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Futures Rise Ahead Of Deluge Of Big Tech Earnings

Futures Rise Ahead Of Deluge Of Big Tech Earnings

One day after Goldman doubled down on its call for a market meltup into year-end, futures…

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This article was originally published by Zero Hedge

Futures Rise Ahead Of Deluge Of Big Tech Earnings

One day after Goldman doubled down on its call for a market meltup into year-end, futures on the Nasdaq 100 edged higher, while contracts on the S&P 500 were modestly higher on Monday, approaching record highs again as investors braced for a flood of earnings (164 of 500 S&P companies report this week) while weighing rising inflation concerns, Covid-19 risks and China’s deteriorating outlook (Goldman slashed China’s 2022 GDP to 5.2% from 5.6% overnight). The FOMC enters quiet period ahead of next week’s FOMC meeting, which means no Fed speakers as attention shifts to economic data and corporate earnings. At 745 a.m. ET, Dow e-minis were up 3 points, or 0.01%, S&P 500 e-minis were up 4.25 points, or 0.1%, and Nasdaq 100 e-minis were up 36.25 points, or 0.25%. Bitcoin bounced back over $63,000 after sliding below $60,000 over the weekend, the 10-year US Treasury yield rose and the dollar also rose after Federal Reserve Chair Jerome Powell flagged that inflation could stay higher for longer, fueling investor concern that sticky price increases may force policy makers to raise borrowing costs.

Global markets have remained resilient despite risks from price pressures stoked by supply-chain bottlenecks and higher energy costs. On Sunday, Janet Yellen was among those counseling the inflation situation reflects temporary pain that will ease in the second half of 2022 even as Twitter CEO Jack Dorsey warned hyperinflation is coming. Investors are wary that tighter monetary policy to keep inflation in check will stir volatility

“Inflation concerns will continue to dominate markets this year as the price of crude oil remains elevated,” while “the pandemic remains a central concern,” said Siobhan Redford, an analyst at FirstRand Bank Ltd. in Johannesburg. “This will add further complexity to the already difficult decisions facing policy makers around the world.”

All of FAAMG – Facebook, Microsoft, Apple, Alphabet and Amazon.com – are set to report their results later this week. The companies shares, which collectively account for over 22% of the weighting in the S&P 500, were mixed in trading before the bell.

Facebook shares fell in premarket trading, extending six weeks of declines, after Bloomberg reported that the social-media company is struggling to attract younger users and that employees are concerned over the spread of misinformation and hate speech on its platform. The company is scheduled to report quarterly results after the market closes. “After Snap got an Apple caught in its throat, markets will have an itchy trigger finger over the sell button if the social network says the same,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA. “Additionally, this week, it is a FAANG-sters paradise … that decides whether the U.S. earnings season party continues, before the FOMC (Federal Open Market Committee) reasserts its dominance next week.”

PayPal jumped 6.4% as the company said it wasn’t currently pursuing an acquisition of Pinterest, ending days of speculation over a potential $45 billion deal. Shares of Pinterest plunged 12.5%. Tesla gained 2.2% in premarket trading after Morgan Stanley raised its price target for the stock by a third, citing “extraordinary” sales growth. The stock then surged to new all time highs after Bloomberg reported that Hertz placed an order for 100,000 Teslas in the first step of an ambitious plan to electrify its rental-car fleet.

Oil firms including Chevron Corp and Exxon Mobil rose about 0.5% each, tracking Brent crude prices to three-year high.

Cryptocurrency-exposed stocks gain in premarket trading as Bitcoin climbs back above the $63,000 per token level after slipping from its record high last week. Crypto-linked stocks that are climbing in premarket include Bakkt +6.6%, Hive Blockchain +3.9%, Hut 8 Mining +2.8%, Riot Blockchain +2.2%, MicroStrategy +2.3%, Marathon Digital +2.8%, Coinbase +1.9%, Silvergate +1.8%, Bit Digital +1.2% and Mogo +0.8%

Strong earnings reports helped lift the S&P 500 and the Dow to record highs last week, with the benchmark index rising 5.5% so far in October to recoup all of the losses suffered last month.  However, market participants are looking beyond the impressive earnings numbers with a focus on how companies mitigate supply chain bottlenecks, labor shortages and inflationary pressures to sustain growth. Analysts expect S&P 500 earnings to grow 34.8% year-on-year for the third quarter, according to data from Refinitiv.

On the economic data front, readings on U.S. third-quarter GDP – the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week.

In Europe, mining companies and banks gained but the telecommunications and industrial goods and services sectors declined, leaving the Stoxx 600 index little changed. Banks rose on HSBC’s bright outlook. Spain’s Banco de Sabadell SA jumped more than 5% after rejecting an offer for its U.K. unit. Telecoms and industrials were the biggest losers. Volvo Car slashed its initial public offering by a fifth, making it the latest in a string of European companies to pull back from equity markets roiled by soaring energy costs and persistent supply chain delay. Here are some of the biggest European movers today:

  • Banca Monte dei Paschi slides as much as 9.5% after the Italian government and UniCredit ended talks over the sale of the lender.
  • Exor shares gain as much as 5.6% in Milan trading to the highest level on record after a report that the Agnelli family’s holding co. revived talks with Covea for the sale of Exor’s reinsurance unit PartnerRe.
  • Banco Sabadell jumps as much as 5.6% after it said it rejected an offer for its TSB Bank unit in the U.K. from Co-operative Bank.
  • SSAB rises as much as 5.2% after the Swedish steelmaker posted 3Q earnings well above analysts expectations. Handelsbanken analyst Gustaf Schwerin said the figures were “very strong.”
  • Weir Group rises as much as 3.7% after Exane BNP Paribas raised the stock to outperform. Analyst Bruno Gjani says the stock’s underperformance YTD provides a “compelling entry opportunity.”
  • Darktrace drops as much as 26% after Peel Hunt initiated coverage of the cybersecurity firm with a sell rating and 473p price target that implies about 50% downside to Friday’s close.
  • Nordic Semiconductor declines as much as 8.8% after ABG Sundal Collier downgraded to hold.

German business morale deteriorated for the fourth month running in October as supply bottlenecks in manufacturing, a spike in energy prices and rising COVID-19 infections are slowing the pace of recovery in Europe’s largest economy from the pandemic. The Ifo institute said on Monday that its business climate index fell to 97.7 from an upwardly revised 98.9 in September. This was the lowest reading since April and undershot the 97.9 consensus forecast in a Reuters poll.

“Supply problems are giving businesses headaches,” Ifo President Clemens Fuest said, adding that capacity utilisation in manufacturing was falling. “Sand in the wheels of the German economy is hampering recovery.”

The weaker-than-expected business sentiment survey was followed by a grim outlook from Germany’s central bank, which said in its monthly report that economic growth was likely to slow sharply in the fourth quarter. The Bundesbank added that full-year growth was now likely to be “significantly” below its 3.7% prediction made in June.

Earlier in Asia, stocks dipped in Japan and were mixed in China, where the central bank boosted a daily liquidity injection and officials expanded a property-tax trial. Signs that it would take at least five years before authorities impose any nationwide property tax bolstered some industrial metals.  Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved. The ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal – for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, while the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China’s State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts.

