected to be militants from Nigeria s
restive Niger Delta
Earlier on Tuesday Lima said he would be restarting talks
with the two nations to finalise a deal
Cameroon could benefit from the partnership by buying
discounted electricity from a power plant that would be set up
in Equatorial Guinea a country split between mainland Africa
and the island of Bioko where Malabo is situated
What we are proposing is to sell them very cheap kilowatts
Cameroon can sell the electricity to its neighbours Lima
said
Editing by Daniel Magnowski and James Jukwey |
TEVA | AbbVie AndroGel partner owe 448 million in antitrust case U S judge | By Nate Raymond Reuters A U S judge on Friday found that pharmaceutical company AbbVie Inc NYSE ABBV used sham litigation to illegally prevent generic versions of testosterone replacement drug AndroGel from getting to market and ordered the drugmaker and its partner to pay 448 million The ruling by U S District Judge Harvey Bartle in Philadelphia came in an antitrust lawsuit filed in 2014 by the Federal Trade Commission against AbbVie and its partner Besins Healthcare Inc The decision followed a non jury trial that tested the ability of the U S regulator to fight efforts by major pharmaceutical companies to prevent the sale of cheaper generic versions of their drugs The FTC has established the actual market reality that defendants possessed monopoly power and illegally and willfully maintained that monopoly power through the filing of sham litigation Bartle wrote Chicago based AbbVie did not respond to a request for comment but it denied the allegations at trial A lawyer for privately held Besins had no immediate comment The FTC has long fought against so called pay for delay settlements in which a brand name drugmaker pays a generic rival to delay releasing a cheaper version of its product in exchange for resolving patent lawsuits In its lawsuit the FTC accused AbbVie and Besins of filing baseless patent infringement lawsuits in 2011 against generic drugmakers Teva Pharmaceutical Industries NYSE TEVA Ltd and Perrigo Company to delay the launch of their generic versions of AndroGel The regulator alleged that as part of that effort AbbVie and Besins entered into a pay for delay settlement with Teva which helped delay generic drug competition Bartle in his ruling agreed the lawsuits were baseless and said that absent the litigation and settlement agreements stuck in the cases Perrigo would have released a generic version of AndroGel in June 2013 rather than December 2014 The judge ordered the companies to pay 448 million representing their profits from June 2013 to August 2017 He apportioned liability between AbbVie and Besins according to their agreed royalty rates According to the ruling Besins received 8 percent of U S net sales of AndroGel through March 2015 at which point the rate dropped to 5 percent The FTC which had sought 1 35 billion said the order was the largest award ever in an antitrust case that it litigated in court
It sends a clear signal that pharmaceutical companies can t use baseless litigation to forestall competition from low cost generics FTC Chairman Joe Simons said in a statement |
XOM | Clinton says Justice Department should probe Exxon over climate change data | BERLIN N H Reuters U S Democratic presidential candidate Hillary Clinton said on Thursday she believes the U S Justice Department should investigate the failure of Exxon Mobil N XOM Corp s to disclose data related to climate change Yes yes they should there s a lot of evidence they misled people Clinton said replying to a question by climate activists after a campaign event at a community college in Berlin New Hampshire
She immediately agreed and was very enthusiastically supportive Jordan Cichon with the group 350 Action told Reuters |
XOM | Weekly Energy | Last week we saw another correction in energy prices as quoted in U S dollars Prices for WTI and Brent
crude as well as diesel dropped 2 5 and 3 respectively
Last week Exxon NYSE XOM released financial results for the last quarter making its worst earnings report since
2009 as the correction in energy prices overshadowed the company s cost cutting efforts This signals a
marked slowdown in the U S energy sector and continues to demonstrate the desired effect of an energy
crisis initially launched by Saudi Arabia
Once again last week crude oil overproduction in international markets was identified as the main cause
of tumbling energy prices According to a Reuters study released on Friday the OPEC countries
produced over 32 million barrels per day bpd in July or approximately 140 000 bpd more than they did
in June
More optimistically for the price of WTI on Wednesday the U S Department of Energy announced that
commercial reserves of crude oil had fallen by 4 2 million barrels experts had expected an increase of
approximately 850 000 barrels But this news was unable to slow the decline in the price of black gold
which over the last month posted its steepest drop since 2008
With the low energy prices that we have been seeing lately now would be a good time to budget part of
your spending on fuel purchases for the next year |
TEVA | Stocks U S Futures Struggle As North Korea Treasury Yields Weigh | Investing com U S futures struggled for direction on Wednesday amid concern that North Korea could back down from a historic meeting with the U S in June
The S P 500 futures was up a quarter of a point or 0 01 to 2 709 25 as of 6 49 AM ET 10 49 GMT while Dow futures decreased nine points or 0 04 to 24 651 0 Meanwhile tech heavy Nasdaq 100 futures rose five points or 0 08 to 6 895 75
North Korea threatened to withdraw from a June 12 meeting in Singapore in response to joint U S South Korea military drills on Wednesday
If they try to corner us and pressure us unilaterally to give up nuclear weapons we will no longer be interested in such dialogue We will have to reconsider whether to participate in the upcoming North Korea US talks said Kim Kye Gwan vice minister of foreign affairs
The news brings into question North Korea s promise to denuclearize North Korea leader Kim Jong Un was set to meet U S President Donald Trump to discuss the country abandoning its nuclear weapons program
Meanwhile a rise in Treasury yields has also weighed on investors with the benchmark United States 10 Year yield dipping 0 61 to 3 061 after reaching a seven year high of 3 095 on Tuesday
Software firm Micro Focus International PLC ADR NYSE MFGP was among the biggest gainers in pre market trading rising 8 55 after it said it expects its revenues for the first half of 2018 to be better than forecast Meanwhile Helios and Matheson Analytics Inc NASDAQ HMNY increased 7 94 while Teva Pharma Industries Ltd ADR NYSE TEVA was up 3 79
