Archive for Opinions – Page 5

13 Nov

Countries spend huge sums on fossil fuel subsidies – why they’re so hard to eliminate

By Bruce Huber, University of Notre Dame 

Fossil fuels are the leading driver of climate change, yet they are still heavily subsidized by governments around the world.

Although many countries have explicitly promised to reduce fossil fuel subsidies to combat climate change, this has proven difficult to accomplish. As a result, fossil fuels remain relatively inexpensive, and their use and greenhouse gas emissions continue to grow.

I work in environmental and energy law and have studied the fossil fuel sector for years. Here’s how fossil fuel subsidies work and why they’re so stubborn.

What is a subsidy?

A subsidy is a financial benefit given by a government to an entity or industry. Some subsidies are relatively obvious, such as publicly funded crop insurance or research grants to help pharmaceutical companies develop new drugs.

Others are less visible. A tariff on an imported product, for example, can subsidize domestic manufacturers of that product. More controversially, some would argue that when a government fails to make an industry pay for damage it causes, such as air or water pollution, that also amounts to a subsidy.

Subsidies, especially in this broader sense, are widespread throughout the global economy. Many industries receive benefits through public policies that are denied to other industries in the same jurisdiction, such as tax breaks, relaxed regulations or trade supports.

Governments employ subsidies for political and practical reasons. Politically, subsidies are useful for striking bargains or shoring up political support. In democracies, they can mollify constituencies otherwise unwilling to agree to a policy change. The 2022 Inflation Reduction Act, for example, squeaked through Congress by subsidizing both renewable energy and oil and gas production.

Practically, subsidies can boost a promising young industry such as electric vehicles, attract business to a community or help a mature sector survive an economic downturn, as the auto industry bailout did in 2008. Of course, policies can outlive their original purpose; some of today’s petroleum subsidies can be traced to the Great Depression.

How are fossil fuels subsidized?

Fossil fuel subsidies take many forms around the world. For example:

  • In Saudi Arabia, fuel prices are set by the government rather than the market; price ceilings subsidize the price citizens pay for gasoline. The cost to state-owned oil producers there is offset by oil exports, which dwarf domestic consumption.
  • Indonesia also caps energy prices, then compensates state-owned energy companies for the losses they bear.
  • In the United States, oil companies can take a tax deduction for a large portion of their drilling costs.

Other subsidies are less direct, such as when governments underprice permits to mine or drill for fossil fuels or fail to collect all the taxes owed by fossil fuel producers.

Estimates of the total value of global fossil fuel subsidies vary considerably depending on whether analysts use a broad or narrow definition. The Organization for Economic Cooperation and Development, or OECD, calculated the annual total to be about US$1.5 trillion in 2022. Tche International Monetary Fund reported a number over four times higher, about $7 trillion.

Why do estimates of fossil fuel subsidies vary so dramatically?

Analysts disagree about whether subsidy tabulations should include environmental damage from the extraction and use of fossil fuels that is not incorporated into the fuel’s price. The IMF treats the costs of global warming, local air pollution and even traffic congestion and road damage as implicit subsidies because fossil fuel companies don’t pay to remedy these problems. The OECD omits these implicit benefits.

But whichever definition is applied, the combined effect of national policies on fossil fuel prices paid by consumers is dramatic.

Oil, for example, is traded on a global market, but the price per gallon of petrol varies enormously around the world, from about 10 cents in Iran, Libya and Venezuela – where it is heavily subsidized – to over $7 in Hong Kong, the Netherlands and much of Scandinavia, where fuel taxes counteract subsidies.

What is the world doing about fossil fuel subsidies?

Global leaders have acknowledged that subsidies for fossil fuels undermine efforts to address climate change because they make fossil fuels cheaper than they would be otherwise.

In 2009, the heads of the G20, which includes many of the world’s largest economies, issued a statement resolving to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” Later that same year, the governments of the Asia-Pacific Economic Cooperation forum, or APEC, made an identical pledge.

In 2010, 10 other countries, including the Netherlands and New Zealand, formed the Friends of Fossil Fuel Subsidy Reform group to “build political consensus on the importance of fossil fuel subsidy reform.”

Yet these commitments have scarcely moved the needle. A major study of 157 countries between 2003 and 2015 found that governments “collectively made little or no progress” toward reducing subsidies. In fact, the OECD found that total global subsidies nearly doubled in both 2021 and 2022.

So why are fossil fuel subsidies hard to eliminate?

There are various reasons fossil fuel subsidies are hard to eliminate. Many subsidies directly affect the costs that fossil fuel producers face, so reducing subsidies tends to increase prices for consumers. Because fossil fuels touch nearly every economic sector, rising fuel costs elevate prices for countless goods and services.

Subsidy reform tends to be broadly felt and pervasively inflationary. And unless carefully designed, subsidy reductions can be regressive, forcing low-income residents to spend a larger percentage of their income on energy.

So, even in countries where there is widespread support for robust climate policies, reducing subsidies can be deeply unpopular and may even cause public unrest.

The 2021-22 spike in fossil fuel subsidies is illustrative. After Russia’s invasion of Ukraine, energy prices surged throughout Europe. Governments were quick to provide aid for their citizens, resulting in their largest fossil fuel subsidies ever. Forced to choose between climate goals and affordable energy, Europe overwhelmingly chose the latter.

Of course, economists note that increasing the price of fossil fuels can lower demand, reducing emissions that are driving climate change and harming the environment and human health. Seen in that light, price spikes present an opportunity for reform. As the IMF noted, when prices recede after a surge, it “provide[s] an opportune time to lock in pricing of carbon and local air pollution emissions without necessarily raising energy prices above recently experienced levels.”The Conversation

About the Author:

Bruce Huber, Professor of Law, University of Notre Dame

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Energy Opinions
12 Nov

Companies are buying up cheap carbon offsets − data suggest it’s more about greenwashing than helping the climate

By Sehoon Kim, University of Florida 

Carbon offsets have become big business as more companies make promises to protect the climate but can’t meet the goals on their own.

When a company buys carbon offsets, it pays a project elsewhere to reduce greenhouse gas emissions on its behalf – by planting trees, for example, or generating renewable energy. The idea is that reducing greenhouse gas emissions anywhere pays off for the global climate.

But not all offsets have the same value. There is growing skepticism about many of the offsets sold on voluntary carbon markets. In contrast to compliance markets, where companies buy and sell a limited number of allowances that are issued by regulators, these voluntary carbon markets have few rules that can be enforced consistently. Investigations have found that many voluntary offset projects, forest management projects in particular, have done little to benefit the climate despite their claims.

I specialize in sustainable finance and corporate governance. My colleagues and I recently conducted the first systematic, evidence-based look at the global landscape of voluntary carbon offsets used by hundreds of large, publicly listed firms around the world.

The results raise questions about how some companies use these offsets and cast doubt on how effective voluntary carbon markets – at least in their current state – are in assisting a global transition to net-zero-emissions.