In FX, the Bloomberg Dollar Spot Index was little changed after earlier inching lower to touch the weakest level since Sept. 27; the greenback was mixed against its Group-of-10 peers with commodity currencies performing best, led by the Australian dollar and Norwegian krone. The euro hovered around $1.1650 even as German business confidence took another hit in October as global supply logjams damp momentum in the manufacturing-heavy economy. Ifo business confidence fell to 97.7 in October, from 98.9 in the prior month. The pound inched up, rising alongside other risk- sensitive Group-of-10 currencies, having trailed all its peers on Friday after Brexit risks reared their head late in the London session. A quiet week for U.K. data turns focus to the upcoming government budget. The Australian dollar rose against all its Group-of-10 peers, tracking commodity gains, with market sentiment also boosted by the People’s Bank of China’s move to inject additional cash into the banking system. The yen declined after rising for three consecutive days; Economists expect the BoJ to keep its policy rate unchanged Thursday. Turkey’s lira fell to a record low as the country’s latest diplomatic spat gave traders another reason to sell the struggling currency. Day traders in Japan have started trimming their bullish wagers on the Turkish lira, with forced liquidation a growing threat as the currency tumbles.

In rates, Treasuries were under pressure again, with the yield curve steeper as US trading begins Monday. They’re retracing a portion of Friday’s swift flattening, which occurred after Fed Chair Powell said rising inflation rates would draw a response from the central bank. 5s30s curve is back to ~89bp vs Friday’s low 85bp, within half a basis point of the lowest level in more than a year. Long-end yields are higher by as much as 3bp, 10-year by 2.7bp at 1.66%, widening vs most developed-market yields; yields across the curve remain inside Friday’s ranges, which included higher 2- and 5-year yields since 1Q 2020. Curve-steepening advanced after an apparent wager via futures blocks.

In commodities, Brent oil rallied above $86 a barrel after Saudi Arabia urged caution in boosting supply. Gold rose for a fifth day, the longest run of gains since July, as risks around higher-for-longer inflation bolstered the metal’s appeal.

Facebook will report its third quarter results after the market today, followed by Alphabet, Microsoft, Apple and Amazon later in the week.  On the economic data front, readings on U.S. third-quarter GDP – the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week.

Top Overnight News from Bloomberg

  • S&P 500 futures up 0.1% to 4,542.25
  • STOXX Europe 600 little changed at 472.03
  • MXAP little changed at 200.13
  • MXAPJ up 0.1% to 661.46
  • Nikkei down 0.7% to 28,600.41
  • Topix down 0.3% to 1,995.42
  • Hang Seng Index little changed at 26,132.03
  • Shanghai Composite up 0.8% to 3,609.86
  • Sensex up 0.4% to 61,038.76
  • Australia S&P/ASX 200 up 0.3% to 7,441.00
  • Kospi up 0.5% to 3,020.54
  • Brent Futures up 0.7% to $86.14/bbl
  • Gold spot up 0.4% to $1,800.45
  • U.S. Dollar Index down 0.10% to 93.55
  • Euro up 0.1% to $1.1655

Top Overnight News from Bloomberg

  • U.S. Treasury Secretary Janet Yellen defended Federal Reserve Chair Jerome Powell’s record on regulating the financial system, which has been a target of criticism from progressive Democrats arguing he shouldn’t get a new term. Yellen said she expects price increases to remain high through the first half of 2022, but rejected criticism that the U.S. risks losing control of inflation.
  • Speaker Nancy Pelosi opened the door to Democrats using a special budget tool to raise the U.S. debt ceiling without the support of Senate Republicans, whose votes would otherwise be needed to end a filibuster on the increase.
  • President Joe Biden and fellow Democrats are racing to reach agreement on a scaled-back version of his economic agenda, with a self-imposed deadline and his departure later this week for summits in Europe intensifying pressure on negotiations.
  • Bundesbank chief Jens Weidmann’s surprise announcement last week that he will leave on Dec. 31 has hit Berlin at a sensitive time, with Chancellor Angela Merkel currently running only a caretaker administration in the aftermath of an election whose outcome is likely to remove her CDU party from power.
  • Some holders of an Evergrande bond on which the embattled developer had missed a coupon deadline last month received the interest before the end of a grace period Saturday, according to people familiar with the matter.

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved with the region now mixed heading into the European open. US equity futures overnight opened trade with a mild negative tilt before drifting higher, with a broad-based performance experienced across the Stateside contracts, whilst European equity contracts are marginally firmer. Back to APAC, the ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal – for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China’s State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts.

Top Asian News

  • Xi Takes Veiled Swipe at U.S. as China Marks 50 Years at UN
  • Hong Kong Convicts Second Person Under National Security Law
  • Gold Extends Gain as Inflation Risks and Virus Concerns Persist
  • Amnesty to Quit Hong Kong Citing Fears Under Security Law

A tentative start to the week for European equities (Stoxx 600 U/C) as stocks struggle to find direction. On the macro front, the latest IFO report from Germany was mixed, with commentary from IFO downbeat, noting that Germany’s economy faces an uncomfortable autumn as supply chain problems were causing trouble for companies, and production capacities were falling. The overnight session was a mixed bag with the Shanghai Composite (+0.8%) supported by a liquidity injection from the PBoC whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China’s State Council is to expand the property-tax reform trials to more areas. Stateside, US futures are marginally firmer with newsflow in the US in part, focused on events on Capitol Hill with CNN reporting that the goal among Democratic leaders is to have a vote Wednesday or Thursday on the infrastructure package. Note, the Fed is currently observing its blackout period ahead of the November meeting. From an earnings perspective, large-cap tech earnings dominate the slate for the week with the likes of Facebook (FB), Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) all due to report. Back to Europe, sectors are somewhat mixed as Basic Resources is the marked outperformer amid upside in underlying commodity prices. It’s been a busy morning for the Banking sector as HSBC (+1%) reported a 74% increase in Q3 earnings, whilst Credit Suisse (+0.7%) is reportedly mulling the sale of its asset management unit. Less encouragingly for the sector, UniCredit (-0.5%) and BMPS (-3.2%) shares are lower after negations on a rescue plan for BMPS have ended without an agreement. Finally, Airbus (-1.2%) and Safran (-2.3%) sit at the foot of the CAC after reports suggesting that the CEO’s of Avolon and AerCap have, in recent weeks, written to the Airbus CEO expressing their concerns that the market will not support Airbus’ aggressive plans to increase the pace of production; subsequently, Airbus has rejected their proposal, according to sources.

Top European News

  • The Man Behind Erdogan’s Worst Spat With the West: QuickTake
  • Weidmann Succession Suspense May Last for Weeks on Berlin Talks
  • Cat Rock Capital Urges Just Eat Takeaway to Sell GrubHub
  • European Gas Jumps Most in a Week as Russian Supplies Slump

In FX, the Dollar is somewhat mixed vs major counterparts and the index is jobbing around 93.500 as a result in rather aimless fashion at the start of a typically quiet start to the new week awaiting fresh impetus or clearer direction that is highly unlikely to come from September’s national activity index or October’s Dallas Fed business survey. Instead, the Greenback appears to be reliant on overall risk sentiment, US Treasury yields on an outright and relative basis along with moves elsewhere and technical impulses as the DXY roams within a 93.775-483 range.