Elsewhere Nokia Corp ADR NYSE NOK fell 0 80 while Deutsche Bank AG NA O N NYSE DB dipped 2 63 and Santander NYSE SAN was down 2 31
In economic news building permits and housing starts data comes out at 8 30 AM ET 12 30 GMT while industrial production is scheduled for 9 15 AM ET 13 15 GMT
In Europe stocks were mixed Germany s DAX rose 24 points or 0 19 while in France the CAC 40 decreased four points or 0 08 and in London the FTSE 100 was up three points or 0 04 Meanwhile the pan European Euro Stoxx 50 fell eight points or 0 24 while Spain s IBEX 35 slumped 97 points or 0 96
In commodities gold futures inched down 0 02 to 1 290 10 a troy ounce while crude oil futures decreased 0 08 to 71 25 a barrel The U S dollar index which measures the greenback against a basket of six major currencies was up 0 28 to 93 40 |
XOM | U S Alaska says will not seek additional 92 million from Exxon for Valdez spill | By Victoria Cavaliere Reuters U S and Alaska state officials announced on Wednesday they will no longer seek an additional 92 million from Exxon Mobil Corp N XOM to pay for environmental cleanup and restoration stemming from the massive Exxon Valdez oil spill nearly three decades ago In court documents filed on Wednesday the state of Alaska and U S Justice Department said they were dropping remaining judicial action and would no longer seek the additional money from Exxon due to the recovery of several species including ducks and sea otters living in Alaska s Prince William Sound Although we will not be pursuing Exxon for additional damages our decision today does not close the book on lingering oil Alaska Attorney General Craig Richards said in a statement The tanker Valdez ran aground in March 1989 dumping about 11 million gallons or 260 000 barrels of crude oil into the icy waters off the southern coast of Alaska The spill was at the time the largest ever in U S waters and one of the worst human caused environmental disasters Over the following months the oil slick spread over 1 300 miles 2 092 km of Alaska s rocky pristine coast killing or injuring more than two dozen types of animals plants and marine habitats in Alaska s Prince William Sound environmental officials said In a sweeping 1991 settlement the oil giant was ordered to pay 900 million in civil damages and 125 million in criminal fines and restitution In 2006 state and federal officials requested Exxon pay an additional 92 million under a special reopener provision to fund cleanup stemming from long term damages The company has refused to pay this amount maintaining that despite lingering oil in Prince William Sound the environment has recovered and cleanup was successful A call to Exxon seeking comment about the decision by state and federal officials to drop the pursuit of the additional payout was not immediately returned
Last year a report issued by the U S Geological Survey said that sea otters in the most affected parts of Prince William Sound have recovered to their pre spill numbers Thousands were killed in the aftermath of the tanker running aground The slow pace of recovery for the otters was likely due to their ongoing exposure to oil the study found The filing late Wednesday came ahead of a planned status hearing in the U S District Court in Anchorage on Thursday |
MRO | Why Marathon Oil MRO Stock Might Be A Great Pick | One stock that might be an intriguing choice for investors right now is Marathon Oil Corporation NYSE MRO This is because this security in the Oil and Gas Integrated United States space is seeing solid earnings estimate revision activity and is in great company from a Zacks Industry Rank perspective This is important because often times a rising tide will lift all boats in an industry as there can be broad trends taking place in a segment that are boosting securities across the board This is arguably taking place in the Oil and Gas Integrated United States space as it currently has a Zacks Industry Rank of 23 out of more than 250 industries suggesting it is well positioned from this perspective especially when compared to other segments out there Meanwhile Marathon Oil is actually looking pretty good on its own too The firm has seen solid earnings estimate revision activity over the past month suggesting analysts are becoming a bit more bullish on the firm s prospects in both the short and long term Marathon Oil Corporation Price and Consensus In fact over the past month current quarter estimates have risen from a loss of 6 cents per share to a loss of 3 cents per share while current year estimates have risen from a loss of 38 cents per share to a loss of 35 cents per share The company currently carries a Zacks Rank 3 Hold which is also a favorable signal You can see So if you are looking for a decent pick in a strong industry consider Marathon Oil Not only is its industry currently in the top third but it is seeing solid estimate revisions as of late suggesting it could be a very interesting choice for investors seeking a name in this great industry segment Zacks Best Private Investment IdeasWhile we are happy to share many articles like this on the website our best recommendations and most in depth research are not available to the public Starting today for the next month you can follow all Zacks private buys and sells in real time Our experts cover all kinds of trades from value to momentum from stocks under 10 to ETF and option moves from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises You can even look inside exclusive portfolios that are normally closed to new investors |
