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Why So Many Multi-Billion-Dollar Manufacturing Giants Are Teaming with Jason Industries Inc. (NASDAQ:JASN)


According to analysts at The Leuthold Group, a firm that diligently follows the S&P 500, we may right now be in the midst of “the longest bull market in history [that] is also the best ever.”[i]

This claim isn’t from the beginning of the year… it’s from within the past month.

And yet doom and gloom has been causing strange things to happen in the market, that can feasibly be attributed to excessive fear baiting and over corrections.

Take for instance the peculiar case of Jason Industries Inc. (NASDAQ:JASN) —an established company currently trading at a mkt cap of 6% its cash position, and 5% its overall liquidity.

Rare is it to see a legacy B2B manufacturer with solid client relationships dating back multiple decades, leading in many of its sectors, with liquidity and revenues in the hundreds of millions…

… with a current market cap of just over US$6 million, and a share price trading around US$0.21.

What to make of this?

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Why are analysts referenced at CNN Business still recommending JASN as a Buy, and are forecasting the company to have a median target of $3.50[ii]representing a whopping +1,566.67% increase from the current price?

It’s a curious case indeed, and one that requires a more in-depth look as to what the market might be missing about this company, despite what this year’s stock chart on it seems to be saying.

Following a major sale of their Fiber Solutions division, the company is currently reporting $97.2 million in cash on hand, and an additional $17.9 million of availability on revolving loan facilities globally.

That’s a liquidity of US$111 million, while the market is valuing it at US$6 millionor roughly 5% of that.

Let us now look at how Jason Industries Inc. (NASDAQ:JASN) may have received an overcorrection, and why investors may want to look at the company with a new set of eyes.

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Meet the REAL Jason Industries Inc. (NASDAQ:JASN)

ANALYST OVERVIEW:
Company – Jason Industries Inc.
Rating – BUY
Price Target – $3.50 USD / Share
Increase +/- = +1,500% (approx. from current price)

Source: View the price target directly on MONEY.CNN.COM here


Tracing its roots back to the Industrial Revolution, Jason Industries Inc. (NASDAQ:JASN) is a diverse machinery industrial supplier that has grown into its current state through a series of tuck-in acquisitions and organic growth initiatives.

They make a wide variety of products that are integral to manufacturers around the globe, ranging from brushes and abrasives for machinery and other important needs,

Across each of its businesses, Jason has fostered and developed deep connections with its key partners. The average client of Jason Industries Inc.’s subsidiaries have been buying from the company for over twenty years.

Over the last few years, the company has used this experience with its customers to drive an organization-wide Lean Manufacturing transformation.

This means they’ve enhanced their offerings, performance, and have evolved their entire approach to manufacturing operations and product and customer management by creating the value stream for their customer, and continuously improving.

Jason’s three main businesses are:

  • Osborn – Global industrial leader in metal preparation, polishing and finishing, with offices and manufacturing facilities around the world.
  • Milsco – Leading seating systems provider for wide range of niche products, including motorcycle seats, operator seats for construction, agriculture, lawn and turf care and other industrial equipment markets; and seating for the power sports market.
  • Metalex – The industry-leading largest producer of expanded metal in North America, and recognized specialist company in the perforated metal market

In all three of these sectors, Jason Industries Inc. (NASDAQ:JASN) subsidiaries are among their respective industries’ elite.

ESTABLISHED INDUSTRY LEADER IN THREE BUSINESSES

As a group of three distinct companies, each of Jason’s businesses is poised to benefit from others’ experience and access to global markets. They’ve all developed leading positions across various niche markets that enhance end user’s comfort, safety, and productivity.

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Osborn – Industrial

2018 Net Sales: US$208 million

Adjusted EBITDA Margin: 14%


Leading the way among all of Jason’s subsidiaries, Osborn generated the largest percentage of the company’s overall revenue in 2018, and will likely the main focus for growth in the near future.

Osborn’s product lines are comprised of industrial brushes, polishing buffs and compounds, and abrasives used primarily in the metalworking, welding, construction and manufacturing industries.

Its extensive product breadth, global footprint and long history with blue-chip customers served through multiple channels is VERY difficult to replicate.

“We believe we are the only market participant that reaches all regions of the world.”

– 2018 Annual Report

In fact, it’s plausible to say that no single competitor directly competes with Jason/Osborn on all of their product lines.

The fact that their products are used in a variety of applications with no single customer or industry accounting for a significant portion of business revenue, acts as a form of a hedge against volatility and cyclicality.

Osborn has representatives who reach more than 30,000 customers in approximately 130 countries worldwide—through US facilities in Indiana and Ohio and 12 foreign countries, including joint ventures in China and Taiwan.

In addition, the company has invested in state-of-the-art laboratories in Richmond, Indiana, and Burgwald, Germany to provide further technical design, testing, and support capabilities for their customers.

Earlier this year, Jason Industries Inc. (NASDAQ:JASN) also added to the Osborn line, by acquiring and integrating in another group called Schaffner, which the company is expecting to incorporate another $3 million in annual cost synergies by mid-2020.

The Milsco brand has provided high-quality seats since 1934, cited as the first company to put padded seating on tractors and farm equipment.

Today, the company provides static and suspension seating solutions for a variety of applications, including motorcycle, agricultural, construction, industrial, lawn and turf care, and power sports—and in 2018 represented 26.2% of Jason’s revenue.

“By far and away the most innovative and highest quality seats.”

The market for seating products is dominated by several large domestic and international participants, who are often awarded contracts as the sole supplier for a particular motorcycle, riding lawn mower or other construction, agriculture or material handling platform.

The construction market is closely tied to overall growth in industrial production, which Jason Industries Inc. (NASDAQ:JASN) believes has long-term growth potential.

Metalex is the provider of components that are used in a broad array of products, including railcars, air and liquid filtration, hardware, off-road equipment and security fencing.

Within each of the components business product categories, their strategy is to have engineers work alongside customers to create value-added components and solutions for various end products.

Their engineering resources, manufacturing capabilities and low cost production availability through their operation in Mexico provide opportunities to deliver value to customers.

Among their customers are several multi-billion-dollar corporations, including:

Parker-Hannifin Corporation (NYSE:PH) – US$25.25 billion

Trinity Industries, Inc. (NYSE:TRN) – US$2.58 billion

Donaldson Company, Inc. (NYSE: DCI) – US$6.91 billion

Cummins Inc. (NYSE:CMI) – US$28.11 billion

A central Midwest location allows the company to offer cost-effective, proximity-based manufacturing to customers throughout North America

End users of component products are diversified across various sectors of the economy.