  • TRY – Lira losses continue to stack up, and the latest swoon to circa 9.8545 against the Buck came on the back of Turkish President Erdogan’s decision to declare 10 ambassadors persona non grata status due to their countries’ support for a jailed activist, including diplomats from the US, France and Germany. However, Usd/Try has actually pared some gains irrespective of a deterioration in manufacturing confidence and this may be partly psychological given that 10.0000 is looming with little in the way of chart resistance ahead of the big round number.
  • AUD/NZD – Iron ore prices are helping the Aussie overcome rather mixed news on the COVID-19 front, as the state of Victoria is on course to open up further from Friday, but new cases in NSW rose by almost 300 for the second consecutive day on Sunday. Nevertheless, Aud/Usd has had another look at offers around 0.7500 and Aud/Nzd is approaching 1.0500 even though Westpac sees near term downside prospects for the cross while maintaining its 1.0600 year end projection, as Nzd/Usd continues to encounter resistance and supply into 0.7200.
  • GBP/CAD – Sterling has regrouped after losing some of its hawkish BoE momentum and perhaps the Pound is benefiting from the latest rebound in Brent prices towards Usd 86.50/br on top of reports that the first round of talks between the UK and EU on NI Protocol were constructive, while the Loonie is up alongside WTI that has been adobe Usd 84.50 and awaiting the BoC on Wednesday. Cable is around 1.3750 after fading into 1.3800, Eur/Gbp is hovering above 0.8450 and Usd/Cad is pivoting 1.2350.
  • EUR/JPY/CHF – The Euro has bounced from the lower half of 1.1600-1.1700 parameters and looks enshrined by a key Fib just beyond the current high (1.1670 represents a 38.2% retracement of the reversal from September peak to October trough) and decent option expiry interest under the low (1 bn between 1.1615-00), with little fundamental direction coming from a very inconclusive German Ifo survey – see 9.00BST post on the Headline Feed for the main metrics and accompanying comments from the institute. Elsewhere, the Yen is hedging bets prior to the BoJ within a 113.83-42 band against the Dollar and the Franc seems to have taken heed of another rise in weekly Swiss sight deposits at domestic banks as Usd/Chf climbs from circa 0.9150 towards 0.9200 and Eur/Chf trades nearer the top of a 1.0692-65 corridor.
  • SCANDI/EM/PM – Firm oil prices are also underpinning the Nok, Rub and Mxn to various extents, while the Zar looks content with Gold’s advance on Usd 1800/oz and the Cnh/Cny have derived traction via a firmer onshore PBoC midpoint fix, a net Yuan 190 bn 7 day liquidity injection and the fact that China’s Evergrande has restarted work on more than 10 projects having made more interest payments on bonds in time to meet 30 day grace period deadlines.

In commodities, a modestly firmer start to the week for the crude complex though action has been contained and rangebound throughout the European session after a modest grinding bid was seen in APAC hours. Currently, the benchmarks post upside of circa USD 0.30/bbl amid relatively minimal newsflow. The most pertinent update to watch stems from China, where the National Health Commission spokesperson said China’s current COVID outbreak covers 11 provinces and expects the number of new cases to keep rising; additionally, the number of affected provinces could increase. Separately, but on COVID, they are some reports that the UK Government is paving the wat for ‘plan B’ measures in England, while this are primarily ‘softer’ restrictions a return of work-from-home guidance could hamper the demand-side of the equation. Note, further reports indicate this is not on the cards for this week and there are some indications that we could see, if necessary, such an announcement after the COP26 summit in Scotland ends on November 12th. Elsewhere, and commentary to keep an eye on for alterations given the above factors, Goldman Sachs writes that the persistence of the global oil demand recovery being on course to hit pre-COVID levels would present an upside risk to its end-2021 USD 90/bbl Brent price target. Moving to metals, spot gold and silver are firmer but reside within tight ranges of just over USD 10/oz in gold, for instance. In a similar vein to crude, newsflow explicitly for metals has been minimal but it is of course attentive to the COVID-19 situation while coal futures were hampered overnight as China’s State Planner announced it is to increase credit supervision in the area.

US Event Calendar

  • 8:30am: Sept. Chicago Fed Nat Activity Index, est. 0.20, prior 0.29
  • 10:30am: Oct. Dallas Fed Manf. Activity, est. 6.2, prior 4.6

DB’s Jim Reid concludes the overnight wrap

Well I saw Frozen twice this weekend. Once in the flesh up in London in the musical version and once on TV on Sunday at the heart of Manchester United’s defence which was breached 5 (five) times by Liverpool without reply. Regular readers can guess which I enjoyed the most.

Anyway I’ll let it go for now and prepare myself for a bumper week ahead for markets. This week we have decisions from the ECB and the Bank of Japan (both Thursday) even if the Fed will be on mute as they hit their blackout period ahead of the likely taper decision next week. Inflation will obviously remain in the spotlight too as we get the October flash estimate for the Euro Area (Friday) with some regional numbers like German (Thursday) before. In addition, the Q3 earnings season will ramp up further, with 165 companies in the S&P 500 reporting, including Facebook (today), Microsoft, and Alphabet (both tomorrow), and Apple and Amazon (Thursday). Elsewhere, the UK government will be announcing their latest budget and spending review (Wednesday), Covid will remain in the headlines in light of the growing number of cases in many countries, and we’ll get the first look at Q3 GDP growth in the US (Thursday) and the Euro Area (Friday).

Starting with those central bank meetings, we’re about to enter a couple of important weeks with the ECB and BoJ meeting this week, before the Fed and the BoE follow the week after. Market anticipation is much higher for the latter two though.

So by comparison, the ECB and the BoJ are likely to be somewhat quieter, and our European economists write in their preview (link here) that this Governing Council meeting is likely to be a staging ground ahead of wide-ranging policy decisions in December, and will therefore be about tone and expectations management. One thing to keep an eye on in particular will be what is said about the recent surge in natural gas prices, as well as if ECB President Lagarde challenges the market pricing on liftoff as inconsistent with their inflation forecasts and new rates guidance. 5yr5yr Euro inflation swaps hit 2% for the first time on Friday so if the market is to be believed the ECB has achieved long-term success in hitting its mandate. With regards to the meeting, we think there’ll be more action in December where our economists’ baseline is that there’ll be confirmation that PEPP purchases will end in March 2022. See the BoJ preview here.

Inflation will remain heavily in focus for markets over the week ahead, with recent days having seen investor expectations of future inflation rise to fresh multi-year highs. See the week in review at the end for more details. This week one of the main highlights will be the flash Euro Area CPI reading for October, which is out on Friday. Last month, CPI rose to 3.4%, which is the highest inflation has been since 2008, and this time around our economists are expecting a further increase in the measure to 3.8%. However, their latest forecast update (link here) expects that we’ll see the peak of 3.9% in November, before inflation starts to head back down again. The other main data highlight will come from the Q3 GDP figures, with releases for both the US and the Euro Area. For the US on Thursday the Atlanta Fed tracker has now hit a low of only +0.53%. DB is at 2.3% with consensus at 2.8%.