Which companies use low-quality offsets might surprise you

Our analysis shows that the global carbon-offset market has grown to comprise a rich variety of offset projects. Some generate renewable energy, contribute to energy-efficient housing and appliances, or capture and store carbon. Others preserve forests and grassland. The majority are based in Asia, Africa and the Americas, but they exist in other regions too.

Companies use these projects to boost their environmental claims in order to help attract investors, customers and support from various groups. That practice has skyrocketed, from virtually nothing in 2005 to roughly 30 million metric tons of carbon offset per year in 2022. Investment banking firm Morgan Stanley in 2023 forecast that the voluntary offset market would grow to about US$100 billion by 2030 and to around $250 billion by 2050.

For our analysis, we examined 866 publicly traded companies that used offsets between 2005 and 2021.

We found that large firms with a high percentage of big institutional investors and commitments to reach net-zero emissions are particularly active in voluntary carbon markets.

Our results also reveal a peculiar pattern: Industries with relatively low emissions, such as services and financial industries, are much more intensive in their use of offsets. Some used offsets for almost all of the emissions cuts they claimed.

In contrast, high-emissions industries, such as oil and gas, utilities or transportation, used negligible amounts of offsets compared to their heavy carbon footprints.

These facts cast a cloud of doubt on how effective voluntary carbon markets could really be at cutting global greenhouse gas emissions. They also raise questions about companies’ motives for using offsets.

Why companies rely on offsets: 2 explanations

One explanation for these patterns is that offsetting is a means to “outsource” efforts to transition away from greenhouse gas emissions. Companies with smaller carbon footprints find it cheaper to buy offsets than to make expensive investments in reducing their own emissions.

At the same time, we found that emissions-heavy companies were more likely to reduce their own emissions in-house, because offsetting massive amounts of emissions every year for an indefinite future would be more costly.

A more pernicious explanation for the growth in voluntary offsets is that offsets enable “greenwashing.” In this view, companies use offsets to cheaply refurbish their image to naive stakeholders who are not well informed about the quality of offsets. Agencies rate offset projects on how likely they are to meet their climate claims, among other indicators of the trustworthiness of offsets. Our reviews of pricing data and ratings found that projects rated as low quality have substantially lower prices.

We found that relatively few of the 1,413 offset projects used by companies in our sample had been verified as high quality by an external carbon rating agency. Most offset credits used by companies were strikingly cheap. More than 70% of retired offsets were priced below $4 per ton.

These explanations are not mutually exclusive. We found that low-emissions companies could easily alter their peer rankings for ESG performance – how well they do on environmental, social and governance issues – by offsetting a small quantity of emissions.

Fixing the voluntary market for the future

Our findings have important implications as policymakers and regulators debate rules for the voluntary carbon markets.

The data suggests that voluntary carbon markets are currently flooded with cheap, low-quality offsets, likely due to a lack of integrity guidelines and regulations for voluntary carbon markets to ensure the transparency and authenticity of offset projects. This lack of guidelines may also encourage the use of low-quality offsets.

Ever since Article 6 of the Paris climate agreement created principles for carbon markets and ways countries could cooperate to reach climate targets, agreeing on how to implement those principles has been a challenge. For the principles to be successful, negotiators must agree on project eligibility and information disclosure standards, among other issues.

In April 2024, SBTi, the world’s leading science-based arbiter of corporate climate targets, added urgency to that process when it announced that it would allow companies to meet their carbon goals with carbon offsets to cover emissions in their supply chains.

The following month, the U.S. Treasury, Energy and Agriculture departments jointly released a policy statement laying out their own template for rules to govern voluntary carbon markets. “Voluntary carbon markets can help unlock the power of private markets to reduce emissions, but that can only happen if we address significant existing challenges,” U.S. Treasury Secretary Janet Yellen said at the time.

Article 6 and standards for carbon offsets are on the agenda for the 2024 United Nations climate conference, COP29, Nov. 11-22 in Baku, Azerbaijan.

With many segments of voluntary carbon markets faltering, the COP29 summit may be a make-or-break moment for voluntary carbon offsets to become a viable contributor to decarbonization going forward.The Conversation

About the Author:

Sehoon Kim, Assistant Professor of Finance, University of Florida

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
10 Nov

Currency Speculators boosted Euro bets, cut GBP & Yen bets on Election Day

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday November 5th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Euro & Swiss Franc

The COT currency market speculator bets were lower this week as four out of the eleven currency markets we cover had higher positioning while the other seven markets had lower speculator contracts.

Leading the gains for the currency markets was the EuroFX (28,651 contracts) with the Swiss Franc (4,017 contracts), Australian Dollar (3,460 contracts) and Bitcoin (412 contracts) also having positive weeks.

The currencies seeing declines in speculator bets on the week were the British Pound (-21,272 contracts), the Japanese Yen (-19,350 contracts), the Brazilian Real (-8,256 contracts), the Canadian Dollar (-7,730 contracts), the New Zealand Dollar (-6,032 contracts), the Mexican Peso (-3,950 contracts) and with the US Dollar Index (-1,589 contracts) also seeing decreased bets on the week.

Currency Speculators boosted Euro bets, cut GBP & Yen bets on Election Day

Highlighting the COT currency’s data for the week was the sharp changes in positioning on the US Presidential election.

The Euro currency positions jumped by over +28,000 net contracts on the election day of Tuesday November 5th. The Euro positions had been falling sharply recently as speculators cut their bets for five straight weeks and for seven out of the previous eight weeks prior to Tuesday. This was an 8-week drop by -150,322 contracts for the Euro and had dropped the overall standing to -50,304 contracts on October 29th before this week’s turnaround.

Despite this week’s boost in bets, the Euro exchange rate had a tough week and fell by over 1 percent against the US Dollar. The Euro has declined in five out of the past six weeks and has now slid from trading at 1.12 in late September to a 1.0729 close this week.

The British pound speculator bets this week dropped by over -21,000 contracts and decreased for the fifth consecutive week. The GBP speculator positions have fallen by a total of -48,681 contracts over these last five weeks and this weakness has brought the overall speculator standing down to a 19-week low, dating back to June 25th. The overall speculator position does remain bullish at a total of 45,084 contracts and has been in a continuous bullish level since May 21st, 2024.

The GBP exchange also has been on the weaker side lately and has now fallen from near 1.3400 in late September to this week’s closing price of approximately 1.2912.

The Japanese yen bets saw a big slide this week and the yen bets have been lower in each of the past six weeks. The total decline of spec bets in the past six weeks has reached -110,178 contracts and has taken the overall speculator standing down from a total of +66,011 contracts on September 17th to this week’s level of -44,167 contracts.

The yen exchange versus the USD has declined for six out of the past eight weeks with the US Dollar (USDJPY currency pair) going from around the 140.75 exchange rate in late September to this week’s close at approximately 152.60.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Australian Dollar

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Australian Dollar (98 percent) leads the currency markets this week. The British Pound (56 percent) and the Japanese Yen (56 percent) come in as the next highest in the weekly strength scores.

On the downside, the US Dollar Index (5 percent), the Canadian Dollar (9 percent), the EuroFX (12 percent) and Bitcoin (19.5 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent).