Demand in the components market is influenced by the broader industrial manufacturing market, as well as trends in the perforated and expanded metal, rail and commercial equipment industries.

… and the best gauge of domestic industrial production is the US Industrial Production Index, which measures monthly output arising from the manufacturing, mining and gas sectors.

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COMPETITIVE STRENGTHS

ESTABLISHED INDUSTY LEADER ACROSS THEIR THREE BUSINESSES

Jason Industries Inc. (NASDAQ:JASN) has built up their market share positions to create a stable platform upon which to grow.

For example, their turf care seats and polishing product lines, are believed to be more than twice the size of the next largest direct competitor.

They’ve managed to do this while maintaining relationships with their many customers, of which several they’ve had over 25 years.

Their market share positions are significantly sustained by their products’ brand recognition.

Jason’s products are often viewed as a brand of choice for quality, dependability, value and continuous innovation.

SUPERIOR DESIGN & MANUFACTURING SOLUTIONS

Jason Industries Inc. (NASDAQ:JASN) has a track record of providing customers with innovative, customized solutions through production flexibility and collaboration with their design and manufacturing teams.

Over the last few years, the company has consistently refined its manufacturing processes to incorporate design technologies that improve design, product offerings and quality, as well as manufacturing efficiency.

Across their businesses, they maintain teams of designers and a diverse product selection in numerous geographic regions, which allow them to respond quickly to real-time customer needs.

Jason’s diverse product offerings and customized design and manufacturing capabilities have made them a preferred choice within many industries and an entrenched key solutions provider to customers.

SCALABLE BUSINESS PHILOSOPHY

Jason Industries Inc. (NASDAQ:JASN) focuses its strategy to deploy capital and resources across their businesses to projects with the highest returns on invested capital.

They annually assess their three-year outlook and goals, by using a policy deployment matrix disseminated throughout the organization. This helps them to develop an annual budget and profit plan and monitor progress towards long-term strategic goals.

If a business doesn’t fit with the long-term strategy, then it’s either shut down or divested—like that of the sale of the company’s acoustics division during late summer 2019 for approximately US$85 million.

Through the divestment of its acoustics business, Jason ultimately reduced its automotive OEM market exposure, and increased the company’s liquidity to ~US$111 million.

With the proceeds of the sale, significant funds are available for reinvestment in the business and acquisitions through 3Q20.

DIVERSE, GLOBAL FOOTPRINT WITH GROWING PRESENCE IN EMERGING MARKETS

Jason Industries Inc. (NASDAQ:JASN) maintains a strong international presence, spaced out over dozens of global manufacturing locations, including 11 in the US and 17 in foreign countries

Approximately 30% of the company’s 2018 revenue was generated from products manufactured outside of the United States.

In addition, their global presence enables them to take advantage of low-cost manufacturing at their facilities in China, India, Portugal, Romania, and Mexico and to meet the needs of local customers with operations in those regions.

Jason continues to build upon its established presence in low-cost production locations through the expansion of owned operations and the development of joint ventures and sourcing relationships in Asia, Eastern Europe and Mexico.

MOVING FORWARD

Jason Industries Inc. (NASDAQ:JASN) continues to have the potential to increase its market share, due to the highly-fragmented nature of their end markets.

As the market as a whole comes out of a down-dip period, there is plenty to still be optimistic about.

Billionaire investor Paul Tudor Jones believes “we’ve got an explosive combination of monetary and fiscal policy right now”[iii]—which he thinks could propel the market further into record territory.

There’s reason to believe that the market slumber could very well be temporary, and that once it awakes, groups like Jason Industries could make a big comeback—as its current $0.21 share price and $6 million market cap (worth 5% of the company’s current liquidity) potentially makes a swing towards the $3.50 share price target given by analysts recognized by CNN Business.

7 IMPORTANT POINTS TO KEEP IN MIND FOR
Jason Industries Inc. (NASDAQ:JASN)

  1. Jason Industries Inc. has been given a median target price of $3.50 per share by analyst cover at CNN Businessa more than 1,500% increase over today’s price.
  2. Jason’s current market cap of US$6 million is equal to just 6% of the company’s cash on hand, and 5% of their overall liquidity.
  3. After the sale of their acoustics business, Jason Industries currently has $110.6 million in total liquidity, including $92.7 million in cash, which is available for reinvestment in the business and acquisitions through 3Q20.
  4. Established industry veterans with long-standing customer relationships with most averaging more than 25 years
  5. Osborn has representatives that reach more than 30,000 customers in approximately 130 countries worldwide
  6. Milsco is known as a high-quality seat manufacturer, with its turf care seats line believed to be more than twice the size of the next largest direct competitor

Analysts and Billionaire Investors believe the market is in the right position to propel even further into record territory.

Analyst Review Team
Equity Insider


[i] https://www.cnbc.com/2019/11/14/the-markets-10-year-run-became-the-best-bull-market-ever-this-month.html

[ii] https://money.cnn.com/quote/forecast/forecast.html?symb=JASN

[iii] https://www.cnbc.com/2019/11/13/paul-tudor-jones-says-there-is-an-explosive-combination-of-forces-driving-the-market-higher.html


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While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

Weekly Market Review – December 7, 2019

Stock Markets

While it was trade-deals that were expected to drive the markets last week, the limelight moved quickly to economic fundamentals, which drove global stocks higher. It appears that international stocks outperformed domestic ones based on the fourth straight month of improvement in global manufacturing PMI, which is seen as a reflection of global growth. Data seems consistent with an improving demand climate. This seems to indicate that the manufacturing downcycle may over, for now. The U.S. jobs report was astounding and set off U.S. stocks best daily gain in over a month. The report showed strong job gains, rising wages, and a return to a 50-year-low unemployment rate. The attention of Trump’s economy has created a seven-month high in consumer sentiment, solidifying the fact that the U.S. economy is on course to finish 2019 on a high note.

U.S. Economy

For the first week of December, the U.S. economic news set an optimistic case for December and a bull market that will continue to year end and beyond. Stocks rose 0.9% on Friday on the solid news. Compared with the first week of December 2018, things were a real step up. Last year stocks slumped based on a yield curve inversion that worried investors with talk of recession. Last year too, the November jobs market missed expectations, and trade negotiations, were bogged down. This week has ended up being completely different from that period. With recession fears in the far distance and trade battles making headway, there is reason for real optimism ahead, albeit a cautious outlook.

