Tuesday, December 18, 2018

Equities: 12/18

Equities:
U.S. equities moved sharply lower in mass, with three of the major indices losing more than 2% yesterday.  A common question is:  Why are stocks down?  While there can be many explanations,  such as trade tensions with China or uncertainty about interest rates going forward, it all boils down to one thing.  There are more sellers than buyers.  This market is probing to find an equilibrium between sellers and buyers.  Some of the best performing sectors lately have been defensive sectors such as real estate and utilities, but yesterday they were some of the worst performers, both losing more than 3%.  That may be a sign of exhaustion to the downside when they give up the fight.  On the day, the Dow Jones Industrials ($DJI) lost 2.1% to 23592.98, the Nasdaq Composite (COMP) fell 2.3% to 6753.73, and the S&P 500 (SPX) dropped 2.1% to 2545.94.

Monday, December 17, 2018

Oil prices

Oil prices have plummeted more than 25% in the past three months on concerns that economic growth is slowing while oil supplies are increasing. Year-to-date, the average price for WTI crude has been $66 per barrel, just below our forecast of $67, though the current price is in the mid-$50s. That compares with $51 in 2017, $43 in 2016, $49 in 2015, $93 in 2014 and $98 in 2013. We think that oil prices hit an inflection point in 2018, and look for a lower average price of $62 in 2019, with a range of $50-$75. Our forecasts are based on several inputs, including conversations with company managements, and the activity of traders, who generate futures prices and the forward curve. The forecast range is also influenced by slowing global demand growth and increased domestic supply, as the U.S. moves toward energy independence, as well as by OPEC announcements. Finally, trends in the U.S. dollar exert pressure on commodity prices, including crude oil. Given the volatility in oil prices, our investment recommendation on the Energy sector is now Market-Weight.

Thursday, December 13, 2018

energy pricing

Oversupply concerns continue to plague energy pricing as Crude Futures (/CL) slipped 1% yesterday while still managing to maintain its posture above $50 a barrel which may be tested anew today. A freshly published contradictory report indicates that OPEC producing countries reached over 33 million barrels a day in November with Saudi Arabia stretching to all-time highs in excess of 11 million barrels pulled from the ground daily which casts doubts on real constraint leading into 2019. 

Wednesday, December 12, 2018

Pivotal Software Inc. (PVTL)

Pivotal Software Inc. (PVTL) shares rose in the extended session Tuesday after the cloud-computing company topped Wall Street estimates for the quarter. Pivotal Software shares advanced 4.2% after hours, following a 1.3% decline to close the regular session at $17.80 The company reported a third-quarter loss of $34.9 million, or 13 cents a share, compared with a loss of $39.3 million, or 57 cents a share, in the year-ago period. The adjusted loss was 5 cents a share. Revenue rose to $168.1 million from $129 million in the year-ago quarter. Analysts surveyed by FactSet had forecast a loss of 8 cents a share on revenue of $164.1 million. For the fourth quarter, Pivotal expects a loss of 10 cents to 9 cents a share on revenue of $169 million to $171 million, while analysts had forecast a loss of 9 cents a share on revenue of $167.3 million.

Thursday, December 6, 2018

Chinese phone maker Huawei CFO

The latest development overnight is the is the arrest of Chinese phone maker Huawei CFO in Canada at the request of U.S. authorities related to U.S. sanctions on Iran.  This is overshadowing the apparent words of truce between the U.S. and China.   Crude oil prices are under pressure this morning as skepticism rises about OPEC’s ability to reach a consensus on a production cut as their meeting begins today.     As of this writing,  U.S crude oil futures (/CL) are 2.7% lower near $51.40 per barrel and S&P 500 futures (/ES) are 1.6% lower near 2657.   

Tuesday, December 4, 2018

(SMAR) shares

(SMAR) shares rose in the extended session Monday after the cloud-software company's quarterly results and outlook topped Wall Street estimates. Smartsheet shares rose 4.4% after hours, following a 0.6% rise to close the regular session at $27.06. The company reported a third-quarter loss of $15.6 million, or 15 cents a share, compared with a loss of $10.4 million, or 54 cents a share, in the year-ago period. The adjusted loss was 9 cents a share. Revenue rose to $46.9 million from $29.4 million in the year-ago quarter. Analysts surveyed by FactSet had forecast a loss of 13 cents a share on revenue of $39.2 million. For the fourth quarter, Smartsheet expects an adjusted loss of 15 cents to 13 cents a share on revenue of $49 million to $50 million, while analysts had forecast a loss of 16 cents a share on revenue of $44.1 million.