3-Year Strength Statistics:
US Dollar Index (4.7 percent) vs US Dollar Index previous week (8.0 percent)
EuroFX (12.1 percent) vs EuroFX previous week (0.0 percent)
British Pound Sterling (56.4 percent) vs British Pound Sterling previous week (65.9 percent)
Japanese Yen (56.0 percent) vs Japanese Yen previous week (63.7 percent)
Swiss Franc (40.1 percent) vs Swiss Franc previous week (32.0 percent)
Canadian Dollar (9.4 percent) vs Canadian Dollar previous week (12.9 percent)
Australian Dollar (98.3 percent) vs Australian Dollar previous week (95.8 percent)
New Zealand Dollar (25.1 percent) vs New Zealand Dollar previous week (36.7 percent)
Mexican Peso (46.7 percent) vs Mexican Peso previous week (48.7 percent)
Brazilian Real (40.2 percent) vs Brazilian Real previous week (48.0 percent)
Bitcoin (19.5 percent) vs Bitcoin previous week (10.5 percent)

Australian Dollar & Brazilian Real top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Australian Dollar (30 percent) and the Brazilian Real (23 percent) lead the past six weeks trends for the currencies. The Mexican Peso (9 percent) and Bitcoin (2 percent) are the next highest positive movers in the 3-Year trends data.

The Canadian Dollar (-49 percent) leads the downside trend scores currently with the Japanese Yen (-44 percent), EuroFX (-39 percent) and the Swiss Franc (-22 percent) following next with lower trend scores.

3-Year Strength Trends:
US Dollar Index (-1.8 percent) vs US Dollar Index previous week (-0.2 percent)
EuroFX (-39.3 percent) vs EuroFX previous week (-50.5 percent)
British Pound Sterling (-18.8 percent) vs British Pound Sterling previous week (1.5 percent)
Japanese Yen (-44.0 percent) vs Japanese Yen previous week (-32.6 percent)
Swiss Franc (-21.7 percent) vs Swiss Franc previous week (-34.2 percent)
Canadian Dollar (-49.1 percent) vs Canadian Dollar previous week (-42.3 percent)
Australian Dollar (30.0 percent) vs Australian Dollar previous week (48.0 percent)
New Zealand Dollar (-13.0 percent) vs New Zealand Dollar previous week (-0.5 percent)
Mexican Peso (9.2 percent) vs Mexican Peso previous week (13.4 percent)
Brazilian Real (23.5 percent) vs Brazilian Real previous week (26.6 percent)
Bitcoin (1.9 percent) vs Bitcoin previous week (-19.6 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week came in at a net position of 95 contracts in the data reported through Tuesday. This was a weekly lowering of -1,589 contracts from the previous week which had a total of 1,684 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 4.7 percent. The commercials are Bullish-Extreme with a score of 94.0 percent and the small traders (not shown in chart) are Bearish with a score of 22.9 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:66.019.59.9
– Percent of Open Interest Shorts:65.719.610.1
– Net Position:95-46-49
– Gross Longs:20,3326,0043,049
– Gross Shorts:20,2376,0503,098
– Long to Short Ratio:1.0 to 11.0 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):4.794.022.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-1.8-1.919.0

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week came in at a net position of -21,653 contracts in the data reported through Tuesday. This was a weekly gain of 28,651 contracts from the previous week which had a total of -50,304 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 12.1 percent. The commercials are Bullish-Extreme with a score of 88.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.9 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:24.859.111.8
– Percent of Open Interest Shorts:28.159.08.5
– Net Position:-21,65361721,036
– Gross Longs:159,900381,70475,889
– Gross Shorts:181,553381,08754,853
– Long to Short Ratio:0.9 to 11.0 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):12.188.617.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-39.342.1-45.8

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week came in at a net position of 45,084 contracts in the data reported through Tuesday. This was a weekly fall of -21,272 contracts from the previous week which had a total of 66,356 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.4 percent. The commercials are Bearish with a score of 39.3 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 84.2 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:54.925.716.2
– Percent of Open Interest Shorts:34.451.011.4
– Net Position:45,084-55,56010,476
– Gross Longs:120,73756,45935,517
– Gross Shorts:75,653112,01925,041
– Long to Short Ratio:1.6 to 10.5 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):56.439.384.2
– Strength Index Reading (3 Year Range):BullishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-18.819.4-14.5

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week came in at a net position of -44,167 contracts in the data reported through Tuesday. This was a weekly lowering of -19,350 contracts from the previous week which had a total of -24,817 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.0 percent. The commercials are Bearish with a score of 45.9 percent and the small traders (not shown in chart) are Bullish with a score of 56.1 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:25.657.715.2
– Percent of Open Interest Shorts:44.337.616.6
– Net Position:-44,16747,295-3,128
– Gross Longs:60,334135,94635,953
– Gross Shorts:104,50188,65139,081
– Long to Short Ratio:0.6 to 11.5 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):56.045.956.1
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-44.045.9-35.4

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week came in at a net position of -29,981 contracts in the data reported through Tuesday. This was a weekly gain of 4,017 contracts from the previous week which had a total of -33,998 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.1 percent. The commercials are Bullish with a score of 63.9 percent and the small traders (not shown in chart) are Bearish with a score of 33.1 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:10.776.512.7
– Percent of Open Interest Shorts:50.224.425.3
– Net Position:-29,98139,519-9,538
– Gross Longs:8,10758,0579,674
– Gross Shorts:38,08818,53819,212
– Long to Short Ratio:0.2 to 13.1 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):40.163.933.1
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-21.729.5-34.2

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week came in at a net position of -175,229 contracts in the data reported through Tuesday. This was a weekly decrease of -7,730 contracts from the previous week which had a total of -167,499 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 9.4 percent. The commercials are Bullish-Extreme with a score of 90.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 14.0 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:8.081.18.4
– Percent of Open Interest Shorts:60.027.310.1
– Net Position:-175,229180,918-5,689
– Gross Longs:26,816272,93828,368
– Gross Shorts:202,04592,02034,057
– Long to Short Ratio:0.1 to 13.0 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):9.490.614.0
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-49.149.8-34.0

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week came in at a net position of 30,976 contracts in the data reported through Tuesday. This was a weekly gain of 3,460 contracts from the previous week which had a total of 27,516 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 98.3 percent. The commercials are Bearish-Extreme with a score of 11.0 percent and the small traders (not shown in chart) are Bullish with a score of 52.3 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:51.633.314.4
– Percent of Open Interest Shorts:34.151.213.9
– Net Position:30,976-31,759783
– Gross Longs:91,48859,10825,478
– Gross Shorts:60,51290,86724,695
– Long to Short Ratio:1.5 to 10.7 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):98.311.052.3
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:30.0-16.2-38.9