Metals and Mining

Gold prices softened on Friday as increased hopes of reaching a phase one and broader US-China deal increased investors’ appetite for riskier assets. A very strong US jobs data report also took its toll on gold.  President Donald Trump said in the week that talks with China were making progress, indicating they may be nearing a deal and that there may be a potential end to the trade war. During 2019, gold has been supported largely by the trade war, helping the safe haven metal gain over 14 percent in that period. Gold was also hurt this week by the robust US jobs data report released earlier Friday. The report revealed that US job growth increased the most in the last 10 months in November. That put to rest investor fears that the economy may be headed for a major downturn. The better-than-expected jobs report took the favor out of demand for safe haven products such as gold, analysts said. Silver was also held back, dropping over 1 percent during Friday morning. Silver slid as its safe haven appeal declined too, but those were losses were capped by investors waiting to hear the upcoming Fed meeting. Overall, silver is up 9.7 percent on a year-to-date basis. In other precious metals, platinum was flat at the end of the trading week. Once again analysts at FocusEconomics believe that platinum prices are likely to pick up based on a fall in global supply. Palladium on the other hand was the leading precious metal with a large enough increase to hit US$1,880.37 per ounce for the first time. Palladium has gained over 40 percent since the beginning of 2019. Its large gains can be traced to stricter environmental regulations around car emissions. Air quality rules in line with cutting pollution have prompted automakers to increase the amount of palladium used in catalytic converters. As demand increases from the automotive sector, supply shortfalls are beginning to appear. That creates a spot price a boost on the market for palladium.

Energy and Oil

Oil jumped this week thanks to news from Vienna. It appears OPEC+ has agreed to cut 500,000 bpd more than the current arrangement, which raised some questions. However, Saudi officials are reported as saying they would maintain their unilateral cuts beyond what is required in order to defend oil prices. Global markets responded immediately with a bounce. OPEC+ agrees to keep the cuts until March. At the same time Saudi Arabia promises to maintain unilateral cuts that they say voluntarily take out 400,000 barrels a day. The news from Saudi Energy Minister Prince Abdulaziz bin Salman sent oil prices much higher. On the domestic front, the U.S. has become a net petroleum exporter. In September, the U.S. exported 89,000 barrels of crude and petroleum products, the first month since 1973 that its overall petroleum balance was net positive. In comparison, the U.S. was importing 10 million barrels per day on a net basis just a decade ago.  Natural gas spot prices fell at most locations this week. The Henry Hub spot price rose from $2.33 per million British thermal units (MMBtu) last week to $2.37/MMBtu this week. At the New York Mercantile Exchange (Nymex), the December 2019 contract expired November 26 at $2.470/MMBtu. The price of the January 2020 contract decreased 10¢, from $2.501/MMBtu last week to $2.399/MMBtu this week. The price of the 12-month strip averaging January 2020 through December 2020 futures contracts declined 7¢/MMBtu to $2.333/MMBtu.

World Markets

In Europe, stocks basically ended the week flat. This after retracing earlier losses set off by fears that a U.S.-China trade deal might be delayed even further – possibly until after the U.S. 2020 election. Stocks increased Friday after President Trump added reassurance that trade talks were “moving right along.” The stronger-than-expected U.S. jobs report really eased market fears of a global economic slowdown. The pan-European STOXX Europe 600 Index ended the week flat, Germany’s DAX index fell 0.5%, and the UK’s FTSE 100 Index dropped 1.6%. UK stocks tend to decline when the pound rises because many index companies are multinationals with overseas revenues. In Britain, the pound headed to a seven-month peak against the U.S. dollar and the euro. That marks its highest level yet under Prime Minister Boris Johnson. That speaks directly to Johnson’s popularity, especially in polls for the UK election. Analysts caution that even a 10% poll lead may not extrapolate as expected. Tactical voting—where voters support a candidate other than their first choice in order avert an undesirable outcome—as well as a surge in new voter registrations are making the election more difficult to predict.

China saw its stocks advance, snapping the last three straight weeks of losses. Apparently, investors felt that an interim U.S.-China trade deal is getting close. For the week, the benchmark Shanghai Composite Index rose 1.4%, and the large-cap CSI 300 Index added 1.9%. Friday added the largest weekly gains for both indexes since the week of October 11. China said it has started to waive retaliatory tariffs on U.S. pork and soy imports by domestic companies on Friday. The Chinese Finance Ministry is reported to be working to waive the tariffs resulting from the trade war after domestic companies bought a certain amount of U.S. farm products. That statement led traders to further support the notion that the U.S. and China were drawing closer to a phase one trade deal that is expected to create the groundwork for a broad, full scope agreement.

The Week Ahead

There are several Important economic data points emerging in the week including the NFIB small business optimism index, consumer inflation, unit labor costs and November retail sales. In what is expected to be an uneventful announcement, the Federal Reserve will release its policy rate on Wednesday. The rate is widely predicted to remain unchanged.

Key Topics to Watch

  • NFIB small-business index
  • Productivity revision
  • Unit labor costs revision
  • Consumer price index
  • Core CPI
  • Federal budget
  • FOMC announcement
  • Weekly jobless claims
  • Producer price index
  • Retail sales
  • Retail sales ex-autos
  • Import prices ex-fuels
  • Business inventories

Markets Index Wrap Up

Weekly Market Review – November 30, 2019

Stock Markets

U.S. stocks rallied once again last week to a another all-time high. That accounts for the 26th record high of the current year. Clearly there is continued optimism that the US and China are making progress in their efforts to pound out a “Phase 1” trade deal, hopefully before year-end. Other data reinforced the notion that the economy is strong with a continued solid base. First, a decrease in the number of people applying for first-time unemployment benefits emerged, followed by an increase in personal spending for October. With October being the eighth straight monthly increase, analysts feel comfortable suggesting that consumers are in pretty healthy shape as we head into holiday spending and the end of the year.

U.S. Economy

U.S. stocks markets are experiencing their best year since 2014. At the same time, bonds are have risen more than the past 17 years. So, while performance remains strong, investors shouldn’t take this term for granted. Analysts are convinced that conditions are in place for an extension to the bull market. Of course, that’s not without some volatility. The Thanksgiving holiday signals we are headed into the homestretch for the year with all eyes on the very important and telltale holiday shopping season. By the numbers it is promising:

Market Numbers

  • Stock markets have historically done well after Thanksgiving. Beginning in 1950, the average return in December has slotted in at 1.5%. The market post-holiday gain in that time period is a gain of 81%.
  • Since 1950, the market has entered Thanksgiving with a year-to-date gain of 20% or more 18 times. This year has followed that trend. In each historical case, the following year produced an average return of 16%.
  • Analysts agree that 2019’s rally reflects positive fundamentals that created and still support this market.   