Earnings season really ramps up this week, with the highlights including some of the megacap tech firms, and a total of 165 companies in the S&P 500 will be reporting. Among the firms to watch out for include Facebook and HSBC today. Then tomorrow, we’ll hear from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter. On Wednesday, releases will include Thermo Fisher Scientific, Coca-Cola, McDonald’s, Boeing, General Motors, Santander and Ford. Thursday then sees reports from Apple, Amazon, Mastercard, Comcast, Merck, Royal Dutch Shell, Linde, Volkswagen, Starbucks, Sanofi, Caterpillar, Lloyds Banking Group and Samsung. Finally on Friday, we’ll hear from ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon and NatWest Group.

Here in the UK, the main highlight next week will be the government’s Autumn Budget on Wednesday, with the Office for Budget Responsibility also set to release their latest Economic and Fiscal Outlook alongside that. In addition to the budget, the government will also be outlining the latest Spending Review, which will cover public spending priorities over the next 3 years. Our UK economists have released a preview of the event (link here), where they write that 2021-22 borrowing is expected to be revised down by £60bn, and they expect day-to-day spending will follow the path set out at the Spring Budget. They’re also expecting Chancellor Sunak will outline new fiscal rules.

Finally, the pandemic is gaining increasing attention from investors again, with a number of countries having moved to toughen up restrictions in light of rising cases. This week, something to look out for will be the US FDA’s advisory committee meeting tomorrow, where they’ll be discussing Pfizer’s request for an emergency use authorization for its vaccine on 5-11 year olds. The CDC’s advisory committee is then holding a meeting on November 2 and 3 the following week, and the White House have said that if it’s authorised then the vaccine would be made available at over 25,000 paediatricians’ offices and other primary care sites, as well as in pharmacies, and school and community-based clinics. The full day by day calendar is at the end as usual.

Asian markets are mixed this morning so far, as the Shanghai Composite (+0.38%), Hang Seng (+0.09%) and the KOSPI (+0.30%) are edging higher, while the Nikkei (-0.85%) is down. The rise in Chinese markets comes despite the news of 38 new COVID-19 cases as well as an announcement of a lockdown affecting around 35,700 residents of a county in Inner Mongolia. As China is one of the last countries in the world to still adhere to strict containment measures, a major outbreak can deal a fresh blow to the domestic economy and further reinforce global supply chain issues. Elsewhere the Turkish Lira hit fresh record lows, and is down around -1.5% as we type after last week’s surprise interest rate cut and Saturday’s news that ambassadors from 10 countries, including the US, Germany and France, were no longer welcome in the country. S&P 500 futures (+0.06%) are around unchanged and 10yr US Treasury yields are back up c.1bp.

Looking back on an eventful week now, and there was a marked increase in inflation expectations, which manifested itself in global breakevens hitting multi-year, if not all-time, highs. Starting with the all-time highs, US 5-year breakevens increased +14.9bps (-1.0bps Friday) to 2.90%, the highest level since 5-year TIPS have started trading, while 10-year breakevens increased +7.5bps (-0.7bps Friday) to 2.64%, their highest readings since 2005. 10-year breakevens in Germany increased +9.5 bps (+3.6bps Friday) to 1.91%, their highest since 2011, while in the UK 10-year breakevens increased +17.1 bps (+4.0bps Friday) to 4.19%, the highest level since 1996. Remarkable as these levels are, 5-year 5-year inflation swaps in the US, UK, and Euro Area finished the week at 2.63%, 4.00%, and 2.00%, multi-year highs for all of these measures. If you never thought you’d see the day that long term inflation expectations in Europe would hit 2% then this is a nice/nasty surprise. Overall, this suggests investors are pricing in the potential for inflation far into the future to be higher, in addition to responding to near-term stimulus and Covid reopening impacts.

Crude oil prices also climbed to their highest levels since 2014, with Brent climbing +1.07% (+1.37% Friday) and WTI gaining +2.07% (+1.79% Friday). One area where there was some reprieve was in industrial metals. Copper decreased -4.81% (-1.24% Friday), but at $449.80, remains +10.10% higher month-to-date. Bitcoin also joined the all-time high club intraweek, and finished the week +2.28% higher (-3.08% Friday). It marked a seminal week for the crypto asset, which saw ETFs and options on said ETFs begin trading in the US.

The inflationary sentiment coincided with market pricing of central bank rate hikes shifting earlier. 2-year yields in the US, UK, and Germany increased +5.9 bps (+0.1bps Friday), +8.0 bps (-4.7 bps Friday), and +4.0 bps (+0.9bps Friday) respectively. In fact, money markets are now placing slightly-better-than even odds that the MPC will raise Bank Rate as early as next week. Fed and ECB officials offered some push back against the aggressive policy path repricing, but BoE speakers seemed to confirm a hike next week was a legitimate possibility.

Rounding out sovereign bonds, nominal 10-year yields increased +6.2 bps (-6.9bps Friday) in the US, +4.0 bps (-5.6bps Friday) in the UK, +6.2 bps (-0.3 bps Friday) in Germany, +6.0 bps (-0.1bpFriday) in France, and +8.1 bps (+0.8bps Friday) in Italy. Inflation expectations didn’t fall with the big rally in the US and U.K. but real rates rallied hard.

The S&P 500 increased +1.64% over the week, but ended its 7-day winning streak after retreating on -0.11% Friday. On earnings, 117 S&P 500 companies have now reported third quarter earnings. Roughly 85% of companies have beat earnings expectations compared to the five-year average of 76%, while 74% of reporting companies have beat sales estimates. The aggregate earnings surprise is +13.05%, topping the 5-year average of +8.4%, while the sales surprise is +2.06%. Although a seemingly strong performance on the surface, our equity team, after taking a look under the hood in this note here, points out that a large part of the beats so far is due to loan-loss reserve releases by banks. Excluding those, the aggregate S&P 500 beat is running much closer to historical average, suggesting the headline beats have not been as broad based as they look at first glance.

Congressional Democrats spent the week negotiating the next fiscal package, which is set to spend more than $1 trillion on social priorities key to the Biden administration. On Sunday, House Speaker Nancy Pelosi noted that 90% of the bill is agreed to and would be voted on before October was out. One of the key sticking points has been what offsetting revenue raising measures should be included in the final bill. As those details emerge, it should give us a better picture as to the ultimate additional fiscal impulse the new bill will provide.

Finally, global services PMIs out last Friday expanded while manufacturing PMIs lagged. Readings across jurisdictions were consistent with supply chain issues continuing to impact activity.

Tyler Durden
Mon, 10/25/2021 – 08:09




Author: Tyler Durden

Energy & Critical Metals

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Penny stocks can sometimes get a bad reputation. On the one hand, they can offer tremendous growth potential as young, promising companies. But, on the other hand, they can be failing businesses with no escape plans. Luckily, I will cover the best penny stocks to buy right now and help you avoid a money-drain situation.

To be considered a penny stock, it generally includes assets trading under $5 a share. Although not all companies trade for pennies, they offer immense growth potential for those who find the hidden gems.

Check out this list for the best penny stocks to buy right now.

penny stocks to buy right now

Top 5 – The Best Penny Stocks to Buy Right Now

Penny stocks have gotten a huge boost this year from traders looking to capture the next big thing. For example, GameStop (NYSE: GME), a stock trading for less than $5 around two years ago, is now up over 3,000%.