MRO | Surging Earnings Estimates Signal Good News For Marathon Oil MRO | Marathon Oil Corporation NYSE MRO is a leading exploration and production company that could be an interesting play for investors That is because not only does the stock have decent short term momentum but it is seeing solid activity on the earnings estimate revision front as well These positive earnings estimate revisions suggest that analysts are becoming more optimistic on MRO s earnings for the coming quarter and year In fact consensus estimates have moved sharply higher for both of these time frames over the past four weeks suggesting that Marathon Oil could be a solid choice for investors Current Quarter Estimates for MROIn the past 30 days two estimates have gone higher for Marathon Oil while none have gone lower in the same time period The trend has been pretty favorable too with estimates narrowing from a loss of 2 cents a share 30 days ago to break even earnings today Current Year Estimates for MROMeanwhile Marathon Oil s current year figures are also looking quite promising with three estimates moving higher in the past month compared to none lower The consensus estimate trend has also seen a boost for this time frame narrowing from a loss of 34 cents a share 30 days ago to a loss of 33 cents per share today a move of 2 9 Marathon Oil Corporation Price and Consensus Bottom LineThe stock has also started to move higher lately adding 22 3 over the past four weeks suggesting that investors are starting to take note of this impressive story So investors may definitely want to consider this Zacks Rank 3 Hold stock to profit in the near future You can see Zacks Editor in Chief Goes All In on This StockFull disclosure Kevin Matras now has more of his own money in one particular stock than in any other He believes in its short term profit potential and also in its prospects to more than double by 2019 Today he reveals and explains his surprising move in a new Special Report |
CSCO | Growth Stocks Provide Evidence Of Vulnerability | Higher Growth Shares Continue To Lag
Leadership in the financial markets speaks to investor conviction If you want to know where demand is strong a leadership list is a good place to start When investors are confident about increasing stock prices they tend to demand companies with faster growth rates since the potential return is greater than their more mature blue chip brothers For example during the dot com craze high flyer Cisco Cisco Systems Inc NASDAQ CSCO significantly outperformed the Dow Jones Industrial Average DIA
The endless stock rally of 2013 was led by small caps and technology stocks telling us the tolerance for risk was high Thus far 2014 is taking on a much more conservative look From
U S stocks closed broadly lower Tuesday with declines concentrated in smaller high growth stocks and consumer Internet shares T he Russell 2000 index of smaller capitalization stocks shed 1 6 to close at the lowest level since Feb 6 The Russell 2000 has resumed a selloff this month and is now down 4 8 on the year compared with a 1 gain in the S P 500 Frank Cappelleri sales trader at brokerage firm Instinet said the resumed weakness in small cap stocks is weighing down a thinly traded market Continued underperformance by the Russell 2000 relative to the S P 500 is something we can t ignore Mr Cappelleri said Anytime you have a major part of the market not participating in a rally it s going to give investors pause he said If you look at the leader board it s the growth stocks that are getting hit said Joe Saluzzi co head of equity trading at institutional brokerage firm Themis Trading
Vulnerable Tech Profile
Leadership that has been in place for several months does not change in a session or two It can take several weeks or months for the change in investor perceptions to show up meaningfully from an intermediate term perspective For example the NASDAQ s 50 day moving average began to show signs of vulnerability in March 2011 see red arrow on left below Five months later the NASDAQ experienced a waterfall plunge in August 2011 see blue arrow
How Does The Same Chart Look Today
The current chart of the NASDAQ looks vulnerable When the blue 50 day rolls over it tells us the intermediate term trend is trying to flip from bullish economic conviction to bearish economic fear
The Wild Card Named Putin
Geopolitical events always bring an extra layer of uncertainty to allocation decisions especially those that are taking place several time zones away Traders and money managers do not like overnight or weekend exposure during acute phases of conflicts similar to what is taking place between Russia and Ukraine now From
Traders also kept an eye on developments in Ukraine where supporters of Russia and of a united Ukraine are accusing each other of tearing the country apart The former Soviet republic is sliding toward war The short term issue is Ukraine We don t know when we ll wake up one morning and Russian President Vladimir Putin is going to be in eastern Ukraine said Jack De Gan chief investment officer at Harbor Advisory Corp in Portsmouth New Hampshire
Investment Implications Shorter Leash For Risk
Taken in isolation is a vulnerable NASDAQ chart a reason to reduce equity risk No in fact nothing taken in isolation in the financial markets is significant enough to call for radical reactions However when the weight of the evidence from multiple sources begins to align in a pay closer attention manner it means the odds of something bad happening in the stock market are increasing We have been watching the Dow s sideways and indecisive action since April 4 The current version of the chart below is still concerning
As noted in this week s our response to the current and less attractive outlook for stocks is a diversified mix of equities SPDR S P 500 ARCA SPY bonds iShares Barclays 20 Yr Treasury ARCA TLT and cash TLT has helped this week it is beating the S P 500 by 0 51 over the last two sessions If conditions continue to deteriorate we are prepared to take additional steps to beef up our stock correction shelters |
CSCO | 361 Capital Weekly Research Why Do Treasury Yields Keep Falling | If you are still asking Why do Treasury yields keep falling then maybe you should have paid up for that Bernanke dinner last week
In a series of quarter million dollar dinners with wealthy private investors Ben Bernanke has been clearer than he ever was as chairman of the Federal Reserve on his expectations that easy money policies and below normal interest rates are here for a long time to come according to some of those in attendance Bernanke who retired from the U S central bank in January has predicted the Fed will only very slowly move to raise rates and probably do so later than many forecast because the labor market still has a lot more room to recover from the financial crisis and recession The accounts of the discussions come from attendees as well as those who heard second hand what was said at the dinners where hedge fund managers and others willing to foot the roughly 250 000 bill for each event asked the former Fed chairman questions in a free flowing round table fashion over recent weeks At least one guest left a New York restaurant with the impression Bernanke 60 does not expect the federal funds rate the Fed s main benchmark interest rate to rise back to its long term average of around 4 percent in Bernanke s lifetime one source who had spoken to the guest said
