Archives of “May 19, 2021” day

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Equities bounce into the European close

  
Analysis, Global Indices

Some life into the finish

Some life into the finish
The S&P 500 has trimmed its decline to 37 points. The opening ‘high’ is 4098 compared to 4090 now. If it can get into the opening gap, we could see a further bounce.
Meanwhile, it’s a rough day for European equities but the closes are around 1% above the lows.
  • UK FTSE 100 -1.3%
  • German DAX -1.7%
  • French CAC -1.5%
  • Italy MIB -1.4%
  • Spain IBEX -1.5%
For the S&P 500, it also looks like the market is trying to carve out a double bottom.

Oil falls further after Iran says texts are mostly drafted for return to nuclear deal

  
Analysis, Crude

A deal is in the bag

WTI daily
There are a few small hurdles to get a deal done but it looks like it’s coming. Iran’s lead negotiator Abbas Araghuchi said the draft texts for a return to the deal are mostly done.
WTI is at $62.03 on the statement, down 5.3% on the day.
The question has always been ‘how much is priced in’ for a deal. I tend to think that with all the recent statements, it should have been anticipated. That said, it’s tough to do in the physical market and depends how Iran returns to the market.
For the longer-term, I like buying a dip on a deal announcement. That would take a big risk out of the market and OPEC+ has proven that they’re in it to win it. So if Iran’s oil makes the market less balanced, OPEC will wait longer to bring back production. And eventually the pandemic ends and demand surges.
Update: We have more confirmation that deal is almost done.
  • EU’s Mora says confident Iran nuclear deal will be reached
  • Iran monitoring agreement will be extended
  • Diplomats to reconvene next week in Vienna

US weekly oil inventories +1320K vs +2000K expected

  
Analysis, Crude

Weekly EIA US petroleum inventories

US weekly oil inventories
  • Prior was -426K
  • Gasoline -1963K vs -700K exp
  • Distillates -2324K vs -1167K exp
  • Refinery utilization +0.2% vs -1.0% exp
  • Cushing -142K vs -421K prior
API data from late yesterday:
  • Crude +620K
  • Cushing -53K
  • Gasoline -2837K
  • Distillates -2581K
Oil is near the lows of the month with WTI down $2.60 to $62.91. There’s been little reaction to this report.

Gold silver ratio around 2016 lows favours gold over silver

  
Analysis, Gold / Silver

Gold silver ratio

The gold silver ratio is down near its 2016 lows.
Gold silver ratio 
What is it? 
The gold to silver ratio represents the relative value of one ounce of silver to one ounce of gold. It is a weight for weight comparison. In basic terms the ratio shows you how many ounces of silver you would need in order to buy a single ounce of gold.
As an example let’s say gold is trading at $1000 per ounce and silver is trading at $10 per ounce. In this example you would need one hundred ounces of silver to buy a single ounce of gold. The gold silver ratio would be 100:1.
The ratio moves each day
Every day the ratio is changing as the price of gold and silver is changing. In order to calculate it you divide the price of gold by the price of silver. You can see now that when the gold/silver ratio is high it means that MORE silver is needed to buy one ounce of gold and silver is relatively cheap compared to gold. This was the case last year when the gold silver ratio was up well over 110.
Conversely, when the gold silver ratio is low it means that LESS silver is needed to buy one ounce of gold and silver is relatively expensive compared to gold.
How to use it
Some analysts, traders, and investors look to “trade the ratio”, buying silver when the gold/silver ratio is high and switching to gold when it falls. If inflation risks rise, and the Fed stays bearish, then precious metals offer good value. Looking at the gold/silver ratio can help you either a) choose between silver and gold or b) allocate your positions between silver and gold

India may rethink its ban on crypto – to look at how to use cryptos as a digital asset

  
  Analysis

A report in the Indian media says that the 2019 recommendation to ban cryptocurrency assets has become outdated.

Citing three sources privy of the discussions 

The article says:
  • prevailing view that the recommendations by a committee headed by former finance secretary Subhash Garg in 2019 for a blanket ban on these assets had become outdated
  • new committee could explore the use of blockchain for technological enhancement, suggest ways to regulate cryptos as digital assets instead of a currency
  • “There is a view within the government that the recommendations made by the Subhash Garg are dated and a fresh look is needed at use of cryptos rather than a total ban,” an official in the know of the matter said.
  • discussions are at an early stage and no formal resolution has yet been passed.
Here is the article, there is more there.
Little respite for crypto here during the session, BTC barely off its lows:
A report in the Indian media says that the 2019 recommendation to ban cryptocurrency assets has become outdated. 

A BTC ICYMI – China bans financial institutions from offering cryptocurrency services

  
Analysis, BITCOIN

Info comes via Reuters, the wire citing three industry bodies in a joint statement on Tuesday.

China ban institutions, including banks and online payments channels:
  • must not offer clients any service involving cryptocurrency, such as registration, trading, clearing and settlement
Also warned investors against speculative crypto trading
  • “Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order”
  • virtual currencies “are not supported by real value,” their prices are easily manipulated, and trading contracts are not protected by Chinese law
—
The three industry bodies statement cited:
  • National Internet Finance Association of China
  • China Banking Association
  • Payment and Clearing Association of China
Info comes via Reuters, the wire citing three industry bodies in a joint statement on Tuesday.

US Treasury Secretary Yellen said Biden’s infrastructure plan will improve the global competitiveness of US companies

  
  Analysis

Biden went for a drive in a Ford electric truck. Yellen spoke on Tuesday, US time.

Yellen was speaking at a US Chamber of Commerce event, emphasising firms will be expected to pay for some of the plan:
  • “We are confident that the investments and tax proposals in the jobs plan, taken as a package, will enhance the net profitability of our corporations and improve their global competitiveness” 
  • “We believe the corporate sector can contribute to this effort by bearing its fair share” 
  • “At the same time, we want to eliminate incentives that reward corporations for moving their operations overseas and shifting profits to low-tax countries.”
Biden went for a drive in a Ford electric truck. Yellen spoke on Tuesday, US time. 

Reports that the EU is to freeze its investment agreement with China

  
  Analysis

A report via politics website Politico, that the European Parliament is expected to pass a motion on Thursday to formally freeze the  investment agreement with China

Politico cite a draft they have seen.
More:
  • The Parliament will vote to urge that “any consideration of the EU-China Comprehensive Agreement on Investment, as well as any discussion on ratification by the European Parliament, have justifiably been frozen because the Chinese sanctions are in place.”
  • draft motion will also call on the EU to “increase coordination and cooperation” with the U.S. to deal with China, while stressing that any trade deals with Taiwan “should not be held hostage” by the deal with Beijing.
Ratification of the treaty had already been put on hold earlier this month. This will formalise the hold on ratification if it goes ahead.

 

A report via politics website Politico, that the European Parliament is expected to pass a motion on Thursday to formally freeze the  investment agreement with China
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