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week came in at a net position of -8,199 contracts in the data reported through Tuesday. This was a weekly fall of -6,032 contracts from the previous week which had a total of -2,167 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.1 percent. The commercials are Bullish with a score of 73.2 percent and the small traders (not shown in chart) are Bearish with a score of 35.4 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:36.557.55.9
– Percent of Open Interest Shorts:50.341.48.2
– Net Position:-8,1999,620-1,421
– Gross Longs:21,85534,3683,501
– Gross Shorts:30,05424,7484,922
– Long to Short Ratio:0.7 to 11.4 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):25.173.235.4
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-13.019.3-48.4

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week came in at a net position of 31,095 contracts in the data reported through Tuesday. This was a weekly decline of -3,950 contracts from the previous week which had a total of 35,045 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 46.7 percent. The commercials are Bullish with a score of 56.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 0.0 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:45.648.62.5
– Percent of Open Interest Shorts:23.967.45.3
– Net Position:31,095-27,000-4,095
– Gross Longs:65,50169,9053,587
– Gross Shorts:34,40696,9057,682
– Long to Short Ratio:1.9 to 10.7 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):46.756.00.0
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:9.2-7.7-14.0

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week came in at a net position of -12,525 contracts in the data reported through Tuesday. This was a weekly fall of -8,256 contracts from the previous week which had a total of -4,269 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.2 percent. The commercials are Bullish with a score of 61.7 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 16.1 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:46.743.03.4
– Percent of Open Interest Shorts:66.022.44.7
– Net Position:-12,52513,371-846
– Gross Longs:30,31827,9292,214
– Gross Shorts:42,84314,5583,060
– Long to Short Ratio:0.7 to 11.9 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):40.261.716.1
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:23.5-21.9-7.5

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week came in at a net position of -1,457 contracts in the data reported through Tuesday. This was a weekly boost of 412 contracts from the previous week which had a total of -1,869 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 19.5 percent. The commercials are Bullish-Extreme with a score of 86.6 percent and the small traders (not shown in chart) are Bullish with a score of 61.8 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:82.26.04.5
– Percent of Open Interest Shorts:86.73.12.9
– Net Position:-1,457927530
– Gross Longs:26,3031,9071,443
– Gross Shorts:27,760980913
– Long to Short Ratio:0.9 to 11.9 to 11.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):19.586.661.8
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:1.9-4.14.3

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
10 Nov

Speculator Extremes: Lean Hogs, AUD, 5-Year & 2-Year Bonds lead Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on November 5th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Lean Hogs


The Lean Hogs speculator position comes in as the most bullish extreme standing this week. The Lean Hogs speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 58.6 this week. The overall net speculator position was a total of 71,441 net contracts this week with an increase by 10,363 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Australian Dollar


The Australian Dollar speculator position comes next in the extreme standings this week. The Australian Dollar speculator level is now at a 98.3 percent score of its 3-year range.

The six-week trend for the percent strength score was 30.0 this week. The speculator position registered 30,976 net contracts this week with a weekly rise of 3,460 contracts in speculator bets.

Steel


The Steel speculator position comes in third this week in the extreme standings. The Steel speculator level resides at a 94.7 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 12.9 this week. The overall speculator position was -414 net contracts this week with a dip by -261 contracts in the weekly speculator bets.

Ultra U.S. Treasury Bonds


The Ultra U.S. Treasury Bonds speculator position comes up number four in the extreme standings this week. The Ultra U.S. Treasury Bonds speculator level is at a 88.8 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 0.9 this week. The overall speculator position was -264,408 net contracts this week with a gain of 45,626 contracts in the speculator bets.

Russell 2000 Mini


The Russell 2000 Mini speculator position rounds out the top five in this week’s bullish extreme standings. The Russell 2000 Mini speculator level sits at a 88.0 percent score of its 3-year range. The six-week trend for the speculator strength score was -9.0 this week.

The speculator position was 8,792 net contracts this week with a decline of -3,151 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

5-Year Bond


The 5-Year Bond speculator position comes in as the most bearish extreme standing this week. The 5-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -12.8 this week. The overall speculator position was -1,767,409 net contracts this week with a shortfall by -86,938 contracts in the speculator bets.

2-Year Bond


The 2-Year Bond speculator position comes in tied for the most bearish extreme standing on the week. The 2-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -27.9 this week. The speculator position was -1,486,359 net contracts this week with a drop by -6,998 contracts in the weekly speculator bets.

US Dollar Index


The US Dollar Index speculator position comes in as third most bearish extreme standing of the week. The US Dollar Index speculator level resides at a 4.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was -1.8 this week. The overall speculator position was 95 net contracts this week with a decrease by -1,589 contracts in the speculator bets.

E-mini SP MidCap400

The E-mini SP MidCap400 speculator position comes in as this week’s fourth most bearish extreme standing. The E-mini SP MidCap400 speculator level is at a 5.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -14.7 this week. The speculator position was -803 net contracts this week with a small gain of 175 contracts in the weekly speculator bets.

Canadian Dollar


Finally, the Canadian Dollar speculator position comes in as the fifth most bearish extreme standing for this week. The Canadian Dollar speculator level is at a 9.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -49.1 this week. The speculator position was -175,229 net contracts this week with a decline of -7,730 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Opinions
07 Nov

UHS, LRCX & LDOS top latest Large Cap Stocks that made our Watchlist in October

By InvestMacro Research

The fourth quarter of 2024 is about halfway over and today we wanted to highlight some of the top companies that have recently been added to our Cosmic Rays Watchlist. The Cosmic Rays Watchlist is the output from our proprietary fundamental analysis algorithm that analyzes over one thousand companies.

The algo examines company fundamental metrics, earnings trends and overall sector strength trends. The aim is identify quality dividend-paying companies on the NYSE and Nasdaq stock exchanges. If a company scores over 50, it gets added to our Watchlist for further analysis.

We use this system as a stock market ideas generator and to update our Watchlist every quarter. However, be aware this fundamental system does not take the stock price as a direct element in our rating so one must compare each idea with their current stock prices (read: this is not a timing tool!).

Disclaimer: Markets are currently at all-time highs and many studies are consistently showing overvalued markets and that always has to be taken into consideration with any stock market idea.

As with all investment ideas, past performance does not guarantee future results. Remember, a stock added to our list is not a recommendation to buy or sell the security but merely a starting point for your own in-depth analysis.

 

Here are 5 of our Top Stocks scored in October 2024:

Leidos Holdings, Inc. (LDOS):

Leidos Holdings, Inc. (Symbol: LDOS) was recently added to our Cosmic Rays WatchList. LDOS scored a 73 in our fundamental rating system on October 30th, 2024.

At time of writing, only 2.00% of stocks have scored a 70 or better out of a total of 10,417 scores in our earnings database. This stock is on our Watchlist for the first time and rose by 70 system points from our last update.

LDOS is a Large Cap stock and part of the Technology sector. The industry focus for LDOS is Information Technology Services.

Company Description:

Leidos Holdings, Inc., together with its subsidiaries, provides services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. It operates through three segments: Defense Solutions, Civil, and Health.