Metals and Mining

Gold started to stabilize Friday after dropping slowly during the majority of the week. The metal is fully on track to end up with its worst month in three years. In all, it could lose as much as US$58.60 per ounce since the beginning of November. So far, the US-China tariff stalemate has added volatility to the precious metals market, with gold benefiting most. Now, the White House is backing pro-Hong Kong protester legislation passed by Congress last week. This will certainly add tension to the overall discussion.

The crux of the legislation signed President Donald Trump earlier this week, declares the US must review Hong Kong annually to ensure they are sufficiently autonomous from China. Otherwise Hong Kong’s special status for trading will be taken away, and therefore damaging China. Of course, Beijing immediately voiced its criticism of the action and warned of countermeasures. Those new concerns helped gold rally on Friday morning to trade at US$1,459.68 at 10:21 a.m. EST. Silver and platinum have also trended lower over the 30-day period. Silver is down just over US$1 per ounce for the month, locking it into the US$17 range. Platinum has dropped about US$50 since the beginning of the month. According to a recent report from the World Platinum Council, global demand is expected to fall 10 percent in 2020. It seems that palladium is the only metal to have performed well over the 30 days. Palladium looks to be closing in on gold’s all time high of US$1,900 set in 2011. It is unequivocally the most successful precious commodity in 2019, gaining US$534 an ounce since starting the year at US$1,287.

Energy and Oil

The blatant uncertainty over global economic and oil demand growth will continue to put pressure on oil prices next year as the oversupply in the market will likely persist. That’s according to the monthly Reuters poll of economists and analysts issued Friday. According to the 42 experts, Brent Crude will average US$62.50 per barrel in 2020. The economists expect WTI Crude to average US$57.30 a barrel next year, also up from last month’s US$56.98 estimate. The analysts expect weak demand growth in the first half of 2020 due to weak economic growth. Most also agree that there is too much oil in the market. Demand growth could be anywhere in the range of 800,000 bpd to 1.4 million bpd, according to the experts surveyed by Reuters. The big story for the week was the spot prices for natural gas which fell sharply on Friday as forecasts for warm weather surprised traders who were hoping for increased demand. After all, this is normally cold season in the United States. Natural gas prices were trading down 7.52% on Friday afternoon at $2.313. Losses mounted all week starting out at $2.738 on Sunday – a loss of 15.5% for the week. As a result of some moderately warmer weather in the short term, US demand is expected to increase only to 104.7 Bcf/d over the same timeframe, compared with US natural gas production that is expected to hover around 92.7 Bcf/d—a 6% increase over year-ago levels. The EIA has estimated that total natural gas use actually fell 5% compared to the previous week, with natural gas use for power consumption declining even more, by 7%. Overall, natural gas prices are down sharply year on year, with prices as of November 30, 2018, sitting at $4.339, a loss of $2.026 or 47% y/y.

World Markets

European stock markets were higher this week lifted by a rally on Wall Street. Still, worries emerged that U.S.-China trade tensions would escalate after President Trump showed support for Hong Kong protests. That action quickly capped the previous gains. The pan-European STOXX Europe 600 Index rose 1.1%. The German DAX gained about 0.7%, and the UK’s FTSE 100 Index was up about 0.5%. The British pound rose 0.7% against the U.S. dollar as another poll came out suggesting that a Conservative Party win was the likely result of the upcoming December UK elections. British Prime Minister Boris Johnson promises that he will deliver a new Brexit deal to Parliament even before Christmas. In Germany, the consumer sentiment rose unexpectedly in December. The improved mood among buyers is expected to give a boost to household spending and support the export-driven German economy.

Chinese stocks fell for a third week as President Trump’s signing of a bill supporting the Hong Kong protesters drew a sour response from Beijing. It also served to unhinge the bilateral trade talks aimed at forging a Phase One trade deal between the countries. For the week, the benchmark Shanghai Composite Index declined 0.5% and the large-cap CSI 300 Index, which tracks blue chips listed on the Shanghai and Shenzhen exchanges, gave up 0.6%. Both indexes fell to their lowest levels on Friday. That followed logically the day after China officially criticized the U.S. legislation and said it would take “firm countermeasures” if the U.S. continued to interfere in Hong Kong. Officials from both countries signaled during the week that an interim US-China trade deal is close, although it isn’t expected to include the bigger items such as intellectual property, or technology transfer.

The Week Ahead

In the post-Thanksgiving week, a few key data will be released that point to the way will be sending off 2019. Important items of note include jobs, the ISM manufacturing index and services PMI, motor vehicle sales, the unemployment rate, and consumer sentiment index which should reflect the average person’s view of how the economy is looking.

Key Topics to Watch

  • Markit manufacturing PMI
  • ISM manufacturing index
  • Construction spending
  • Motor vehicle sales
  • ADP employment
  • Markit services PMI
  • ISM nonmanufacturing index
  • Weekly jobless claims
  • Trade deficit
  • Factory orders
  • Nonfarm payrolls
  • Unemployment rate
  • Average hourly earnings
  • Consumer sentiment index
  • Wholesale inventories
  • Consumer credit

Markets Index Wrap Up

Weekly Market Review – November 23, 2019

Stock Markets

The U.S. stock markets had a bit of a reprieve this week with a small decline. That comes after six continuous weeks of advances and new highs. The volatility level continues to be low, but still a concern. The news on the U.S./China trade made things murky for investors who seem unsure if there is indeed a “Phase 1” trade deal ready to be completed before the year closes. The preliminary U.S. Purchasing Managers’ Index for November indicated an uptick in economic activity. This supports what most analysts see as the passing of the worst of the manufacturing slowdown.

U.S. Economy

In the US economic outlook, it’s not simply where things are headed that counts, but also how they will arrive at the end mark. As evidenced this year yet again, stocks go through significant rallies followed by pullbacks. The underlying drivers and the make-up of the components serve as indicators or predictors as to how long those trends may continue. So, while the market has continued strong over the last while (gains of 26.0% in 2019 and 6.6% in just the last three months), the question is will this continue? Analysts seem to agree on a couple of aspects here: they doubt that the market will continue with this magnitude. Mainly, they say, another 20%-plus gain is unlikely in 2020. They also doubt its continued steadiness. Since the market has rallied with virtually no volatility, that would need to continue. But overall, they think the direction will continue with a prolonged bull market led by more moderate gains on a bumpier road toward those gains. The underlying fundamentals, they say, are in place to support this path.