Also on a relative basis U S Bonds are bloody cheap compared to their Euro counterparts If the reasons had to be ranked it really does seem like Europe is driving markets not Treasuries a combination of falling nominal growth assumptions this is occurring even as real estimates tick higher but more importantly ECB anticipation has driven yields lower throughout the Eurozone opening up an arbitrage opportunity in the process 10 year yields are now 1 3 in Germany 2 95 in Spain 3 in Italy 3 7 in Portugal 2 6 in Ireland 2 5 in the UK etc these numbers make U S 10yr yields seem relatively cheap in comparison
Just look at this list of Countries with 10 year yields less than the U S I can t listen to a talking head bond manager strategist or seemingly anyone without hearing about how Rates can only go higher from here When in reality THEY CAN go lower In fact when you look around the world on a relative basis THEY SHOULD Look at that list and tell me the United States should pay more on their debt then all those countries France is borrowing at 1 77 people FRANCE You have Japan borrowing at a rate 76 lower than the U S with more than twice the debt Now all this doesn t mean the United States SHOULD trade lower but it s either that or others SHOULD trade higher because on a relative basis much is out of whack And those calling for much higher rates in the U S should realize that basket cases like Italy and Spain are trading at 3 1
The other chart that the world is fixated on is Small Cap stocks Bounce here or Bear Market for the Russell 2000
Across the broader market it is the Emerging Markets which are posting the largest gains while the Financial Stocks go negative for 2014
The youth of India have voted and they elected Growth The vote amounted to a surprisingly broad repudiation of Congress s welfare focused approach to policy making and an endorsement of Mr Modi s call for more effective governance and business friendly measures to create jobs and drive growth I didn t get a chance to sacrifice my life in India s freedom struggle but I have the chance to dedicate myself to good governance Mr Modi said to cheers in a victory speech in his home state of Gujarat on Friday night I will develop this country I will take it to new heights Mr Modi tapped into the frustrations of a generation of Indians who climbed out of poverty in the past decade but who have been prevented from joining the middle classes by slowing growth and a lack of employment It is a generation that aspires to better work opportunities a higher standard of living and world class infrastructure Modi will change the country 100 said Vijay Thakur a 31 year old cabdriver in Gujarat He will bring rapid development he will bring foreign companies to India everyone will have jobs
India will see a massive growth in their working age population over the next 10 years so no better time to shift political gears away from what wasn t working The elections also underpin the point we have made often over the past few months Indian youth s rising aspirations desire for growth and development and strong leadership are driving the political debate in the country This increases the probability that the new government will focus on development and governance as its prime agenda It sets the stage for India s structural story to unfold in the coming years as we have highlighted in our recent note The Next India We have assumed a greater chance of a reform agenda even though clarity on this will emerge in the ensuing weeks
The risk markets also voted on India and they chose Growth
Tech giant Cisco Systems Inc NASDAQ CSCO reported last week and the stock surged higher helped by this comment The momentum in U S enterprise and commercial remains very strong John Chambers CEO Cisco Systems
For those record keeping the previous Bull Market data points this is a good chart to study awealthofcs Nice chart from JP Morgan on the conditions seen in prior stock market peaks that is reminiscent of the game Twister
A further study of history will show you that the equity markets should have plenty of runway Below is a chart we update from time to time showing the rolling 10 year price change for the S P 500 going back to the start of the index in 1928 As shown over the last ten years the S P 500 is up 64 8 This might seem like a lot but compared to past runs for the index it barely shows up Since 1937 the average rolling 10 year return for the S P has been 103 so the current 10 year gain of 64 8 is only two thirds of the average
With the Anaheim park running full Disneyland is choosing to raise ticket prices Obviously no Blackfish issues at the Magic Kingdom
Disneyland announced big increases to its ticket prices Sunday night the latest evidence the massive upgrades made to the parks during the recession are paying off The price of the popular One Day Parkhopper tickets which allow visitors to enter both Disneyland and Disney California Adventure parks in California rose 9 5 to 150 says Disneyland blog MiceChat com Meanwhile the price to visit just one park rose 4 3 to 96 Disneyland s Suzi Brown confirmed the price increase to USA TODAY
A special Congratulations to all the 2014 College Graduates
2014 Graduation Tweet of the Week ReformedBroker Congrats college grads Today is the first day of the rest of your move back to Mom Dad s
This is just wrong and it will continue to crimp keeping the U S economy from reaching its full growth potential In 2012 the most recent year for which data are available workers with just a bachelor s degree were making a median salary of 46 900 a year while the average student loan balance for people under 30 years old was 21 400 Those numbers aren t directly comparable but it does seem that most young people can pay back their debts The problem developing is that earnings and debt aren t moving in the same direction From 2005 to 2012 average student loan debt has jumped 35 adjusting for inflation while the median salary has actually dropped by 2 2 If that continues debt burdens could start to become more unwieldy
Kids are already cutting back and delaying home and auto debt and thus purchases
which is causing apartments to become the housing start of choice for the class of 2014 MarketWatch Apartments as percent of housing starts reached a 40 year high in April
Speaking of auto sales unknown to General Motors is the fact that no fan of Nirvana would ever be caught dead driving a GM vehicle
Hedge Fund quote of the week jfahmy You guys are the 1 But I m not sure if that refers to your income bracket or your rate of returns Kevin Spacey at SALT2014