Company Website: https://www.leidos.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Leidos Holdings, Inc. (LDOS)22.082.870.7
– Benchmark Symbol: XLK44.232.11.2

 

* Data through November 06, 2024

Universal Health Services, Inc. (UHS):

Universal Health Services, Inc. (Symbol: UHS) was recently added to our Cosmic Rays WatchList. UHS scored a 85 in our fundamental rating system on October 25th, 2024.

At time of writing, only 0.75% of stocks have scored a 80 or better out of a total of 10,417 scores in our earnings database. This stock has made our Watchlist a total of 6 times and rose by 3 system points from our last update.

UHS is a Large Cap stock and part of the Healthcare sector. The industry focus for UHS is Medical – Care Facilities.

Company Description (courtesy of SEC.gov):

Universal Health Services, Inc., through its subsidiaries, owns and operates acute care hospitals, and outpatient and behavioral health care facilities. The company operates through Acute Care Hospital Services and Behavioral Health Care Services segments.

Company Website: https://uhs.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Universal Health Services, Inc. (UHS)13.565.431.28
– Benchmark Symbol: XLV25.115.270.7

 

* Data through November 06, 2024

Comfort Systems USA, Inc. (FIX):

Comfort Systems USA, Inc. (Symbol: FIX) was recently added to our Cosmic Rays WatchList. FIX scored a 68 in our fundamental rating system on October 25th, 2024.

At time of writing, only 4.76% of stocks have scored a 60 or better out of a total of 10,417 scores in our earnings database. This stock has made our Watchlist a total of 3 times and rose by 20 system points from our last update.

FIX is a Large Cap stock and part of the Industrials sector. The industry focus for FIX is Engineering & Construction.

Company Description (courtesy of SEC.gov):

Comfort Systems USA, Inc. provides mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services industry in the United States. It engages in the design, engineering, integration, installation, and start-up of mechanical, electrical, and plumbing (MEP) systems; and renovation, expansion, maintenance, monitoring, repair, and replacement of existing buildings.

Company Website: https://www.comfortsystemsusa.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Comfort Systems USA, Inc. (FIX)33.3118.831.13
– Benchmark Symbol: XLI30.433.961.1

 

* Data through November 06, 2024

Lam Research Corporation (LRCX):

Lam Research Corporation (Symbol: LRCX) was recently added to our Cosmic Rays WatchList. LRCX scored a 77 in our fundamental rating system on October 24th, 2024.

At time of writing, only 2.00% of stocks have scored a 70 or better out of a total of 10,417 scores in our earnings database. This stock is on our Watchlist for the first time and rose by 61 system points from our last update.

LRCX is a Large Cap stock and part of the Technology sector. The industry focus for LRCX is Semiconductors.

Company Description (courtesy of SEC.gov):

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits.

Company Website: https://www.lamresearch.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Lam Research Corporation (LRCX)24.920.491.48
– Benchmark Symbol: XLK44.232.11.2

 

* Data through November 06, 2024

CF Industries Holdings, Inc. (CF):

CF Industries Holdings, Inc. (Symbol: CF) was recently added to our Cosmic Rays WatchList. CF scored a 50 in our fundamental rating system on October 31st, 2024.

At time of writing, only 8.24% of stocks have scored a 50 or better out of a total of 10,417 scores in our earnings database. This stock has made our Watchlist a total of 3 times and rose by 45 system points from our last update.

CF is a Large Cap stock and part of the Basic Materials sector. The industry focus for CF is Agricultural Inputs.

Company Description (courtesy of SEC.gov):

CF Industries Holdings, Inc. manufactures and sells hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities worldwide. Its principal products include anhydrous ammonia, granular urea, urea ammonium nitrate, and ammonium nitrate products.

Company Website: https://www.cfindustries.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: CF Industries Holdings, Inc. (CF)13.29.310.95
– Benchmark Symbol: XLB18.418.91.2

 

* Data through November 06, 2024

By InvestMacro – Be sure to join our stock market newsletter to get our updates and to see more top companies we add to our stock watch list.

All information, stock ideas and opinions on this website are for general informational purposes only and do not constitute investment advice. Stock scores are a data driven process through company fundamentals and are not a recommendation to buy or sell a security. Company descriptions provided by sec.gov.

Opinions Stock Market Ideas Stock Market News
01 Nov

Week Ahead: US500 braces for US election/Fed showdown

By ForexTime 

  • US500 ends October ↓ 1%, still up ↑ 20% YTD
  • April & October only negative trading months this year
  • US election & FOMC decision = big price swings?
  • Fed expected to cut rates by 25bp in November
  • Technical levels – 5770, 5675 & 5600

FXTM’s US500, which tracks the benchmark S&P 500 index is heading for its worst week since early September.

Disappointing earnings reports from Microsoft and Meta sent the index tumbling almost 2% on Thursday while weaker-than-expected sales in China pressured Apple shares post-market trading.

And we could see more action this afternoon due to the key US jobs report (Friday 1st November).

But all eyes will be on the pivotal US election along with major central bank decisions in the week ahead:

Monday, 4th November

  • Public holiday in Japan
  • CN50: China’s NPCSC meeting
  • GER40: Germany HCOB Manufacturing PMI
  • USDInd: US factory orders

Tuesday, 5th November

  • CN50: China Caixin Services PMI
  • SG20: Singapore retail sales
  • AU200: RBA rate decision, Judo Bank Services PMI
  • UK100: S&P Global Services PMI
  • US500: US Presidential election, ISM Services PMI

Wednesday, 6th November

  • GER40: HCOB Services PMI, PPI
  • TWN: Taiwan CPI
  • JP225: BoJ meeting minutes
  • CAD: BoC meeting minutes

Thursday, 7th November

  • CN50: China trade, forex reserves
  • GER40: Industrial production, balance of trade
  • SEK: Riksbank Rate decision, CPI
  • UK100: BoE rate decision
  • US500: FOMC rate decision, initial jobless claims

Friday, 8th November

  • CAD: Employment change
  • TWN: Taiwan trade
  • UK100: BoE Chief Economist Huw Pill speech
  • USDInd: US University of Michigan consumer sentiment

Despite recent losses, the US500 is still up almost 20% year-to-date – adding to the 24% gains secured in 2023. Still, the index’s outlook hangs on how events play out in the week ahead…

US500 weekly

Here are 3 reasons you should keep a close eye on the US500:

 

    1) US Presidential election

US voters head for the polls on Tuesday, 5th November in what has been a tight presidential race.

This will be the most significant event for the United States in 2024, potentially influencing US stock markets depending on who becomes the new president.

  • A Trump victory could push the US500 higher due to the prospect of corporate tax cuts and a softer regulatory environment boosting company profits.
  • A Harris victory may trigger a “relief rally” as policy continuity removes an element of uncertainty. However, the upside could be capped by a potential hike in corporate taxes and tough regulations.
  • If the US election results are delayed or contested, the US500 may tumble amid the uncertainty.

 

    2) FOMC rate decision

Just two days after the US election the Federal Reserve is expected to cut interest rates by 25 basis points in November. But this decision could be influenced by the incoming US jobs report and the election outcome.