Metals and Mining

Gold managed to hang above US$1,460 an ounce Friday supported by the concerns that a trade deal between the US and China may not close by the end of the year as previously expected. For most of the week gold traded in the US$1,465 range but climbed on Wednesday more than US$9 an ounce to finish out the week as the only precious metal to eke out gains. The price surge for the safe haven metal can be pinned on the US Congress passing two bills that are specifically in support of human rights issues for Hong Kong. The legislation was of course condemned by China. Silver on the other hand was unable to get past the US$17.19 level which was its high point in the week. Silver reacted to the positive tariff talks, pushing the metal lower, despite the fact that it has gained a double-digit uptick year-to-date, climbing 12 percent. Still, it has been slightly outpaced by gold, which is up 14 percent. The steady player in the precious metals game was platinum, which hovered at the US$900 mark before dropping 2.6 percent post market open. Platinum has also enjoyed a double-digit gain over the last 12 months, but nothing like palladium. That metal has gained 12 percent year-to-date and looks balanced for 2019. According to a recent report from the World Platinum Council, record growth in platinum ETFs is the driving factor in the 12 percent increase in demand for palladium. Overall, the industrial platinum group metal prices are up more than 40 percent year-to-date. That can be attributed to the strong demand by the automotive sector. Palladium fell to US$1,731.50 at 10:46 a.m. EST Friday.

Energy and Oil

Global oil prices rebounded midweek this week with signs of a tighter physical market and more rumors that OPEC+ may extend production cuts. In reality, the market is awaiting direction from the U.S.-China trade war and until a firm answer emerges, every murmur has an immediate price impact. So, while markets are optimistic, everyone is cautious at this point.

Natural gas spot price movements were mixed this week. The Henry Hub spot price fell from $2.62 per million British thermal units (MMBtu) last week to $2.47/MMBtu this week.

At the New York Mercantile Exchange (Nymex), the price of the December 2019 contract decreased 4¢, from $2.600/MMBtu last week to $2.559/MMBtu this week. The price of the 12-month strip averaging December 2019 through November 2020 futures contracts declined 6¢/MMBtu to $2.427/MMBtu.

World Markets

European equity markets were under pressure from the uncertainty about the future of a U.S.-China trade deal, aka ‘Phase One’. The pan-European STOXX Europe 600 Index lost 0.3%, while the German DAX was off 0.5%. The UK’s FTSE 100 Index gained about 0.5% in proportion with a decline in the British pound that echoed the U.S. dollar. Typically, UK stocks gain when the pound falls since a majority of companies that make up the index benefit from overseas revenues. The telling Purchasing managers’ indexes (PMIs) in the eurozone showed manufacturing activity shrank at a slower pace in November, while services numbers dropped slightly. The region’s manufacturing PMI rose to a three-month high of 46.6 in November. That is still in contraction territory. Data show that Germany’s manufacturing PMIs rose for the second straight month and Germany’s Statistics Office confirmed that the German economy grew 1%, narrowly missing the recession numbers.

Chinese stocks were down for the week sparked by the U.S. support for a bill in aid of protestors in Hong Kong. This also pivoted the expectations for a partial trade deal that was supposed to be completed by November. On the week, the benchmark Shanghai Composite Index declined 0.2% and the large-cap CSI 300 Index, which tracks stocks listed on the Shanghai and Shenzhen exchanges, fell a tiny 0.7%. In both cases, the markets fell to their lowest points Friday well after the U.S. House and Senate each passed a bill supporting human rights in Hong Kong. The passage of the bill compiled the uncertainty surrounding talks on the ’phase one’ trade deal, which most expect is the gateway for greater progress across the board.

The Week Ahead

While this week will be shortened by the Thanksgiving Holiday, there are still several important economic data that will come out in the run-up. Key data emerging this week include consumer confidence, new home sales, third-quarter GDP (second estimate), as well as with capex order, Chicago PMI, durable goods orders and personal income on the eve of the holiday.

Key Topics to Watch

  • Chicago Fed national activity index
  • Advance trade in goods
  • Case-Shiller home price index
  • Consumer confidence index
  • New home sales
  • Weekly jobless claims
  • GDP revision
  • Durable goods orders
  • Core capex orders
  • Chicago PMI
  • Personal income        
  • Consumer spending
  • Core inflation
  • Pending home sales index

Markets Index Wrap Up

5 Biotech Stocks to Buy for Blockbuster Potential

Biotechnology has boomed over the past few decades as our understanding of living organisms and the human machine has swelled. As a result, biotech stocks have become some of the most exciting growth plays on Wall Street.

And their potential to deliver sky-high returns is especially explosive when they’re developing a drug with blockbuster potential.

So how can you pinpoint biotech stocks with these kind of superstar drugs in the pipeline? We suggest turning to Wall Street’s pros.

Here are five promising biotech stocks to buy for their blockbuster-drug potential. The data below shows that all five stocks boast a “Strong Buy” consensus among the Wall Street analysts covering them, based on ratings given during the past three months.

Of the 5 Stocks mentioned below, we’ll start with our favorite, which also has the highest upside potential based on Analyst review (Over +500%), a stock that is still more-or-less under the radar and has massive upside potential, and potentially, the answer to breast cancer!


Trading Symbol: NASDAQ:ONCY
Median Price Target: $6.80 (516.18% upside potential)
Consensus Rating: Strong Buy

Oncolytics Biotech Inc. (NASDAQ:ONCY) (TSX:ONC) is a development stage biotech company developing an immuno-oncology virus (called pelareorep) that’s currently being studied for potential combination with Opdivo® from Bristol-Myers Squibb Company (NYSE:BMY), Roche’s Tecentriq, Pfizer’s & Merck KGaA’s Bavencio, as well as Keytruda® from Merck & Co., Inc. (NYSE:MRK).

For a more detailed report on Oncolytics Biotech, USA News Group has some very in-depth coverage of the company that can be viewed here.