However, it’s also important to realize these investments still come with major risks. Penny stocks are often more volatile than other types of investments.

Although not every penny stock will perform like GameStop, these businesses are making a name for themselves. With this in mind, let’s take a look.

#5 Invacare Corp. (NYSE: IVC)

  • Market Cap: 115.92M
  • Focus: Health Care Equipment
  • Key Statistic: 5.8% net sales growth in Q3.

Invacare Corp is a newer member of the penny stock club, falling from a yearly high of over $10 a share. But, after experiencing several issues in the previous quarter, the company is lowering its guidance for the rest of the year.

Between labor shortages and freight costs, the company had no choice but to change the growth outlook to -1% – 2%. As a result of the outlook changes, IVC stock is down over 60% this year.

Looking ahead, however, Invacare is in a growing medical equipment segment. The company offers several innovative patient products in categories such as mobility, rest, and patient transfer.

Despite just being surpassed by millennials as the largest generation, Baby Boomers carry the second largest population group. And with the baby boomer generation all being over the age of 65 by 2030, the demand for medical equipment will continue growing.

#4 Denison Mines (NYSE: DNN)

  • Market Cap: 1.31B
  • Focus: Uranium
  • Key Statistic: Q2 revenue grew 58% YOY.

This year, Dennis Mines has been a hot penny stock, with Uranium prices soaring in September, hitting its highest price in seven years. The demand for uranium comes as energy prices are being pushed higher due to supply chain issues brought about by the pandemic.

Additionally, uranium is considered a clean energy source since it doesn’t emit harmful gases. In fact, it provided 52% of America’s clean energy in 2020.

With that in mind, Denison has a growing portfolio of projects with enormous potential. Its flagship Wheeler River project is the largest undeveloped uranium mine, with ‘top 5’ producing potential.

As clean energy becomes more of a priority, look for the demand for uranium to continue climbing. And because of this, Denison earns a spot on the best penny stocks to buy right now list.

#3 Ocean Power Technologies (NYSE: OPTT)

  • Market Cap: 95.47M
  • Focus: Renewable Energy
  • Key Statistic: Q1 revenue growth of 60%.

There’s no denying the movement towards renewable energy sources. And what better way to capture clean energy than from one of the most abundant sources – wave energy.

According to recent insights, wave power has the potential to generate about 66% of the electricity in the United States. As a pioneer in its field, OPTT is developing technology for a cleaner future.

The company just received a U.S Department of Energy award to study next-generation wave energy technology. On top of this, the company is transitioning from research stage to deployment, offering excellent growth potential for investors.

Keep reading to discover the best penny stocks to buy right now.

Best Penny Stocks – #2 IZEA Worldwide (NASDAQ: IZEA)

  • Market Cap: 110.36M
  • Focus: Digital Marketing
  • Key Statistic: Managed services grew 130% YOY.

IZEA is an online platform that connects creators with businesses. The online marketplace makes it simple for companies to partner with top influencers to help promote their brand. The company has been developing the online influencer industry since it was started in 2006.

Despite being up over 200% since last year, IZEA stock is still down from its highs of $7.45 per share.

But, the company is starting to gain some traction growing its user base to over 850K registered creators. On top of this, the company has worked with major brands like…

  • Chipotle
  • Pepsi
  • Harley Davidson
  • And Planet Fitness

If the company can continue growing its user base with solid brands, it has a real chance of capturing a sizable position in the potential +$785 billion digital marketing industry.

Best Penny Stocks – #1 Energous Corp. (NASDAQ: WATT)

  • Market Cap: 112.36M
  • Focus: Wireless Charging Tech
  • Key Statistic: +50% YOY revenue growth in each of the last five quarters.

Another innovator, Energous Corp, is developing next-generation wireless charging technology. The company was started in 2012 and is making significant developments as of lately.

Currently, the company has +200 patents for its first-of-a-kind WattUp Technology. What’s more, Energous just received FCC approval for its unlimited distance over the air wireless charging tech.

The company is making strides to bring its product to the mainstream, a market that can be worth over $2.5 billion by 2028.

With that in mind, WATT stock is down 13% in the past year, currently sitting just under $2 a share. The innovative product, value, and potential market land Energous number one on the best penny stocks list.

Best Penny Stocks to Buy Right Now – Is Penny Stock Investing Right for You?

When it comes to investing in penny stocks, it’s essential to know the risks. Penny stocks are highly volatile and can change prices significantly in a matter of seconds. Even the best penny stocks can experience drawdowns at times.

It’s crucial to do your due diligence before investing in penny stocks. These can often be newer companies with little known about them.

But, with that said, they can also offer investors a chance to get in on the ground floor of some of the most innovative companies. If you decide to invest in penny stocks, stay up to date with the company as things can change often.

Most importantly, investing in penny stocks can take years for meaningful returns to develop. Make sure you believe in the company and its mission.

And lastly, for more of the best penny stocks to buy right now, join Trade of the Day. This free newsletter comes packed with investing tips, tricks, and resources designed to make you a better investor. Invest with the best and sign up today!

The post Best Penny Stocks To Buy Right Now appeared first on Investment U.




Author: Pete Johnson

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Precious Metals

New Covid Variant Spooked the Markets; Gold Fundamentals Remained Solid

2021.11.27
US and Canadian stock markets fell sharply on Friday in reaction to a new coronavirus variant originating in South Africa.
The Dow Jones Industrial…

New covid variant spooks markets; gold un-moved but fundamentals solid

2021.11.27

US and Canadian stock markets fell sharply on Friday in reaction to a new coronavirus variant originating in South Africa.

The Dow Jones Industrial Average had its worst day of the year, at one point dropping over 1,000 points before recovering about 100 points at time of writing. The S&P 500 and the Nasdaq each lost 2.2% while in Canada, the S&P/ TSX composite index sold off nearly 500 points, as the price of oil tumbled over 10% on demand destruction fears.

The World Health Organization on Friday declared the new South African strain of covid-19 a “variant of concern” and named it omicron. The WHO defines a variant of concern as one that shows genetic changes that in theory could give it the potential to affect transmissibility, severity of disease, or how well vaccines or treatments work on the virus.

Up to now the most serious version of covid has been the delta variant.  

According to a report by CNBC, South African scientists identified a new variant they say is behind a recent spike in infections in Gauteng, the country’s most populous province. The covid mutation was also detected in travelers to Hong Kong and Botswana.

Cases in South Africa ballooned to 1,200 on Wednesday and 2,465 on Thursday, compared to a daily count of just over 200 in recent weeks. Scientists are worried that “omicron” has a high number of mutations (30) in the coronavirus’ spike protein which could affect how easily it spreads.

This concern was enough to prompt British authorities to make travelers arriving in the UK from South Africa and neighboring countries to self-isolate for 10 days. The United States will also restrict travel from the region starting Monday. CNBC quoted an infectious disease specialist at Imperial College London saying that the new variant has an “unprecedented” number of mutations and that compared to previous variants, the South African version might evade current vaccines.

That could trigger widespread travel restrictions and renewed curbs on social activity, potentially even lockdowns, throwing a wrench into the machinery of economic recovery for most of the world’s major economies.