Although annual inflation has edged closer to the Fed’s 2% target, economic data remains mixed. A strong jobs report could fuel bets around slower-than-expected Fed rate cuts. But the election outcome is likely to determine what action the Fed takes in December and beyond.

  • A Trump victory could boost economic growth – triggering inflationary pressures. This may prompt the Fed to keep interest rates higher for longer.
  • A Harris victory that sees tax hikes and more caution to government spending may impact growth – possibly cooling inflation. Such a development could provide room for the Fed to cut rates.

Traders are currently pricing in a 95% probability of a 25-basis point cut in November with a 68% probability of another cut by December.

Considering how tech stocks account for over 30% of the S&P 500 weighting, the Fed decision could trigger price swings. Tech stocks are influenced by interest rates because their value is based on earnings forecasted in the future.

 

    3) Technical forces

The US500 has breached the bullish channel on the daily timeframe with prices trading 3% away from the all-time high at 5890. Interestingly, the Relative Strength Index (RSI) is approaching 30 – signalling that prices could be entering oversold zones.

  • If 5675 proves to be reliable support, prices may rebound back toward 5770, 5820 and 5890.
  • A solid breakdown and daily close below 5675 could see bears target the 100-day SMA at 5600 and 5550.

daily us500

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Opinions
31 Oct

Expert Says Secondary Metals Will Star in New Bull Market

Source: Streetwise Reports (10/30/24)

Bob Moriarty of 321gold sat down with Francis Hunt of The Market Sniper recently to discuss the state of the commodities markets and the recent meeting of the BRICS nations in Russia. Find out why he thinks the bulls will be running for more than just gold. 

Major periods of rising gold prices since 1971 have included the 1970s and the 2000s. Many experts believe we’ve started a new period of such expansion now.

Spot prices touched a new record of US$2,769.02 per ounce on Tuesday “as the run-up to the 2024 presidential election and uncertainty prior to upcoming economic data kept safe haven demand in play,” Investing.com reported.

Bob Moriarty of 321gold sat down with Francis Hunt of The Market Sniper recently to discuss the state of the commodities markets and the recent meeting of the BRICS nations in Russia.

He told Hunt that the most important mechanism in determining their prices is not the textbook answer you’ve always been given.

“Ignore demand, ignore supply, ignore the value of the dollar, ignore the geopolitical, none of those make any difference whatsoever,” Moriarty said in the interview, posted on YouTube. “The only thing that moves the price of anything is sentiment.”

Sentiment Changing Soon

The Investing.com article reported by Scott Kanowsky said the rise is coming from safe haven demand and a string of expected economic readings expected soon, “which are likely to factor into in the Federal Reserve’s plans for interest rates.”

However, Moriarty said the overall price of gold miners has devalued vs. the price of gold and is “at the bottom now.”

“From a relative position of sentiment, everybody hates the miners,” he said of environmental and ESG concerns that have affected the industry. “You can go to Canada, and there’s probably 1,500 stocks, and the number of stocks under 10 cents is absolutely staggering. I own probably 50 different stocks, and I would guess 40 of them are under 10 centers per share . . . You don’t have to know anything about investing if you understand the sentiment.”

And Moriarty expects that sentiment to change soon.

“We’re going to be in a bull market probably for the next 10 or 20 years,” he said. “It has just started the real bull face. You’re going to see it in the other metals, and you’re absolutely going to see it in the miners. And I believe there are a lot of stocks that are going to go up 100-fold.”

But Moriarty said it won’t be just gold; other metals like silver, rhodium, palladium, and platinum will benefit, sometimes even more.

“Gold is going to continue to go up, but just like with dancing, sometimes you lead, sometimes you follow,” he said. “And I think it’s the secondary metals that are going to lead now.”

Most Valuable Precious Metal on the Planet?

Like gold, silver has had a good year so far and is up 42.17%, according to USA Today. It was trading at US$34.02 per ounce on Tuesday, an increase of 1.26% in the previous 24 hours.  Platinum, which was US$1,025.65 per ounce on Monday, is up 3.84% on the year.

But in addition to gold, silver and platinum, the platinum group contains lesser-known metals like osmium, ruthenium, iridium, palladium, and rhodium.

The metals are all very rare and have high corrosion resistance, catalytic properties, and high melting points, according to How Stuff Works.

But Mack Hayden wrote for the site that rhodium, a silver-white metal, is “the most valuable precious metal on the planet.” The automotive industry uses nearly 80% of the world’s supply to make catalytic converters that help reduce toxic gas emissions. South Africa is the leading producer, contributing about 80% of the global supply. It is often found mixed with other platinum group metals and requires extensive processing to extract.

Trading Economics said rhodium has increased US$250 per ounce or 5.65% since the beginning of 2024. While it was US$4,675 per ounce on Monday, it reached an all-time high of US$29,800 per ounce in 2021 — nearly 10 times gold’s current record price.

Hunt pointed out that two of the major producers of platinum, palladium, and rhodium are Russia and South Africa, two members of the BRICS group of nations that met earlier this month in Russia.

“They control price; that’s a big deal,” Moriarty agreed. “We’re going to see some real financial shocks with silver, with rhodium, with palladium, and with platinum.”

BRICS Group Expanding

BRICS is an intergovernmental organization that includes Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. At its October meeting, it expanded to add 13 new “partner nations.”

At the meeting, China President Xi Jinping referred to BRICS as “a vanguard for advancing global governance reform” and “reform of the international financial architecture.”

Bolivian President Luis Arce said, “the shield of BRICS and multipolarity” can protect formerly colonized nations, helping them resist “Western unipolarity and the tyranny of the dollar.”

With gold hitting record highs and silver rising, the other platinum group metals are nowhere near their eventual highs, Moriarty said.

“The Russians understand this, and they’re going to start buying palladium, they’re going to start buying rhodium, and they’re going to start buying silver because those metals are going to move faster and higher than gold,” he said, predicting record highs for all three.

Important Disclosures:

  1. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
  2. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

For additional disclosures, please click here.

Metals Opinions
28 Oct

Nobel economics prize: how colonial history explains why strong institutions are vital to a country’s prosperity – expert Q&A

By Renaud Foucart, Lancaster University 

This year’s Nobel memorial prize in economics has gone to Daron Acemoglu and Simon Johnson of the Massachusetts Institute of Technology and James Robinson of the University of Chicago for their work on why there are such vast differences in prosperity between nations.

While announcing the award, Jakob Svensson, the chairman of the economics prize committee, said: “Reducing the huge differences in income between countries is one of our times’ greatest challenges”. The economists’ “groundbreaking research” has given us a “much deeper understanding of the root causes of why countries fail or succeed.”

The award, which was established several decades after the original Nobel prizes in the 1960s, is technically known as the Sveriges Riksbank prize in economic sciences. The academics will share the award and its 11 million kroner (£810,000) cash prize.

To explain their work and why it matters, we talked to Renaud Foucart, a senior lecturer in economics at Lancaster University in the UK.

What did Daron Acemoglu, Simon Johnson and James Robinson win for?