Trading Symbol: NASDAQ:DERM
Median Price Target: $19.00 (128.47% upside potential)
Consensus Rating: Strong Buy

Dermira (NASDAQ:DERM) develops therapies meant to improve the lives of the millions of people living with chronic skin conditions This includes hyperhidrosis (excessive sweating) and atopic dermatitis (a widespread condition that leads to severe, persistent itching)

For more information on Dermira, please visit their website by clicking here


Trading Symbol: NASDAQ:GBT
Median Price Target: $92.22 (64.62% upside potential)
Consensus Rating: Strong Buy

Global Blood Therapeutics (NASDAQ:GBT) is one of a few biotech stocks developing innovative treatments for rare blood diseases. Its lead candidate is voxelotor (GBT440), an oral, once-daily first-in-class breakthrough for the treatment of sickle cell disease (SCD).

For more information on Global Blood Therapeutics, please visit their website by clicking here.


Trading Symbol: NASDAQ:MRNA
Median Price Target: $31.00 (53.47% upside potential)
Consensus Rating: Strong Buy

Moderna (NASDAQ:MRNA) is pioneering a new approach to medicine. The company believes that messenger RNA (mRNA) can transform how medicines are discovered, developed and manufactured. Messenger RNA – sometimes dubbed “the software of life” – is the set of instructions by which cells make proteins and send them to various parts of the body. Moderna hopes to treat a broad spectrum of diseases that currently show limited treatment options.

For more information on Moderna, please visit their website by clicking here.


Trading Symbol: NASDAQ:MORF
Median Price Target: $30.00 (62.69% upside potential)
Consensus Rating: Strong Buy

Morphic Holding (NASDAQ:MORF), which was founded in 2014 by Harvard scientist-entrepreneur Tim Springer, represents an intriguing new investing opportunity. The company, which operates as Morphic Therapeutic, executed its initial public offering on June 27, pricing at $15 per share then opening at $18. The target has since floated up to near the $21 level.

For more information on Moderna, please visit their website by clicking here.


Subscribe to receive our free
Market Review Weekly


Equity Insider
Analyst Team


Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Equity Insider is a wholly-owned subsidiary of Market IQ Media Group, Inc. (“MIQ”). MIQ has been paid a fee for Oncolytics Biotech Inc. advertising and digital media from the company directly. There may be 3rd parties who may have shares of Oncolytics Biotech Inc., and may liquidate their shares which could have a negative effect on the price of the stock. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this publication as the basis for any investment decision. The owner/operator of MIQ own shares of Oncolytics Biotech Inc. which were purchased in the open market, and reserve the right to buy and sell, and will buy and sell shares of Oncolytics Biotech Inc. at any time without any further notice. We also expect further compensation as an ongoing digital media effort to increase visibility for the company, no further notice will be given, but let this disclaimer serve as notice that all material disseminated by MIQ has been approved by the above mentioned company; this is a paid advertisement, we currently own shares of Oncolytics Biotech Inc. and will buy and sell shares of the company in the open market, or through private placements, and/or other investment vehicles.
While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

5 Biotech Stocks to Buy for Blockbuster Potential

Biotechnology has boomed over the past few decades as our understanding of living organisms and the human machine has swelled. As a result, biotech stocks have become some of the most exciting growth plays on Wall Street.

And their potential to deliver sky-high returns is especially explosive when they’re developing a drug with blockbuster potential.

So how can you pinpoint biotech stocks with these kind of superstar drugs in the pipeline? We suggest turning to Wall Street’s pros.

Here are five promising biotech stocks to buy for their blockbuster-drug potential. The data below shows that all five stocks boast a “Strong Buy” consensus among the Wall Street analysts covering them, based on ratings given during the past three months.

Of the 5 Stocks mentioned below, we’ll start with our favorite, which also has the highest upside potential based on Analyst review (Over +500%), a stock that is still more-or-less under the radar and has massive upside potential, and potentially, the answer to breast cancer!


Trading Symbol: NASDAQ:ONCY
Median Price Target: $6.80 (516.18% upside potential)
Consensus Rating: Strong Buy

Oncolytics Biotech Inc. (NASDAQ:ONCY) (TSX:ONC) is a development stage biotech company developing an immuno-oncology virus (called pelareorep) that’s currently being studied for potential combination with Opdivo® from Bristol-Myers Squibb Company (NYSE:BMY), Roche’s Tecentriq, Pfizer’s & Merck KGaA’s Bavencio, as well as Keytruda® from Merck & Co., Inc. (NYSE:MRK).

For a more detailed report on Oncolytics Biotech, USA News Group has some very in-depth coverage of the company that can be viewed here.


Trading Symbol: NASDAQ:DERM
Median Price Target: $19.00 (128.47% upside potential)
Consensus Rating: Strong Buy

Dermira (NASDAQ:DERM) develops therapies meant to improve the lives of the millions of people living with chronic skin conditions This includes hyperhidrosis (excessive sweating) and atopic dermatitis (a widespread condition that leads to severe, persistent itching)

For more information on Dermira, please visit their website by clicking here


Trading Symbol: NASDAQ:GBT
Median Price Target: $92.22 (64.62% upside potential)
Consensus Rating: Strong Buy

Global Blood Therapeutics (NASDAQ:GBT) is one of a few biotech stocks developing innovative treatments for rare blood diseases. Its lead candidate is voxelotor (GBT440), an oral, once-daily first-in-class breakthrough for the treatment of sickle cell disease (SCD).

For more information on Global Blood Therapeutics, please visit their website by clicking here.


Trading Symbol: NASDAQ:MRNA
Median Price Target: $31.00 (53.47% upside potential)
Consensus Rating: Strong Buy

Moderna (NASDAQ:MRNA) is pioneering a new approach to medicine. The company believes that messenger RNA (mRNA) can transform how medicines are discovered, developed and manufactured. Messenger RNA – sometimes dubbed “the software of life” – is the set of instructions by which cells make proteins and send them to various parts of the body. Moderna hopes to treat a broad spectrum of diseases that currently show limited treatment options.

For more information on Moderna, please visit their website by clicking here.


Trading Symbol: NASDAQ:MORF
Median Price Target: $30.00 (62.69% upside potential)
Consensus Rating: Strong Buy

Morphic Holding (NASDAQ:MORF), which was founded in 2014 by Harvard scientist-entrepreneur Tim Springer, represents an intriguing new investing opportunity. The company, which operates as Morphic Therapeutic, executed its initial public offering on June 27, pricing at $15 per share then opening at $18. The target has since floated up to near the $21 level.

For more information on Moderna, please visit their website by clicking here.


