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Oil Prices Soar Above $85 as OPEC Continues to Restrict Global Supply

The price of oil soared to $85 per barrel on Monday, as OPEC members continue to restrict supply despite growing
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This article was originally published by The Deep Dive

The price of oil soared to $85 per barrel on Monday, as OPEC members continue to restrict supply despite growing global demand for crude as skyrocketing natural gas prices prompt gas-to-oil switching.

US benchmark WTI futures hit a high of $84 per barrel at the time of writing, while benchmark Brent crude soared to just above $86 per barrel on Monday morning, marking the highest since 2014, as the growing global energy crisis continues to send commodity prices accelerating.

The latest rally comes after Saudi Arabia informed its oil producers that the current jump in oil prices will subside, and that demand for crude could soon crash given growing uncertainty over the Covid-19 pandemic. “We are not yet out of the woods. We need to be careful. The crisis is contained but is not necessarily over,” Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV.

However, with natural gas prices repeatedly hitting new record-highs around the world— particularly in Europe, gas-to-oil switching has been on the rise, further contributing to the growing demand for crude just as economies reopen from the Covid-19 pandemic. As a result, Goldman Sachs forecasts that the acceleration in gas prices could boost oil demand by 1 million barrels per day, especially if there is an unseasonably cold winter in the months ahead.

Information for this briefing was found via Bloomberg and Goldman Sachs. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Oil Prices Soar Above $85 as OPEC Continues to Restrict Global Supply appeared first on the deep dive.


Author: Hermina Paull

Economics

Canadian dollar dips after BoC

Bank of Canada maintains policy The Canadian dollar had a muted reaction to Wednesday’s Bank of Canada policy decision. As expected, the bank maintained…

Bank of Canada maintains policy

The Canadian dollar had a muted reaction to Wednesday’s Bank of Canada policy decision. As expected, the bank maintained the cash rate at an ultra-low 0.25%. The BoC also kept its forward guidance, saying that it expected to raise rates in the “middle quarters of 2022”. Admittedly, that timeline is somewhat vague and provides the bank with plenty of wiggle room if needed.

There were no surprises at the meeting, although some market participants may have been looking for a more hawkish rate statement, given the superb employment report last week. In fact, there are now 185 thousand more people working than in February 2020, the last month prior to Covid.

With Canada’s economy showing strong growth and inflation at a 30-year high, it’s understandable why the markets have priced in a potential hike in the first quarter, ahead of the bank’s guidance. The statement acknowledged that inflation is high and projected strong growth of 4% in 2022, but nevertheless did not bring forward its guidance despite these risks to the upside. This cautious stance stems in large part from the uncertainty surrounding Omicron. The variant’s symptoms have been less severe than previous Covid variants, but it is also more contagious, and it will take time to determine if the Covid vaccines are as effective against Omicron.

Another factor that has an impact on the Canadian dollar is oil prices, as Canada is a major oil producer. The November dip in oil prices weighed on the Canadian currency, but oil has found its footing and a cold winter in North America and Europe could send oil prices towards the USD 100 level, which would bode well for the Canadian dollar.

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USD/CAD Technical

    • USD/CAD has support at 1.2618. Below, there is a monthly support line at 1.2477
    • The pair is testing resistance at 1.2666. Above, there is resistance at 1.2898




Author: Kenny Fisher

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Economics

Waning Term Premiums And The Riddle Of Surging Inflation

Waning Term Premiums And The Riddle Of Surging Inflation

By Ven Ram, Bloomberg macro commentator and reporter

If you asked your bank manager…

Waning Term Premiums And The Riddle Of Surging Inflation

By Ven Ram, Bloomberg macro commentator and reporter

If you asked your bank manager for a loan, the rate you will be offered will vary proportionally with not only how much you borrow, but also how long you borrow for. That, of course, is a no-brainer since the longer the bank is willing to lend to an individual, the greater the risk of something going wrong. Mainly, they encompass credit and inflation risks, and in the case of institutional investments, liquidity as well.

Yet, in the market for Treasuries and several other major developed markets, investors have recently become indifferent to the risk surrounding the longevity of their loans to governments. In other words, they are essentially saying, there is no more inflation risk in lending to Uncle Sam over, say, 10 years than there is when lending for a far shorter period. That is a massive irony against a backdrop where inflation is Le probleme du jour.

Shrinking term premiums is one major reason why Treasury long-dated yields have fallen after the brisk first quarter that, back then, resembled a juggernaut on the move. (The issue isn’t peculiar to the U.S. by any stretch: investors are willing to loan the U.K. for a 30-year period for well less than 1%, but will readily settle for even less — at around 50 basis points — if the Chancellor of the Exchequer will agree to keep the sum in his state’s coffers for 50 years, thank you. Sure, there are reasons such as demand for ultra-long debt from pension funds, but that’s a discussion for another day.)

Why is it that investors couldn’t seem to care less about earning a decent term premium?

A combination of liquidity, declining natural rates of interest and unbridled expansion of balance sheets — and that’s not an exhaustive list — have got us to where we are now. Getting out of it, though, isn’t going to be easy. Getting into quicksand takes a trice, but last I checked no one had found a way yet to come out of it in one swift ascent.