The three academics won the prize mostly for providing causal evidence of the influence of the quality of a country’s institutions on its economic prosperity.

At first glance, this may seem like reinventing the wheel. Most people would agree that a country that enforces property rights, limits corruption, and protects both the rule of law and the balance of power, will also be more successful at encouraging its citizens to create wealth, and be better at redistributing it.

But anyone following the news in Turkey, Hungary, the US or even the UK, will be aware that not everyone agrees. In Hungary for instance, cases of corruption, nepotism, a lack of media pluralism, and threats to the independence of the judiciary have led to a fierce battle with the European Union.

Rich countries typically have strong institutions. But several (wannabe) leaders are perfectly comfortable with weakening the rule of law. They do not seem to see institutions as the cause of their prosperity, just as something that happens to be correlated.

In their view, why does the quality of institutions vary across countries?

Their work starts with something that has clearly not had a direct effect on today’s economic prosperity: living conditions at the start of European colonialism in the 14th century. Their hypothesis is that, the richer and the more inhospitable to outsiders a place was, the more colonial powers were interested in brutally stealing the country’s riches.

In that case, they built institutions without any regard for the people living there. This led to low quality institutions during the colonial period, that continued through independence and led to bad economic conditions today.

All of this is because – and this is another domain to which this year’s laureates contributed – institutions create the conditions of their own persistence.

In contrast, in more hospitable and less developed places, colonialists did not take resources. They instead settled and tried to create wealth. So, it was in their (selfish) interest to build democratic institutions that benefited people living there.

The researchers then tested their hypothesis by looking at historical data. First, they found a “great reversal” of fortune. Places that were the most urbanised and densely populated in 1500 became the poorest by 1995. Second, they found that places where settlers died quickly from disease and could therefore not stay – while local populations were mostly immune – are also poorer today.

Looking at the colonial roots of institutions is an attempt to disentangle causes and consequences. It is also perhaps the main reason why the committee would say that even if this year’s laureates did not invent the idea that institutions matter, their contribution is worthy of the highest distinction.

Some have suggested the work simply argues ‘democracy means economic growth’. Is this true?

Not in a vacuum. For instance, their work does not tell us that imposing democracy from scratch on a country with otherwise malfunctioning institutions will work. There is no reason for a democratic leader not to become corrupt.

Institutions are a package. And this is why it is so important to preserve their different aspects today. Weakening even a little bit of the protections the state offers to citizens, workers, entrepreneurs and investors may then lead to a vicious circle where people do not feel safe that they will be defended against corruption or expropriation. And this leads to lower prosperity and more calls for authoritarian rules.

There may also be outliers. China is clearly trying to push the idea that capitalism without a liberal democracy can be compatible with economic success.

The growth of China since Deng Xiaoping’s reforms in the 1980s coincides with the introduction of stronger property rights for entrepreneurs and businesses. And, in that sense, it is a textbook version of the power of institutions.

But it is also true that Deng Xiaoping ordered the crushing by the military of the Tiananmen Square protests for democracy in 1989. China today also has a clearly more authoritarian system than western democracies.

And China is still much poorer than its democratic counterparts, despite being the world’s second-largest economy. China’s GDP per capita is not even a fifth of that of the US, and it is facing major economic challenges of its own.

Actually, according to Acemoglu, Xi Jinping’s increasingly authoritarian regime is the reason why China’s economy is “rotting from the head”.

What trajectory are democratic institutions throughout the world currently on?

Acemoglu has expressed concern that democratic institutions in the US and Europe are losing support from the population. And, indeed, many democracies do seem to be doubting the importance of protecting their institutions.

They flirt with giving more power to demagogues who claim it is possible to be successful without a strong set of rules that bind the hands of the rulers. I doubt today’s prize will have the slightest influence on them.

But if there is one message to take home from the work of this year’s laureates, it is that voters should be cautious not to throw the baby of economic prosperity with the bathwater of the sometimes frustrating rules that sustain it.The Conversation

About the Author:

Renaud Foucart, Senior Lecturer in Economics, Lancaster University Management School, Lancaster University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
25 Oct

5 Ranked Stocks that Made Our Watchlist Last Quarter

By InvestMacro Research

The fourth quarter of 2024 is under way and with the bulk of earnings reports still to come we wanted to highlight some of the top companies that had been added to our Cosmic Rays Watchlist from the last quarter.

The Cosmic Rays Watchlist is the output from our proprietary fundamental analysis algorithm that examines company fundamental metrics, earnings trends and overall sector strength trends. The aim is identify quality dividend-paying companies on the NYSE and Nasdaq stock exchanges. If a company scores over 50, it gets added to our Watchlist for further analysis.

We use this system as a stock market ideas generator and we continuously update our Watchlist every quarter.

However, be aware the fundamental system does not take the stock price as a direct element in our rating so one must compare always each idea with their current stock prices (this is not a timing tool).

Many studies are consistently showing overvalued markets and that has to be taken into consideration with any stock market idea.

As with all investment ideas, past performance does not guarantee future results and, any stock added to our Watchlist is not a recommendation to buy or sell the security.

Here we go with 5 of our Top Stocks scored in Q3 2024:

Oshkosh Corporation (OSK):

Oshkosh Corporation (Symbol: OSK) was recently added to our Cosmic Rays WatchList. OSK scored a 82 in our fundamental rating system on August 1st, 2024.

At time of writing, only 0.80% of stocks have scored a 80 or better out of a total of 9,639 scores in our earnings database. This stock has made our Watchlist a total of 5 times and actually decreased by -5 system points from the previous update.

OSK is a Medium Cap stock and part of the Industrials sector. The industry focus for OSK is Agricultural Machinery. The company is a designer and manufacturer of specialty vehicles, electric vehicles and intelligent products.

Company Website: https://www.oshkoshcorp.com

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Oshkosh Corporation (OSK)10.316.511.22
– Benchmark Symbol: XLI29.237.21.1

 

* Data through October 24, 2024

The Hartford Financial Services Group, Inc. (HIG):

The Hartford Financial Services Group, Inc. (Symbol: HIG) was recently added to our Cosmic Rays WatchList. HIG scored a 73 in our fundamental rating system on July 26, 2024.

At time of writing, only 2.06% of stocks have scored a 70 or better out of a total of 9,639 scores in our earnings database. This stock has made our Watchlist a total of 5 times and decreased by -8 system points from our last update.

HIG is a Large Cap stock and part of the Financial Services sector. The industry focus for HIG is Insurance. The company provides diversified insurance and financial services in the US, UK and internationally.

Company Website: https://www.thehartford.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: The Hartford Financial Services Group, Inc. (HIG)11.370.710.92
– Benchmark Symbol: XLF21.246.41.0

 

* Data through October 24, 2024

Novartis AG (NVS):

Novartis AG (Symbol: NVS) was recently added to our Cosmic Rays WatchList. NVS scored a 53 in our fundamental rating system on July 19, 2024.

At time of writing, only 8.41% of stocks have scored a 50 or better out of a total of 9,639 scores in our earnings database. This stock has made our Watchlist a total of 5 times and still made the Watchlist despite falling by -32 system points since our previous update.