And finally it is the early bird that gets the worms and the early horse that collects the Crowns BH CNovak KYDerby Preakness winner California Chrome the morning after his second victory at Pimlico
He has no clue where he was born Coburn said All he knows is he loves to run and that s all it takes is a heart of a horse that loves to run He s got a tremendous heart we ve seen it because he never gives up He keeps trying and trying and trying and he keeps winning and winning and winning by more and more and more
Disclosure The information presented here is for informational purposes only and this document is not to be construed as an offer to sell or the solicitation of an offer to buy securities Some investments are not suitable for all investors and there can be no assurance that any investment strategy will be successful The hyperlinks included in this message provide direct access to other Internet resources including Web sites While we believe this information to be from reliable sources 361 Capital is not responsible for the accuracy or content of information contained in these sites Although we make every effort to ensure these links are accurate up to date and relevant we cannot take responsibility for pages maintained by external providers The views expressed by these external providers on their own Web pages or on external sites they link to are not necessarily those of 361 Capital In the event that you missed a past Research Briefing here is the archive |
XOM | Exxon Mobil Paces Energy Sector Down | Back in January I pointed out Exxon Mobil s NYSE XOM topping pattern The stock like the rest of the energy sector has stumbled and fumbled its way lower although certainly not in a straight line I suspect energy will continue to be weak for many months perhaps even years to come
Just remember that the bulls are going to fight every step of the way hence the tinted highlights below |
XOM | Earnings Update Is The S P 500 Topping | Each week clients are emailed a stat of the week or chart of the week or graph of the week
This week the chart of the week will be shared with this site s readers first before going to clients CNBC clip of the 200 day moving average is pretty significant
There is an old saw or maxim in investing the more often a support or resistance level is tested the more likely it is to fail The 200 day moving average has been tested a few times in the last year
October 14 where the S P 500 actually traded through the S P 500 and then rallied right back above with Q3 14 earnings
June 29 15 was another test
July 8th 9th the S P 500 traded through again based on Greece and Grexit but with Q2 15 earnings the S P 500 rallied again
July 27th another test of the S P 500 as China s stock market plummets and Energy Gold and Basic Materials sectors continue to trade lower
One thing that worries me is that the 200 day moving average tests are becoming more frequent
The S P 500 hasn t seen a 20 correction since April October 2011 so technically it has been four years or roughly 1 400 days since the market has seen a feel it in your toes correction
What bothers me greatly about the financial media is that pundits and such rarely distinguish between corrections and longer term bear markets The decade of 2000 2009 was a permanent loss of capital for some with two vicious bear markets interrupting what was an otherwise flat period of S P 500 returns much like the 1930s
The likelihood of a longer term bear market occurring today in the S P 500 absent some enormous exogenous shock seems extremely remote The period from 2000 to 2009 was a colon blow for excesses that had built up in the bull market in Technology and Financials the two sectors that led the S P 500 for the entire 1980s and 1990s bull market from 1982 to 2000 And even then Financials didn t finally tip until 2007 thanks to a 60 year bull market in housing coming to an end
Seasonally August and September are usually the two worst months of the year for S P 500 returns Maybe it is time for a decent flush
Earnings data per Thomson Reuters This Week in Earnings
Forward 4 quarter estimate 124 90 versus last week s 125 10
P E ratio 16 6 x
PEG ratio still negative based on forward growth rate but Ex Energy and looking at the adjusted PEG continues to hover around 2 x
S P 500 earnings yield 5 94 down from last week s 6 02 Contrast this with the Q1 2000 s earnings yield of 2 and the 10 Year Treasury of 5 5
Forward 4 quarter growth rate 1 50 versus last week s 1 42 This trend continues to make me uneasy With the importance of Exxon Mobil NYSE XOM in terms of the S P 500 s market cap Friday morning s Q2 15 earnings release by XOM will likely drag forward Energy estimates lower which was written about recently on here
Analysis conclusion John Butters of Factset noted in his July 31 Earnings Insight that there are smaller cuts to S P 500 earnings estimates than average for Q3 15 to date In English this means that revisions for Q3 15 earnings are less severe than average
Here is the data from Factset
July 15 1 5 is the decline in the bottom up estimate for the first month of the quarter
4 quarter average 3 2
20 quarter average 1 6
40 quarter average 2 0
The S P 500 rose a little better than 2 in July Per the AAII data pessimism on the part of individual investors rose to its highest level in 2 years this past week |
TEVA | Jazz JAZZ Submits NDA For Xyrem Follow On Candidate JZP 258 | Jazz Pharmaceuticals plc NASDAQ JAZZ announced that it has submitted a new drug application NDA seeking approval for JZP 258 as a treatment for cataplexy and excessive daytime sleepiness EDS associated with narcolepsy in patients seven years or younger The company has redeemed a priority review voucher for the NDA submission which may lead to accelerated review of the regulatory application JZP 258 is a follow on candidate of the company s blockbuster sleep disorder drug Xyrem It is an oxybate product candidate with 92 less sodium content than Xyrem which is also approved for cataplexy or EDS sleepiness associated with narcolepsy Jazz s shares have increased 17 6 so far this year compared with the s rise of 1 8 The NDA for JZP 258 was supported by data from a phase III study which evaluated JZP 258 for change in weekly cataplexy attacks compared to a placebo Data from the study demonstrated highly statistically significant differences in the number of cataplexy attacks as well as in key secondary endpoint of change in Epworth Sleepiness Scale ESS score for JZP 258 versus placebo The candidate has a safety profile similar to Xyrem The company has a strong sleep disorder portfolio