Investors and traders didn’t like what they were hearing and on Friday they sold off risky assets like stocks and bitcoin, which was down over $4,600 at time of writing, or 7.5%, to $54,292.

Bond yields also fell sharply, with benchmark US Treasuries on track for their biggest drop since the start of the pandemic in early 2020. The yield on the 10-year slipped over 15 basis points to 1.485% while the 30-year fell to 1.826%, in mid-day trading Friday. Yields move in the opposite direction of bond prices, which typically rise on market uncertainty.

To us at AOTH it’s all good for gold.

There is a strong correlation between rising gold prices and falling bond yields, although gold’s performance Friday was oddly weak. Despite climbing to $1,814 per ounce at the start of the session, strong selling pressure pushed the precious metal to an intra-day low of $1,784; it was changing hands for around $1,791, at time of writing.

5-year spot gold. Source: Kitco

Gold has been on a run, a week ago trading at its highest level since June. The latest US inflation data (6.2% in October) has reinforced concerns over rising prices, especially after seeing the central banks’ approach to soothe the situation.

While a growing number of Federal Reserve officials have indicated they are open to tapering the Fed’s bond-buying program, if inflation holds, and would move more quickly to raise interest rates, the latest covid variant scare appears to be pouring cold water on that notion.

Bloomberg reports that Money-markets pushed back the timing of a first 25-basis-point rate increase by the Federal Reserve to September from June, while briefly pricing out any more hikes unit 2023…

It’s a similar story in the U.K. where the Bank of England is now expected to tighten policy in February instead of next month. Wagers that the European Central Bank will raise its deposit rate by the end of next year were also slashed…

With gold widely seen as a hedge against inflation, it makes sense for the safe-haven metal to be in demand.

It’s also important to note that gold has been rallying despite a stronger US dollar, which competes with gold as a safe store of value. This indicates that investors have looked past this to focus on its traditional role as an inflation hedge.

In the near term, there’s optimism that rising price levels could offer more support for the gold market.

Analysts at UBS have lifted their gold price forecasts, highlighting risks of further strength in inflation in early 2022. The Swiss investment bank’s March-end gold price target was raised to $1,800/oz, up from $1,700.

While some, including UBS, are predicting a moderation in inflation expectations for the coming year, this will likely take longer than most have anticipated.

The Fed’s official line is that inflation is “transitory” based on supply chain disruptions resulting from the pandemic. We don’t buy it. Sure, we accept the idea that high demand for products and services in countries coming out of the pandemic has led to supply shortages and higher prices in a number of industries. But there are several inflation manifestations that simply cannot be called temporary or transitory. We have reported on most, if not all of them.

To recap, an energy crunch has pushed coal and natural gas prices to record highs. We also have energy inflation because of too massive a shift to renewables and a de-investment in fossil fuels, before renewable energy is ready to take the place of oil, natural gas and coal. The problem isn’t about to sort itself out anytime soon, because even though solar and wind power are getting less expensive, many parts of the world still depend on coal and natural gas as a primary source, or as a backup.

Research from Dalhousie University’s Agri-Food Analytics Lab, quoted by BNN Bloomberg, shows that food inflation in Canada is close to 5%, well above the normal 1-2%. A similar trend is happening in the United States. In September food prices jumped 0.9% with the largest rise since April 2020 driven by a surge in meat costs.

It isn’t only retail food shoppers that are feeling the pinch of climbing prices. Recently the Green Markets North American Fertilizer Index hit a record high, rising 7.9% to US$996.32 per ton, and blasting past its 2008 peak. Higher fertilizer prices are usually passed onto the end user, the buyer of grains, fruits, vegetables and meats, for the grower/ farmer/ rancher to preserve his profit margin. This is precisely what we see happening right now.

Climate change is affecting not only the prices of agricultural commodities and food, but the entire commodities complex. As global temperatures warm, practically everything that is grown or mined is impacted. The prices of a number of industrial metals, including copper, zinc, nickel and aluminum, have seen healthy gains this year due to a constellation of factors, including robust demand from top commodities buyer China.

As for what the new coronavirus variant could mean for gold, we see a “rinse and repeat” scenario taking place.

If the new stain turns out to be as potent as it seems, central banks will shrink away from monetary tightening, instead choosing to fall back on their current dovish monetary policies (low interest rates, bond-buying, money-printing), which are great for precious metals.

Depending on how quickly and to what extent it spreads, US states (and Canadian provinces) may be forced to re-instate mask mandates, social distancing measures, school closures, etc., to prevent health care systems from being overloaded. If stimulus check disbursements continue, along with potentially hundreds of billions in new stimulus measures to fight a strengthened pandemic, it could easily push inflation higher.

Note that in 2008, “quantifornication” i.e., rock-bottom interest rates and the monthly purchases of mortgage-backed securities and government bonds did not cause inflation, so the idea that tapering QE will stop inflation doesn’t make sense, imo.

Finally there is a good amount of geopolitical risk in the world right now that should boost safe-haven demand for gold.

Despite a friendly online meeting between US President Biden and Chinese President Xi, the US government recently added a dozen more Chinese companies to its restricted trade list, citing concerns that some of the firms are help to develop the Chinese military’s quantum computing program.

Tensions between the United States and China over Taiwan are also ratcheting up, after five US lawmakers this week arrived in Taiwan to meet with government officials. Beijing considers the island to be a renegade province and has made re-unification with the Motherland a top priority.

Meanwhile over in Belarus, there are fears that Russia is trying to sow chaos in the landlocked Eastern European country as a pretext for an invasion of Ukraine to the south. The European Union has blamed Minsk, the capital and seat of government, for flying in thousands of Middle Eastern migrants, who are hoping to make it to Europe, yet instead are stranded on the border between Belarus and Poland in terrible conditions. This week Ukraine reportedly deployed 8,500 troops to the Belarusian border in anticipation of a clash with Russia, which according to the head of Ukraine’s military intelligence, has massed 92,000 troops around Ukraine’s borders and is preparing for an attack by the end of January or early February.

The world is clearly getting more dangerous and when combined with the resurgent threat of a covid variant that may be resistant to current vaccines, investors should be looking at safe investments that won’t be diminished by inflation yet offer solid growth potential. Junior gold stocks are an excellent choice in this type of environment and four of my favorites — all of them are undervalued and offer major exploration upside — are listed below.

Goldshore Resources (TSXV: GSHR) (OTC: GSHRF) (FRA: 8X00) has embarked on an extensive 100,000-meter drill program on its flagship Moss Lake project that will run for about a year until mid-2022.

Results of drilling so far have not disappointed, giving us a glimpse of what may be a significant mineralized system within northwestern Ontario, a historically productive gold-mining province. From the first three holes reported, the highlight was MMD-21-001, which was mineralized over 550m. This corresponds to an estimated true thickness of 422m and a 52% increase over the historical resource model.

Several higher-grade zones were identified:

  • 57.00m at 1.20 g/t Au from 4.0m and
  • 36.00m at 1.15 g/t Au from 182.0m in MMD-21-003
    31.00m at 1.18 g/t Au from 122.0m and
  • 16.30m at 2.09 g/t Au from 350.7m in MMD-21-001
     35.00m at 1.09 g/t Au from 100.0m in MMD-21-002

The three holes reported here represent only 2.3% of the planned 100,000 meters of drilling scheduled to be completed by the end of Q2 of 2022 as the drill program ramps-up from two to four drill rigs.