NVS is a Mega Cap stock and part of the Healthcare sector. The industry focus for NVS is Drug Manufacturers – General. The company develops and manufactures healthcare products globally.

Company Website: https://www.novartis.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Novartis AG (NVS)23.319.380.49
– Benchmark Symbol: XLV25.318.630.7

 

* Data through October 24, 2024

EMCOR Group, Inc. (EME):

EMCOR Group, Inc. (Symbol: EME) was recently added to our Cosmic Rays WatchList. EME scored a 60 in our fundamental rating system on July 26, 2024.

At time of writing, only 4.80% of stocks have scored a 60 or better out of a total of 9,639 scores in our earnings database. This stock has made our Watchlist a total of 4 times and rose by 8 system points from the previous update.

EME is a Large Cap stock and part of the Industrials sector. The industry focus for EME is Engineering & Construction. EME is a fortune 500 company that provides mechanical & electrical construction as well as industrial and energy infrastructure mostly in the US and UK.

Company Website: https://www.emcorgroup.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: EMCOR Group, Inc. (EME)24.4129.861.06
– Benchmark Symbol: XLI29.237.21.1

 

* Data through October 24, 2024

PepsiCo, Inc. (PEP):

PepsiCo, Inc. (Symbol: PEP) was recently added to our Cosmic Rays WatchList. PEP scored a 66 in our fundamental rating system on October 10, 2024.

At time of writing, only 4.86% of stocks have scored a 60 or better out of a total of 9,639 scores in our earnings database. This stock has made our Watchlist a total of 2 times and rose by 28 system points from the previous update.

PEP is a Mega Cap stock and part of the Consumer Defensive sector. The industry focus for PEP is Beverages – Non-Alcoholic. The company is a major manufacturer and global distributor of numerous beverages as well as convenient foods with major brand names.

Company Website: https://www.pepsico.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: PepsiCo, Inc. (PEP)25.56.380.54
– Benchmark Symbol: XLP27.820.110.6

 

* Data through October 24, 2024

By InvestMacro – Be sure to join our stock market newsletter to get our updates and to see more top companies we add to our stock watch list.

All information, stock ideas and opinions on this website are for general informational purposes only and do not constitute investment advice. Stock scores are a data driven process through company fundamentals and are not a recommendation to buy or sell a security.

Opinions Stock Market Ideas
25 Oct

Week Ahead: Big Tech set for big gains?

By ForexTime

  • 5 of “Magnificent 7” set to publish earnings
  • Combined market cap of 5 tech titans over $12 trillion
  • Looking past earnings, key focus on AI spending
  • Meta could move over 7.3% ↑ or ↓ post earnings
  • Apple richest company in the world reports results Thursday

Financial markets could end October with a bang thanks to market-moving events.

High-impact data from across the globe, a general election and rate decision in Japan coupled with earnings from tech titans will be in focus:

Sunday, 27th October

  • JP225: Japan holds general election
  • CN50: China industrial profits

Monday, 28th October

  • CAD: Bank of Canada Governor Tiff Macklem speech

Tuesday, 29th October

  • JP225: Japan unemployment
  • SG20: Singapore unemployment
  • SPN35: Santander earnings
  • UK100: HSBC earnings
  • US500: Alphabet earnings

Wednesday, 30th October

  • CN50: Major Chinese banks earnings
  • AU200: Australia CPI
  • GER40: Germany GDP, CPI, unemployment, Volkswagen earnings
  • UK100: UK Chancellor of the Exchequer presents budget
  • USDInd: US GDP, ADP employment, pending home sales
  • NAS100: Meta platforms, Microsoft earnings

Thursday, 31st October

  • AU200: Australia building approvals, retail sales
  • CN50: China manufacturing and non-manufacturing PMI
  • EU50: Eurozone CPI, unemployment
  • JP225: BoJ rate decision, industrial production, retail sales
  • NAS100: Amazon, Apple earnings, US PCE report, initial jobless claims

Friday, 1st November  

  • CN50: China Caixin manufacturing PMI
  • UK100: S&P Global Manufacturing PMI
  • US500: US NFP report, ISM manufacturing, Exxon Mobil earnings
  • US30: Chevron earnings

It’s all about earnings from the tech giants after Tesla’s blockbuster results sent its shares rallying over 20%!

Despite this burst of positivity, US equities are heading for their first weekly loss in almost two months amid rising Treasury yields and political uncertainty.

Five of the “Magnificent” 7 tech giants with a combined market cap of over $12 trillion are set to publish their results in the week ahead.

This is what you need to know:

    1) Alphabet

Google parent company Alphabet reports its third-quarter earnings on Tuesday 29th October after US markets close.

The tech giant is expected to post revenue and income growth, supported by the cloud division of its business. A positive set of results could boost Alphabet shares, already up over 15% year-to-date. Beyond the revenue growth, updates on AI spending will be in focus.

Markets are forecasting a 5.5% move, either Up or Down, for Alphabet stocks post earnings.

Alphabet

 

    2) Microsoft

Microsoft reports its fiscal Q1 2025 earnings on Wednesday 30th October after US markets close.

Despite slipping almost 4% in Q3, its shares are still up roughly 13% year-to-date. In July, when reporting its Q4 results investors were disappointed by the Azure cloud services revenue growth. So much focus will be on cloud services growth, AI development and forward guidance.

Markets are forecasting a 4% move, either Up or Down, for Microsoft stocks post earnings.

microsoft1

 

    3) Meta Platforms

 

Meta is set to report third quarter earnings after US market close on Wednesday 30th October.

Its shares have gained 60% in 2024, taking the tech giants market cap to over $1.4 trillion. Back in Q2, Meta advertising revenues increased 22% – so investors may be seeking for similar results in Q3 to justify recent gains. Watch out for any fresh insight on AI projects including the upcoming Llama 4 set for released in 2025.

Markets are forecasting a 5.9% move, either Up or Down, for Amazon stocks post earnings.

Meta

 

    4) Amazon

Amazon will publish its third-quarter earnings after US markets close on Thursday 31st October.

Quarterly revenues are projected to rise $157.3 billion from $143.1 billion in the prior year, translating to a near 10% increase. Investors will direct their focus toward Amazon’s Web Services (AWS) and advertising business in addition to any updates on AI research.

Markets are forecasting a 5.9% move, either Up or Down, for Amazon stocks post earnings.

amazon

 

    5) Apple

The richest company in the world with a market cap of $3.5 trillion reports its Q4 earnings on Thursday 31st October after US markets close.

Apple is expected to post revenue and earnings growth but it’s all about the performance of iPhone sales. Despite the new iPhone 16 released in September, there have been reports that orders have been cut by 10 million units. Investors will be looking for fresh insight into this development along with any updates on its AI technology through Apple Intelligence features.

Apple shares are up almost 20% year-to-date with markets projecting a 2.6% move, either Up or Down, post earnings.

apple 1

Forex-Time-LogoArticle by ForexTime

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