with two FDA approved drugs Xyrem and Sunosi solriamfetol Xyrem is its key revenue generator with estimated full year sales in the range of 1 6 1 64 billion Meanwhile Sunosi was launched in the United States for treating EDS in patients with narcolepsy with or without cataplexy or obstructive sleep apnea in July 2019 The drug generated nearly 1 million in sales since its launch till the third quarter of 2019 Potential approval to JZP 258 will boost Jazz s sleep disorder portfolio further JZP 258 is likely to expand the eligible patient population for Jazz medicines as it will include patients ineligible for Xyrem as they are at risk of high sodium intake related consequences including hypertension and other cardiovascular diseases The highest approved dose of Xyrem of 9 grams per night contains 1 640 mg of sodium which is almost 70 of the recommended daily sodium intake for a healthy adult per an published on FDA s website Moreover generic version of Xyrem is set to hit the market starting 2023 The low sodium content of JZP 258 and a similar safety profile are likely to largely offset the decline in Xyrem sales once generic versions enter the market Approved drugs for narcolepsy include Teva Pharma s NYSE TEVA Provigil and Novartis NYSE NVS Ritalin SR A few other pharma companies are also developing treatment for narcolepsy which includes Avadel Pharmaceuticals NASDAQ AVDL Jazz Pharmaceuticals PLC Price
Zacks RankJazz currently has Zacks Rank 3 Hold You can see The Hottest Tech Mega Trend of AllLast year it generated 24 billion in global revenues By 2020 it s predicted to blast through the roof to 77 6 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
TEVA | Jazz JAZZ Submits NDA For Xyrem Follow On Candidate JZP 258 Revised | Jazz Pharmaceuticals plc NASDAQ JAZZ announced that it has submitted a new drug application NDA seeking approval for JZP 258 as a treatment for cataplexy and excessive daytime sleepiness EDS associated with narcolepsy in patients seven years or older The company has redeemed a priority review voucher for the NDA submission which may lead to accelerated review of the regulatory application JZP 258 is a follow on candidate of the company s blockbuster sleep disorder drug Xyrem It is an oxybate product candidate with 92 less sodium content than Xyrem which is also approved for cataplexy or EDS sleepiness associated with narcolepsy Jazz s shares have increased 15 5 in the past year compared with the s rise of 0 8 The NDA for JZP 258 was supported by data from a phase III study which evaluated JZP 258 for change in weekly cataplexy attacks compared to a placebo Data from the study demonstrated highly statistically significant differences in the number of cataplexy attacks as well as in key secondary endpoint of change in Epworth Sleepiness Scale ESS score for JZP 258 versus placebo The candidate has a safety profile similar to Xyrem The company has a strong sleep disorder portfolio with two FDA approved drugs Xyrem and Sunosi solriamfetol Xyrem is its key revenue generator with estimated full year sales in the range of 1 6 1 64 billion Meanwhile Sunosi was launched in the United States for treating EDS in patients with narcolepsy with or without cataplexy or obstructive sleep apnea in July 2019 The drug generated nearly 1 million in sales since its launch till the third quarter of 2019 Potential approval to JZP 258 will boost Jazz s sleep disorder portfolio further JZP 258 is likely to expand the eligible patient population for Jazz s medicines as it will include patients ineligible for Xyrem as they are at risk of high sodium intake related consequences including hypertension and other cardiovascular diseases The highest approved dose of Xyrem of 9 grams per night contains 1 640 mg of sodium which is almost 70 of the recommended daily sodium intake for a healthy adult per an published on FDA s website Moreover generic version of Xyrem is set to hit the market starting 2023 The low sodium content of JZP 258 and a similar safety profile are likely to largely offset the decline in Xyrem sales once generic versions enter the market Approved drugs for narcolepsy include Teva Pharma s NYSE TEVA Provigil and Novartis NYSE NVS Ritalin SR A few other pharma companies are also developing treatment for narcolepsy which includes Avadel Pharmaceuticals NASDAQ AVDL Jazz Pharmaceuticals PLC Price Zacks RankJazz currently has a Zacks Rank 3 Hold You can see We are reissuing this article to correct a mistake The earlier article on this topic issued on January 23 2020 should no longer be relied upon |
TEVA | Teva TEVA Q4 Earnings In Line Sales Beat Stock Up | Israel based Teva Pharmaceutical Industries Ltd NYSE TEVA is a global pharmaceutical company with a strong presence in the generics as well as branded markets The company s branded products include Copaxone multiple sclerosis MS Austedo chorea associated with Huntington s disease and tardive dyskinesia respiratory products like ProAir and Qvar and Ajovy preventive treatment of migraine Teva is facing significant challenges in the form of accelerated generic competition for Copaxone new competition for branded products pricing erosion in the U S generics business and a massive debt load However it has made impressive progress on restructuring activities and has a more stable financial position than before However we believe the company has a long way to go before it gains stability Teva s earnings surpassed expectations in two of the last four reported quarters while missing in the other two with the average negative surprise being 0 45 Currently TEVA has a Zacks Rank 3 Hold but that could definitely change following the company s earnings report which was just released You can see We have highlighted some of the key stats from this just revealed announcement below Earnings In Line Teva s fourth quarter earnings of 62 cents per share came in line with the consensus estimate Revenues Beat Teva posted revenues of 4 47 billion which beat the consensus estimate of 4 37 billion Sales rose 1 up 2 in constant currency terms year over year Key Statistics North America segment sales were 2 37 billion up 6 year over year due to launch of Truxima its biosimilar version of Roche s Rituxan and higher sales Qvar and Austedo which offset the impact of generic erosion of Copaxone Copaxone posted sales of 264 million in North America down 26 year over year due to generic erosion Combined sales of Bendeka and Treanda declined 11 to 125 million ProAir sales rose 77 to 80 million while Qvar sales were 67 million in the quarter rising massively year over year