The property is located in an excellent jurisdiction with a number of major gold deposits nearby, including Kirkland Lake Gold’s Detour project with 15.7Moz proven and probable reserves at 0.82 g/t Au, New Gold’s Rainy River with 2.6Moz P&P at 1.06 g/t Au, and Cote (IAMGOLD & Sumitomo) with 7.3Moz P&P at 1.0 g/t Au.

Moss Lake itself hosts a number of gold and base metal rich deposits. These include the Moss Lake deposit, the East Coldstream deposit, the historically producing North Coldstream mine and the Hamlin zone, all of which occur over a mineralized trend exceeding 20 km in length.

Goldshore Resources has five properties located in northwestern Ontario, a district prized for its gold endowment.

Magna Gold’s (TSXV: MGR) (OTCQB: MGLQF) flagship San Francisco project in Sonora, Mexico, resumed production in Q3 2020 and achieved commercial production earlier this year.

Located 150 km north of Hermosillo, this 47,395-hectare property consists of two previously mined open pits (San Francisco and Chicharra) and associated heap leaching facilities.

The mine was previously operated from 1995 through 2000. During that time, approximately 13.5 million tonnes of ore at a grade of 1.13 g/t Au were treated by heap leaching, and 300,834 ounces of gold were recovered.

Magna Gold’s gold and silver properties in Mexico

An updated prefeasibility study (PFS) on the property last September showed total proven and probable reserves of 47.6 million tonnes, graded at 0.495 g/t Au, leaving 758,000 ounces of contained gold. Now at full capacity, the San Francisco mine is capable of producing as much as 90,000 ounces annually.

There is also ample room for resource expansion, with an estimated upside of 3Moz gold and 50Moz silver.

Meanwhile, Magna has also been advancing several of its other precious metals assets across Mexico. The next area of exploration focus is Chihuahua, where its newly acquired Margarita silver project is situated. The project is a low-intermediate sulfidation epithermal Ag-Pb-Zn system, which can be traced to many of Mexico’s producing silver mines.

Drilling programs are also planned at the San Judas and Veta Tierra gold projects, and the La Pima silver project.

In the southern part of the Golden Triangle in northwestern British Columbia, Dolly Varden Silver Corp’s (TSXV: DV) (OTC: DOLLF), silver project of the same name lies in an area well known for its base and precious metals deposits.

The property hosts four historically active silver mines: Dolly Varden, Torbrit, North Star and Wolf.

Dolly Varden project location

Historical records show that the Torbrit mine produced 18.5 million ounces of silver at an average recovered grade of 13.58 oz per tonne between 1949 and 1959, while the Dolly Varden mine had 1.5 million ounces at an average grade of 35.7 oz per tonne in the early 1920s.

Altogether, about 20 million ounces of silver were produced from the two historical mines over a 40-year period, with assays of ore as high as 2,200 oz (over 72 kg) per tonne.

Now, under Dolly Varden’s control, the path to restoring these silver mines back to production has begun, much like how Skeena Resources is reawakening the Eskay Creek mine up north.

An updated NI 43-101 resource estimate completed by the company in 2019 revealed 32.9Moz silver in indicated resources and 11.477Moz inferred, for a total of 44Moz silver, adjacent to the historical deposits.

An aggressive two-year drilling campaign is underway to expand these resources. Last year’s drilling returned consistent intervals of high-grade silver mineralization at the Torbrit silver deposit, which Dolly Varden believes has the potential to support economically attractive underground bulk-mining.

The company also hasn’t ruled out a gold discovery consistent with the +1 million-ounce resource at the adjacent Homestake property, in addition to the potential for another Torbrit-like silver discovery.

About 170 km northeast of Reno, Nevada, Getchell Gold (CSE: GTCH) (OTCQB: GGLDF) is in the midst of a drill campaign at the advanced-stage Fondaway Canyon project, comprising 170 unpatented lode claims in Churchill County.

The property has been the subject of multiple exploration campaigns dating back to the late 1980s and early ‘90s, with nearly 50,000m of drilling completed. It covers 12 known veins, including five mineralized areas — Colorado, Halfmoon, Paperweight, Silica Ridge and Hamburger Hill.

Map of Fondaway Canyon showing 2021 drill locations

The latest technical report on Fondaway Canyon (2017) provided an estimate of 409,000 oz indicated gold resources grading 6.18 g/t Au and 660,000 oz inferred grading 6.4 g/t Au, for a combined 1.1 million oz. Up to 80% of these ounces are within Colorado, Paperweight and Halfmoon, with the remainder found in parallel veins or splays off the main veins.

Five of the six holes drilled as part of a 2,000m program intersected significant gold intercepts within the Central Area, which is considered by company management to be the “nexus for the gold-mineralizing system” observed at Fondaway.

Following up on the drilling success, which Getchell says “blew the potential of the project wide open” by producing a revised geological interpretation for Fondaway that extrapolated the continuity of the gold mineralization over extensive distances, the company decided to proceed with a drill program twice the size this year.

The 2021 program is designed to complete sufficient infill drilling to confirm this new geological model, thus elevating the resource estimate from the current 1.1Moz. Getchell will also continue stepping out from known gold intercepts to expand the geological model.

The results so far have been promising, with the latest drill hole returning one of the best cumulative series of gold intercepts in the project’s 45-year history. This was also the seventh consecutive hole to hit substantive mineralization, with more results still to come.

Richard (Rick) Mills
aheadoftheherd.com
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Richard does not own shares of Goldshore Resources (TSXV: GSHR), Magna Gold (TSXV: MGR), Dolly Varden Silver Corp’s (TSXV: DV).

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Author: Gail Mills

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Precious Metals

Palladium One Extends High-Grade Mineralization 250m SW of Kaukua Open-Pit Resource

2021.11.27
Palladium One Mining (TSXV: PDM) (FRA: 7N11) (OTC: NKORF)  
continues to advance its Läntinen Koillismaa (LK) platinum group element-copper-nickel…

2021.11.27

Palladium One Mining (TSXV: PDM) (FRA: 7N11) (OTC: NKORF)  

continues to advance its Läntinen Koillismaa (LK) platinum group element-copper-nickel property in Finland — this week announcing that initial down plunge drilling has extended mineralization 250 meters southwest of the open-pit constrained resource estimate at the Kaukua deposit.

Hole LK21-101 intersected 1.5 g/t palladium equivalent (PdEq) over 74.5 meters starting at 273 meters down hole, and returned a higher-grade 2.2 g/t PdEq over 19.6 meters.

Other high-grade intercepts included:

  • Hole LK21-102, @ 3.2 g/t PdEq over 13.7 meters, within 1.6 g/t PdEq over 113.6m, with individual samples grading up to 9.6 g/t PdEq over 1m;
  • Hole LK21-100, @ 3.3 g/t PdEq over 9.6m, within 1.5 g/t over 113.4m, with individual samples grading up to 5.9 g/t PdEq over 1.5m.