Subscribe to receive our free
Market Review Weekly


Equity Insider
Analyst Team


Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Equity Insider is a wholly-owned subsidiary of Market IQ Media Group, Inc. (“MIQ”). MIQ has been paid a fee for Oncolytics Biotech Inc. advertising and digital media from the company directly. There may be 3rd parties who may have shares of Oncolytics Biotech Inc., and may liquidate their shares which could have a negative effect on the price of the stock. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this publication as the basis for any investment decision. The owner/operator of MIQ own shares of Oncolytics Biotech Inc. which were purchased in the open market, and reserve the right to buy and sell, and will buy and sell shares of Oncolytics Biotech Inc. at any time without any further notice. We also expect further compensation as an ongoing digital media effort to increase visibility for the company, no further notice will be given, but let this disclaimer serve as notice that all material disseminated by MIQ has been approved by the above mentioned company; this is a paid advertisement, we currently own shares of Oncolytics Biotech Inc. and will buy and sell shares of the company in the open market, or through private placements, and/or other investment vehicles.
While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

Weekly Market Review – November 16, 2019

Stock Markets

In what is the longest streak in two years, U.S. stocks reached another all-time record high, gaining for the sixth straight week this week.  US-China trade negotiations remain fluid and, the possibility of a limited deal between the two countries has been the real power behind the month-long market rally. The news seems mixed with softer October retail sales and industrial production in China, but in the Eurozone, it turns out that GDP was better than expected. Even global manufacturing, which was in a slump, appears to be improving. That’s based on the global manufacturing Purchasing Manager’s Index which has now risen for three straight months. Analysts seem convinced that underlying fundamentals will still support the bull market for stocks, but they caution that they don’t expect the relatively low volatility to last forever.

U.S. Economy

Although Washington is going through a lot of turmoil and drama right now, it does not appear to have leaked onto Wall Street. Last week saw four new daily record highs reached which brings the total in 2019 so far to 22 new highs. The market appears to keep rising steadily and volatility has continued to sink. In fact, a full seven percent of the S&P 500’s rise that totaled 24% this year to date, has taken place in just the last six weeks. That appears to echo a growing optimism from the apparent progress in the US -China trade war, along with solid third-quarter corporate earnings, and the data indicates that the U.S. and global economies are not on a course to a sure recession. Offsetting that, the fluctuations in the stock market have been pretty mild, with the volatility index (or VIX index) which measures short-term volatility, falling to its lowest the lowest level in 2019. For these reasons, analysts don’t think the bull market is done moving up, but investors should still prepare for tougher markets than we’ve had since summer.

Metals and Mining

All of the precious metals were affected negatively again this week while the markets responded to growing hopes around a summation of the US-China trade deal. Gold tumbled on Friday as the sentiments pushed investors to renew their appetite for riskier assets, which immediately pushed gold lower. The US dollar got a boost when comments from White House officials sparked belief that they may be close to a deal and that there may be an end nearing in the battle over trade. However, gold appears primed to make gains for the week. Any serious declines are likely to be contained until official word of a confirmed deal is sealed. In 2019, gold has been largely supported by the trade war, which has fueled gains of over 14 percent as disputes between two of the world’s largest economies caused turmoil in the markets and sustained investors concerned over a global slowing of economies. Silver also headed downward on Friday, but, much like its counterpart gold, made marginal gains for the week. Silver got bumped as its safe haven appeal declined. The uncertainty of an actual trade agreement coming to a final broad agreement has many industry experts suggesting silver will rebound. In other precious metals sectors, platinum was able to offset gold and silvers’ trends, with small gains of just under 0.6 percent on Friday. Things were not so rosy for palladium, which fell 0.64 percent by Friday morning. That decline was relatively marginal since palladium is still supported by the same factors that helped it break records last month. Palladium is a true star in 2019, gaining over 40 percent, with its significant increases attributed largely to stricter environmental regulations around car emissions that use the metal in pollution control devices.

Energy and Oil

This was a big week for oil market data and projections as both OPEC and the IEA released some key reports for the industry. Even with this spurt of new data, oil closed out the week with virtually no change the previous week. In terms of volatility things were mostly quiet with the U.S.-China trade war hanging over all oil market indexes. Weak demand and rising non-OPEC supply presents a “major challenge” to OPEC next year, according to a new report from the IEA. The agency said that non-OPEC supply could grow by 2.3 mb/d in 2020, higher than the 1.8 mb/d this year. The other news that resounded was reports that offshore oil production could hit a peak in 2020 before heading into decline. After supply additions next year, a bunch of new projects go forward, according to a Sanford Bernstein Report just out. Natural gas spot prices fell at most locations this week. Henry Hub spot prices fell from $2.78 per million British thermal units (MMBtu) last week to $2.62/MMBtu this week. At the New York Mercantile Exchange (Nymex), the price of the December 2019 contract decreased 23¢, from $2.828/MMBtu last week to $2.600/MMBtu this week. The price of the 12-month strip averaging December 2019 through November 2020 futures contracts declined 8¢/MMBtu to $2.487/MMBtu.

World Markets

In Europe, the equity markets were mostly higher again this week, led by support for a U.S.-China trade deal that paired with continued strength in U.S. stocks. The pan-European STOXX Europe 600 Index gained 0.2%, and the German DAX rose 0.08%, while the UK’s FTSE 100 Index dropped about 1%. The latest data out of Germany showed the economy there avoided recession, but just technically, growing 0.1% in the third quarter. No question Germany’s manufacturing sector has been dampened by the U.S.-China trade dispute, Brexit uncertainty, and a disruption in its auto industry. The manufacturing recession has not spilled into the services sector so far. The EU Statistics office reported that the eurozone economy grew at 0.2% over the previous quarter for a total 1.2% in 2019. The UK also managed to avoid recession, but the economy there grew at its slowest annual rate in the last decade. The UK economy grew a total of 1% in the last quarter.

Chinese stocks recorded a weekly decline as a group of weak results reinforced the U.S.-China trade war’s impact on the economy. The talks over a partial “phase one” trade deal appear to be dragging on with no firm commitment to set a quick end the dispute. The benchmark Shanghai Composite Index lost 2.5%, its largest weekly decline since September, and the large-cap CSI 300 Index, fell 2.4%. Evidence of China’s slowing economy appeared on Thursday, when the government reported disappointing data for three key areas: industrial output, retail sales, and fixed-asset investment. Industrial output and retail sales which were showing strength also grew less than expected for October.