Tyler Durden
Thu, 12/09/2021 – 08:20

Author: Tyler Durden

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Economics

3 Growth Stocks to Buy Before The End of the Year

Recently, the market has experienced increased volatility, with a major factor being the Federal Reserve’s hawkish pivot. The Fed seems to be more focused…

Recently, the market has experienced increased volatility, with a major factor being the Federal Reserve’s hawkish pivot. The Fed seems to be more focused on combating inflation, and the market is now expecting at least two rate hikes next year. As a result, the yield on the two-year Treasury Note has moved up from 0.15% in June to 0.65%. Rising short-term rates are a headwind for growth stocks, which perform their best in environments where rates are declining. 

So, it’s not surprising that growth stocks led the market to the downside last week. A good example is the ARK Innovation ETF (NYSEARCA:ARKK) which is down more than 19% in just the past month. In contrast, the S&P 500 and Nasdaq are down 0.64% and 2.25%, respectively. 

However, I believe this pullback in growth stocks offers investors an opportunity.  The rise in short-term rates may soon be over, as forward-looking inflation measures are moderating at a rapid pace. Further, after the recent steep pullback, many growth stocks have reached more attractive valuation levels. Therefore, investors should consider buying the dip in these three top growth stocks:

Growth Stocks to Buy: Alphabet (GOOGL)

Source: Castleski / Shutterstock.com

Alphabet recently became the third-most-valuable company in the world with a market capitalization of over $1.9 trillion. The company’s primary source of revenue and income remains Search which is very profitable and maintains a dominant market share. Over the years, GOOGL has expanded into other areas like Google Cloud, Android, Chrome, Google Docs, YouTube, and its venture bets like autonomous driving venture Waymo. 

GOOGL stock was initially an underperformer during the pandemic as ad spending decreased. Further, ads from travel companies were put on hold, and those comprise a meaningful chunk of revenue. However, ad rates and ad spending are now well above pre-pandemic levels as the economy reopens and gradually normalizes. 

The company’s momentum is evident in its results for Q3. Revenue increased by 41% to $65.1 billion, while operating income increased by 32% to $21 billion. For the full year, analysts project EPS growth of 85% and 39% revenue growth. Not surprisingly, GOOGL’s stock is up more than 60% year to date and the company has shown impressive relative strength during this period of market stress. 

GOOGL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a “Buy” in our proprietary rating system. B-rated stocks have posted an average annual performance of 19.7% which compares favorably to the S&P 500’s annual return of 7.1%. To see more information about GOOGL’s POWR Ratings, click here.

Workday (WDAY)

A close-up view of a Workday (WDAY) sign in Pleasanton, California.Source: Sundry Photography / Shutterstock.com

Workday provides enterprise cloud applications with offerings that include financial management applications, cloud spending management solutions, and Workday applications for planning. YTD, WDAY’s stock is up 17%, and that number surges to almost 500% since its IPO in 2013.

Cloud and enterprise software stocks have been among the best performers of the last decade. It’s not surprising when considering that companies are increasing spending on their IT systems, software and cloud systems at a strong rate which is expected to continue over the next decade.

For investors, these companies are fantastic, because they tend to have high margins and recurring revenue. Once companies choose a software or cloud provider, they are unlikely to change often given the cost and complexity of changing systems. Further, once companies have people on their platforms, they are able to unlock more opportunities for monetization. 

Despite the stock’s recent underperformance, the business continues to gain momentum. Its last earnings report showed a 20% increase in revenue to $1.3 billion with over 90% of revenue coming from recurring subscriptions. It also made a new milestone in terms of EPS going from a loss of 10 cents per share last year to a profit of 17 cents per share this year’s Q3.

WDAY has an overall B rating, which equates to a “Buy” in our POWR Rating system. The POWR Ratings also evaluate stocks by various components to give more insight. In terms of its component grades, the stock has an A grade for Growth and a B grade for Sentiment and Quality. Click here to see the complete POWR Ratings for WDAY. 

Growth Stocks to Buy: Expedia (EXPE)

building facade with expedia (EXPE) group logoSource: VDB Photos / Shutterstock.com

Expedia is an online travel company that operates through multiple segments. Some of its most well-known brands include Expedia, Vrbo, Hotels.com, Orbitz, Travelocity and Wotif. In addition, it offers a range of travel and non-travel verticals, including corporate travel management, airlines, travel agents, online retailers, and financial institutions.

EXPE’s business took a big hit during the pandemic for obvious reasons. However, travel volumes are increasing and during the Thanksgiving holiday were at 90% of 2019 levels. It’s very possible that the recent rise in coronavirus cases and the emergence of the omicron strain could have a short-term impact. However, in the longer-term, vaccination rates and effective therapeutics are signs that the pandemic is close to an end.

The company’s recent earnings report also confirms the recovery in travel. The company topped expectations with revenue increasing by 97% to $3 billion. In total, it had $553 million in net income, a big turnaround from last year’s $31 million loss.  For Q4, analysts are projecting $2.3 billion, a 148%increase and a big jump in EPS to $6.89 per share.

EXPE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, which equates to a “Neutral” rating in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. 

EXPE has a B grade for Growth and Quality which isn’t surprising considering its Q3 results and status as one of the top online travel companies. To see EXPE’s complete POWR Ratings, click here.

On the date of publication, Jaimini Desai did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jaimini Desai has been a financial writer and reporter for nearly a decade. He has helped countless investors take profitable rides on some of the hottest growth trends. His previous experience includes writing for Investopedia, Seeking Alpha, and MT Newswires. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters.

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Author: Jaimini Desai

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