“The high-grade ‘Core Zone’ of the Kaukua deposit has been extended to the southwest and remains open for expansion. These are among the thickest intercepts to date within the Kaukua deposit and will add significant tonnage to our existing resource endowment,” said Palladium One’s CEO, Derrick Weyrauch, in the Nov. 23 news release.

The news from Kaukua alters the geological model, in a good way. As Palladium One explains,

Previous geological interpretations suggested that the Kaukua deposit was cut-off by a northwest trending fault, occupying a distinct magnetic low and topographic lineament. Drilling has demonstrated that the magnetic low is the result of a later cross cutting dyke (now referred to as the high-titanium gabbro dyke) and that the Kaukua deposit remains open to the south.

Resource definition drilling at Kaukua and the western half of Kaukua South (together known as the Kaukua area) is complete, with an updated NI 43-101 resource estimate scheduled for the first quarter, 2022.

While the Haukiahio trend is more copper-nickel rich, the Kaukua deposit contains mostly platinum group elements, with two-thirds of the value in palladium and platinum.

Historic and current drilling in the Kaukua and Kaukua Southwest area. Assays have been received for holes up to LK21-103, the remainder are pending. Background is induced polarization (IP) chargeability.
Cross sections showing holes LK21-102, 107, along with historic holes KAU07-005, KAU12-057 and 068, and their position with respect to the 2019 Kaukua open-pit resource estimate.

The Kaukua mineralized system is also much larger than previously understood, as evidenced by last year’s major discovery about 500m away at Kaukua South, which hosts a >4 km-long IP chargeability anomaly, of which 3.5 km had never been tested prior to Palladium One’s drilling work.

Initial drilling last year, therefore, focused on expanding known mineralization to the east of existing drill intercepts in the Kaukua South Zone, taking priority over the planned drilling to upgrade and convert the historical resource estimate at Haukiaho.

(As announced in a Sep. 7 news release, results from a 2,000m drill program at the Haukiaho Zone significantly increased this area’s resources (NI 43-101-compliant) to 32.7 million tonnes grading 1.15 g/t PdEq for 1.21 million ounces of contained PdEq. This resource update essentially doubles the resource endowment of the entire LK project, which now boasts 11 million tonnes of indicated resources grading 1.60 g/t PdEq (600,000 oz PdEq) and 44 million tonnes of inferred resources grading 1.19 g/t PdEq (1.7 million oz PdEq))

Kaukua South drilling successfully confirmed the eastern extension and the over-4 km strike length, insinuating the presence of a large-scale, shallow mineralized system with significant continuity.

Phase 2 drilling by Palladium One this year continued to return significant PGE grades and widths, including 47m at 2.3 g/t PdEq and 53m @ 2.1 g/t PdEq, and was successful in extending the strike length of the Upper Zone mineralization.

These results added to the company’s belief that it could add a significant amount of open-pit resources to the upcoming NI 43-101 resource estimate upgrade.

Last month the company announced the highest-grade hole to date at LK, which intersected 4.07 g/t PdEq over 24m within 2.08 g/t Pd_Eq over 112m, starting at 171.5m depth.

The question is not if, but by how much, the Kaukua drilling will add to the already doubled mineral resources at the LK property.

The Kaukua Zone at LK is mostly a palladium-platinum-gold play, however it may surprise readers to learn there are significant base metal values particularly at Haukiaho, where two-thirds of the zone’s value is in nickel and copper compared to Kaukua where 66% of the value is in palladium and platinum.

Indeed Haukiaho hosts some of the highest nickel grades on the LK project. At 17 km in length, the Haukiaho trend currently represents the largest continuous patch of blue-sky potential.

The latest resource estimate of 1.2 million ounces PdEq grading 1.15% g/t, comprises only 3 km of strike length; 2 km of strike extent, immediately east of the Haukiaho resource estimate, contains two significant IP chargeability anomalies with sufficient historic drilling to potentially be upgraded to inferred resources with modest additional drilling.

The remaining 12 km of the Haukiaho trend has not been drill-tested by the company, though widely spaced historic drilling has demonstrated that the trend is mineralized. This drilling provides a high level of confidence for potential additional nickel-copper resources to be delineated, Palladium One said.

Also worth noting is the fact that the Haukiaho Zone’s resource estimate contains cobalt. There is a reasonable expectation that the next resource estimate update at the Kaukua Zone where PDM is concentrating its drill program, will also contain notable values of the crucial lithium-ion battery component.

Tyko

As for Palladium One’s Tyko nickel-copper project in Ontario, in a Nov. 16 project update the company says geophysical crews are on site conducting ground-based electromagnetic surveys on key areas; three new exploration permit applications have been filed for drill-testing the newly identified EM anomalies; and a fourth exploration permit application has been made to expand upon the existing Smoke Lake exploration permit, to allow for additional step-out drill pad locations.

“We eagerly await receipt of new exploration permits for Tyko so that we can get back to drilling and make additional discoveries.” said Derrick Weyrauch, President and CEO.

The project known for its high sufide nickel tenor, received the Bernie Schnieders 2020 Discovery of the Year Award, presented by the Northwestern Ontario Prospectors Association (NWOPA).  

It covers approximately 24,500 hectares within the highly prospective Mid-Continent Rift nickel province, including over 7,000 hectares of the mafic-ultramafic Bulldozer intrusion, which has seen virtually no geological mapping nor exploration.

The Tyko project is located 25 km north of the Hemlo mining complex, in northwestern Ontario.

The Archean-aged mafic-ultramafic intrusion is rich in nickel, containing twice as much the battery metal as copper, and equal amounts of platinum and palladium.

According to the company, the high tenor of the sulfide minerals suggests a valuable concentrate could be produced, and that even if the sulfides are disseminated, the deposit could still be economic.

Drilling in 2020 primarily focused on the Smoke Lake target, an EM anomaly identified through geophysical surveying. Magnetic survey undertaken shortly before drilling helped to refine the anomaly, resulting in the successful discovery of massive magmatic sulfides.

The first discovery of massive sulfide mineralization at Tyko was confirmed in January, when the company announced drill intercepts from massive magmatic sulfide of up to 9.9% nickel equivalent. Subsequent drill results reported from the 2020 program were a resounding success, confirming the high-grade nature of the deposit.

A second-phase, 2,000m drill program was initiated in April to follow up on these high-grade hits. The assays to date have been excellent, including massive magmatic sulfide intercepts grading up to 10.2% nickel equivalent, demonstrating a robust mineralization spread over a distance of at least 18 km.

In addition to the high-grade Smoke Lake Zone, Palladium One believes there are new zones of nickel-copper mineralization yet to be discovered.

Preliminary results of the recently completed airborne EM survey have identified as many as four significant multi-line EM anomalies on the Tyko nickel-copper project, which further support this hypothesis.

Of particular interest are two anomalies in the Bulldozer Intrusion. These are the first EM anomalies identified in this large mafic-ultramafic intrusion and hint at potentially large tonnage targets.

Assay results from the Phase 2 drill program at Smoke Lake are pending.

Palladium One Mining
TSXV: PDM, FRA: 7N11, OTC: NKORF
Cdn$0.18, 2021.11.26
Shares Outstanding 248m
Market cap Cdn$43.4m
PDM website

Richard (Rick) Mills
aheadoftheherd.com
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Author: Gail Mills

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