The Week Ahead

Relevant economic data to be released this week include housing starts, the leading economic index, housing starts, Markit Manufacturing Index and consumer sentiment on Friday. A few last retailers are still scheduled to report quarterly earnings results next week.

Key Topics to Watch

  • Home builders’ index 
  • Housing starts
  • Building permits
  • Advance services                     
  • FOMC minutes                                                
  • Weekly jobless claims
  • Philly Fed index
  • Existing home sales
  • Leading economic indicators
  • Markit manufacturing PMI (flash)
  • Markit services PMI (flash)
  • Consumer sentiment index

Markets Index Wrap Up

Weekly Market Review – November 9, 2019

Stock Markets

U.S. stocks extended recent gains this week, ending higher for the fifth week in a row. The continued signs of progress with U.S.-China trade negotiations accompanied by better-than-expected corporate earnings for the season, have helped ease the fears of recession for the whole month and moved investor sentiment into the positive zone. Treasury yields climbed to their highest level in three months this week on the backs of stabilizing global growth. There remain many uncertainties where trade is concerned, but earnings are projected to bottom out this year and then reaccelerate in 2010 to a possible mid-single-digit pace. That’s a real positive for investors. Analysts are suggesting this sets the stage for moderate returns in a bull market that is welcomed in November.

U.S. Economy

There are several issues dominating the market recently, including the trade issues, political battles consuming Washington, Fed rate shifts, and broader geopolitical uncertainties. The more fundamental drivers have taken the lead on this recently, namely corporate earnings results. These are driving to the markets to new all-time highs and continue to be the focus. 

Already, about 90% of S&P 500 companies have reported results, indicating that the third-quarter earnings season is about to close. It looks as though corporate profits are on track to register just a meager decline when compared with a year ago. But in the bigger picture, the results have been better than expected, mostly as a result of the latest signs of progress on trade negotiations, which clearly pushed the markets to new highs.

Metals and Mining

Gold prices tumbled Friday as hopes surrounding US-China trade talks caused the dollar to gain momentum and pushed gold down as a result. The US dollar began moving upwards when news broke that China and the US had agreed to roll back tariffs as part of a potential deal to end their ongoing trade war. Even so, Gold continues to be supported by concerns that emerged as officials spoke out against giving up punitive tariffs. On the whole, gold has gained more than 14 percent in 2019, mainly as a direct result of fears about the trade war between the super giants. Gold is set for its largest weekly decline in two and a half years. Silver is slumping on the week and was also down about 6 percent by the end of Friday’s session — its biggest slump since October 2016. Like gold, silver is being pushed by the steady dollar, as investors pulled back. The other precious players, platinum and palladium, came down this week. Platinum lost over 1 percent on Friday and 5 percent for the week. Palladium’s decline was only marginal, as it remains supported by the same factors that helped it break records last week. Palladium is the real runner and has gained 43 percent since the beginning of the year.

Energy and Oil

Oil prices fell back on Friday as traders awaited more backing that the U.S.-China trade deal will become a reality. From the news reports this week, it is expected that both sides would lower tariffs as part of the phase one agreement. Unfortunately, the deal has been moved to a December completion. In following the news, oil demand growth remained weak in the short term, stemming from slow progress on the US-China trade war, and from long-term growth of alternative transportation methods, which are gaining steam. OPEC unhappily is projecting oil demand growth of about 1 million b/d this year. However, the International Energy Agency predicted oil demand would grow by just 0.25 million b/d a year on average post-2025. Natural gas spot prices rose at most locations this week. The Henry Hub spot price rose from $2.67/MMBtu last week to $2.78/MMBtu this week. At the New York Mercantile Exchange (Nymex), the price of the December 2019 contract increased 14¢, from $2.691/MMBtu last week to $2.828/MMBtu this week. The price of the 12-month strip averaging December 2019 through November 2020 futures contracts climbed 7¢/MMBtu to $2.567/MMBtu.

World Markets

Markets in in Europe remained mostly higher this week following suit with the rally on Wall Street fueled by optimism about a U.S.-China trade deal, and for the most part, solid corporate earnings reports. The pan-European STOXX Europe 600 Index rose for the fifth week in a row, gaining about 1.4%. The German DAX rose about 2%, while the UK’s FTSE 100 Index gained about 0.8%.

As the earnings season slows down, it’s worth noting that of the 80% of the STOXX 600 that have reported numbers, 50% of the companies have surpassed consensus estimates on both the topline and bottom line. That is the highest level in the last six quarters. Of the winners, health care and basic materials sectors have surpassed the most on earnings per share; utilities and consumer goods followed the leaders. The International Monetary Fund (IMF) said that the eurozone is likely to grow less than expected in 2019. It claims the recession in manufacturing sector could spill into the services sector. The IMF forecast is down from its April estimate of 1.3% to a new 1.2%. That comes after expansion in 2018 of 1.96%. The IMF attributes the slowdown mostly to slow growth in Germany, which is the eurozone’s largest economy. It was also hobbled by stagnation in Italy. In Germany, exports rose a higher-than-expected 1.5% in September after adjusting for seasonal and calendar effects.

In China, stocks advanced for the week based on hopes that a comprehensive U.S.-China trade would emerge following news that both sides agreed to roll back tariffs on each other’s goods as part of a phase one trade deal. For the week, the benchmark Shanghai Composite Index edged up 0.2%, and the large-cap CSI 300 Index, rose 0.5%. Both indexes fell Friday as Beijing and Washington sent mixed messages about the likelihood of an imminent breakthrough. In any case, news of a plan to remove tariffs in stages was strong enough to raise sentiment, since investors appear to have embraced it as a sign of de-escalation in the U.S.-China trade war and a boost to the global economy.

The Week Ahead

Only about 10% of the S&P 500 companies will report earnings as the earnings season comes to an end this week. Bond markets are closed on Monday in observance of Veteran’s Day. The significant economic data rolling out this week includes inflation numbers, the Consumer Price Index, Householder Debt and on Friday, the industrial production and retail sales figures.

Key Topics to Watch

  • NFIB small-business index
  • Consumer price index
  • Core CPI
  • Household debt
  • Nel Kashkari speaks                                        
  • Federal budget
  • Weekly jobless claims
  • Producer price index
  • Retail sales
  • Retail sales ex-autos
  • Import prices ex-fuel
  • Empire state index
  • Industrial production
  • Capacity utilization
  • Business inventories

Markets Index Wrap Up

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