Generic products revenues rose 3 at 1 14 billion in the North America segment Austedo a new drug approved to treat chorea associated with Huntington s disease and tardive dyskinesia recorded sales of 136 million in the quarter in North America compared with 105 million in the previous quarter Ajovy Teva s new migraine treatment recorded sales of 25 million in the quarter same as the previous quarter The Europe segment recorded revenues of 1 18 billion down 2 up 2 in constant currency terms year over year In the International Markets segment sales declined 3 same in constant currency terms to 578 million 2020 Outlook Teva expects revenues to be in the range of 16 6 17 0 billion The Zacks Consensus Estimate stood at 17 11 billion Earnings are expected in the band of 2 30 2 55 per share The Zacks Consensus Estimate stood at 2 50 per share Share Price Impact Shares rise around 4 pre market trading Check back later for our full write up on this TEVA earnings report later Teva Pharmaceutical Industries Ltd Price and Consensus
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TEVA | 7 Stock Charts To Watch AVXL COLL FSLR LUNA PRPL TNDM XENE | 1 Anavex Life Sciences Corp AVXL
Anavex Life Sciences NASDAQ AVXL has a big inverse head and shoulders and the neckline is broken On Wednesday it did pop 40 cents or 9 29 to 4 57 reaching a high of 4 91 on 2 4 million shares traded All it needs to do now is get through the Sept Oct double top up around the 5 15 range and this stock could rip Targets is 6 1 2 8 and then we ll see if it will go further
2 Collegium Pharmaceutical Inc COLL
Collegium Pharmaceutical NASDAQ COLL had a really nice snapback after the two day pullback on Wednesday as it jumped 1 95 or 9 to 24 16 with a high of 24 30 on 2 8 million shares traded This one looks like it s headed toward 27 and 29ish next
3 First Solar FSLR
First Solar Inc NASDAQ FSLR was put out as a swing I believe that the solar group is moving and we ve got to be the leader It reached up to the declining topsline lateral price resistance and the gap gaining 2 59 or 4 85 to 56 12 just a nickel off Wednesday s high at 56 17 on 2 5 million shares traded Let s see if it can punch up through here The first target is the double top at 59 and the second target is up around 62 63
4 Luna Innovations Incorporated LUNA
Luna Innovations Incorporated NASDAQ LUNA has be on a tear for about three years and in this last strong year it went from about 2 65 all the way up to Wednesday s high at 9 32 before pulling back and closing up 46 cents or 5 36 to 9 04 on 392 746 shares traded It s doing great There s some resistance up near 10 10 1 2 which is my next target zone
5 Purple Innovation Inc PRPL
Purple Innovation NASDAQ PRPL has been on my swing trade list since the 7 s and on Wednesday it was up 54 cents or 4 to 14 20 just 8 cents off the session and all time high at 14 28 on 383 499 shares traded The next target is 16
6 Tandem Diabetes Care Inc TNDM
is working It popped and pulled back got very quiet broke out had an inside day on Tuesday and jumped 2 33 or 3 to 81 05 after running up to the session high at 82 59 on 1 8 million shares traded on Wednesday That s also a new all time high I think this stock will head for 98 100 next
7 Xenon Pharmaceuticals Inc XENE
Xenon Pharmaceuticals Inc NASDAQ XENE ran up to new highs in mid Jan had a pretty ugly pullback to the 50 bounced had an inside day started to move two days ago and on Wednesday it spiked 1 78 or 12 to 17 18 reaching a high of 18 10 on 565 184 shares traded I m looking for a run to about the 19 range and then potentially 23 1 2 going forward
Stocks on the long side included Anavex Life Sciences Corp AVXL Collegium Pharmaceutical Inc COLL Cerence Inc CRNC Canadian Solar Inc CSIQ eGain Corporation EGAN First Solar Inc NASDAQ FSLR Grayscale Bitcoin Trust BTC GBTC JinkoSolar Holding Co Ltd JKS Luna Innovations Incorporated LUNA Invitae Corporation NVTA Progyny Inc PGNY Purple Innovation Inc PRPL Virgin Galactic Holdings Inc SPCE SunPower Corporation SPWR Teva Pharmaceutical Industries Limited NYSE TEVA Tandem Diabetes Care Inc TNDM 21Vianet Group Inc VNET Vivint Solar Inc VSLR and Xenon Pharmaceuticals Inc XENE |
TEVA | Vanda receives notice of Teva application for generic Hetlioz | The FDA has sent Vanda Pharmaceuticals VNDA 1 a notice letter notifying it that Teva Pharmaceutical Industries TEVA 1 2 has filed a marketing application seeking approval for a generic version of HETLIOZ tasimelteon Vanda says it intends to vigorously defend its intellectual property protecting the product which will involve patent infringement litigation Filing a lawsuit will invoke an automatic 30 month stay on FDA approval of Teva s application Now read |
TEVA | New commercial chief at Lannett | Lannett Company NYSEMKT LCI appoints Maureen Cavanaugh as SVP and Chief Commercial Officer effective May 7 She joins the firm from Teva Pharmaceutical Industries NYSE TEVA where she was SVP Chief Commercial Officer North American Generics Now read |
XOM | Guyana accuses Venezuela of aggressive behavior near border area | GEORGETOWN Reuters Guyana s President David Granger said on Tuesday neighboring Venezuela had launched an extraordinary military deployment in the east of the OPEC country near a disputed border area We have noticed during the month of September an extraordinary escalation of Venezuelan military activity in eastern Venezuela Granger said at his Georgetown office It is a persistence of aggressive behavior hostile behavior towards Guyana he said adding the deployment was mostly marine and various forms of ground forces He did not provide further details Venezuelan Defense Minister Vladimir Padrino said on Tuesday the armed forces were conducting military exercises in both the east and west of the country I call on the people of Venezuela to stay calm because we re seriously preparing ourselves Padrino said in a televised speech at the Fuerte Tiuna military base Granger s comments come against the backdrop of a spike in tensions between Guyana and Venezuela long divided by a centuries old territorial dispute due to a recent oil discovery off the coast of the poor South American country Venezuelan President Nicolas Maduro has described newly elected Granger as a hostage of Exxon Mobil which discovered the oil in a potential boon for Guyana whose economy relies heavily on rice gold diamonds and bauxite Many in Guyana a small nation of 800 000 people sandwiched between Venezuela Brazil and Suriname fear that their larger neighbor is seeking to lay hands on its newfound oil wealth Exxon Mobil Corp NYSE XOM is drilling in the so called Stabroek Block about 120 miles 190 km off Guyana s coast Maduro s critics say he is using the border dispute as well as a more recent one with Colombia to distract voters from high inflation a severe recession and rampant crime ahead of December s parliamentary elections The leftist leader has also deployed troops to municipalities near the Colombian border amid what he calls a crackdown on smuggling
Price fixed goods ranging from flour to gasoline are also smuggled over the border to Guyana where they can be sold for a handsome profit |
XOM | At U N Guyana blasts Venezuela over century old border spat | By Hugh Bronstein UNITED NATIONS Reuters Guyana used the United Nations as a forum to blast Venezuela on Tuesday accusing the neighboring oil powerhouse of intimidation and aggression related to a border dispute two days after the countries agreed to restore diplomatic ties In his speech at the U N General Assembly Guyana s president David Granger accused his Venezuelan counterpart Nicolas Maduro of cross border bullying There has been a series of acts of aggression by presidents of Venezuela against my country Granger said citing actions dating from 1968 to President Nicolas Maduro s decree of May 2015 The decree created a theoretical defense zone offshore that would in Venezuela s eyes leave Guyana with no direct access to the Atlantic Ocean Granger said Venezuela was four times as big as the former British colony and its armed forces were more than 40 times as big as Guyana s Defense Force He said Venezuela mindful of its superior wealth and military strength and unmindful of its obligation as a member state of the United Nations has pursued a path of intimidation and aggression A Venezuelan government representative was not immediately available for comment Maduro withdrew his country s ambassador to Guyana in July after demanding a halt to oil exploration by Exxon Mobil Corp NYSE XOM off the coast of a region known as the Essequibo In September he yanked accreditation for Guyana s ambassador to Venezuela On Sunday Maduro said the countries would restore their respective ambassadors after meeting with Granger and U N Secretary General Ban Ki moon in New York Exxon in May said it had found oil in an area known as the Stabroek Block under a license granted by Guyana s government The company has declined to comment on the dispute The Essequibo a sparsely populated region of thick jungle encompasses an area equivalent to around two thirds of Guyana s territory and functions in practice as part of Guyana Guyana says Caracas agreed to relinquish the Essequibo following a ruling by an international tribunal in 1899 but that Venezuela later backtracked on that decision Venezuela says the 1899 ruling was unfair and insists the territory is still in dispute Maps in Venezuela usually describe the Essequibo as the reclamation zone Venezuela has the world s largest oil reserves according to the Organization of Petroleum Exporting Countries
This story has been refiled to change dateline to United Nations |
XOM | ExxonMobil sells Torrance Calif refinery to PBF Energy for 537 5 mil | Investing com Shares in PBF Energy surged more than 4 5 on Wednesday after the New Jersey based company agreed to purchase a 155 000 barrel per day refinery in Torrance Calif from XOM for 537 5 million
The purchase includes a lubricants distribution center at a refinery in Vernon just south of downtown Los Angeles proprietary terminals at the Vernon and Atwood refineries associated pipelines throughout California and related logistics assets With the acquisition PBF Energy will increase its total capacity to approximately 900 000 bpd
The deal is expected to be accretive immediately to PBF Energy s earnings and is expected to close by the end of the second quarter of fiscal year 2016 PBF Energy said on Wednesday in a statement Located on a 750 acre campus in Southern California PBF Energy believes the Torrance refinery offers distinct raw material and product distribution opportunities to the California Las Vegas and Phoenix markets
Southern California is a very attractive market and we are excited to become a supplier in the region PBF Energy chairman Tom O Malley said in a statement PBF s management team has extensive experience operating in California and we are entering at a very attractive purchase price for the Torrance refinery The transaction also includes a 171 mile pipeline which transports oil from numerous fields in the San Joaquin Valley directly to the refinery
The Torrance Refinery acquisition is another significant step in the continued growth of PBF Energy Coupled with the previously announced Chalmette acquisition we will have increased our refining capacity by over 60 percent and added meaningful Gulf and West Coast assets to our refining system PDF Energy CEO Tom Nimbley said in a statement
We are excited to be adding a refinery with Torrance s complexity and we look forward to entering the West Coast market Upon completion of these two pending transactions we will have operations spanning four PADDs and have diversified and increased our commercial footprint and flexibility
Earlier this month the reopening of a portion of the refinery was delayed after a California air quality board delayed a regulatory hearing on carbon emissions caused by outdated equipment inside the refinery In February four contractors outside of the refinery suffered minor injuries after a malfunction with an old piece of equipment known as an electrostatic precipitator ESP triggered an explosion in the area Until recently the refinery had only been operating at 20 capacity
The sale results from a strategic assessment of the site and how it fits with our refining portfolio ExxonMobil NYSE XOM president of Refining Supply Jerry Wascom said in a statement
Shares in ExxonMobil inched up 0 08 or 0 11 to 74 25 on Wednesday in after hours trading |
XOM | U S fines Exxon 2 63 million for Arkansas oil pipeline leak | WASHINGTON Reuters The U S pipeline safety office wrote Exxon Mobil Corp NYSE XOM on Thursday saying it has fined the company 2 63 million for spilling crude oil in an Arkansas residential area in 2013
The Pegasus pipeline spilled about 5 000 barrels of oil in a residential neighborhood near a town called Mayflower The Pipeline and Hazardous Materials Safety Administration told Exxon in a letter it published on Thursday that when the civil penalty is paid and terms of a compliance order are completed the enforcement matter will be closed |
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