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Jumat, 13 September 2019

Top 5 Things to Know in the Market on Friday - Investing.com

Investing.com -- Stocks are within touching distance of new all-time highs after China stoked hopes of a trade deal with the U.S. Meanwhile, sterling is at a two-month high as Brexit risks recede, and WeWork's IPO is back on the road. Here's what you need to know in financial markets on Friday, 13th September.

1. China encourages trade hopes

China indirectly encouraged hopes of trade détente with the U.S., as Global Times editor Hu Xijin suggested via Twitter that the Chinese government is leaning on agricultural buyers to of U.S. soybeans and pork.

Hu’s tweets aren’t government policy but have been a reasonably reliable indicator of Chinese thinking on trade in recent months, reflecting the Global Times’s status as a vehicle for Chinese Communist Party thought.

2The news came after President Donald Trump tried to downplay a Bloomberg report on Thursday suggesting that he was prepared to offer a temporary truce, delaying or even rolling back some U.S. tariffs on Chinese goods. Trump told reporters he would “rather get the whole deal done."

2. Stocks close in on all-time highs

The increasing signs of a thaw between the U.S. and China have sent stock markets back to within touching distance of all-time highs.

By 5:45 AM ET, were up 94 points or 0.3%, while and were also both up 0.3%, the S&P contract less than half a percent away from its record high.

The risk-on move found its mirror image in the dollar and in Treasury bond yields. The benchmark note yield rose to 1.80%, its highest in over a month and a comfortable seven basis points above the benchmark. The dollar, meanwhile, fell against the , and offshore

3. Sterling hits highest since July

The rose to its highest in nearly two months overnight, after a newspaper report gave fresh impetus to hopes that a disorderly “no-deal” Brexit will be avoided on Oct. 31.

The Times of London reported that the Northern Irish Democratic Unionist Party had effectively dropped its opposition to a plan that would leave much of its economy subject to EU rather than U.K. regulation after Brexit, something that gives Prime Minister Boris Johnson more room to work out a compromise on the issue with EU negotiators. The DUP’s leader in the House of Commons later denied the report, however.

The pound, which has traded almost exclusively on Brexit risk in recent weeks, rose above $1.24 for the first time since late July and was up 1% against the dollar at $1.2453 by 5:50 AM.

4. Michigan Consumer Sentiment due

The University of Michigan’s survey at 10 AM ET leads a relatively light day for U.S. economic data. The survey comes a day after the index hit its highest level in 2019 – rising 2.4% year-on-year – in a development that gives ammunition to those arguing against aggressive action from the Federal Reserve next week.

Investing.com’s suggests markets no longer view a rate cut next week as a certainty. The implicit probability of action has fallen to 87% from over 92% a week ago.

Federal Reseve Chairman Jerome Powell has argued that uncertainty over trade policy is among the biggest drags on the U.S. economy at present. Any moves to lift that uncertainty would, by that logic, weaken the case for easing.

5. WeWork gets IPO back on the road, WSJ says

WeWork’s parent company is set to begin its IPO marketing next week after agreeing to concessions to outside investors on governance issues, the Wall Street Journal reported.

We Company, as it’s known, intends to list on the Nasdaq, the WSJ added. There was no further update as regards the prospective valuation, which various reports has been slashed from $47 billion to less than $20 billion in recent weeks.

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2019-09-13 10:54:00Z
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Palace Revolt at the ECB, Legitimacy of Policy out the Window - WOLF STREET

Draghi’s desperate shenanigans thicken.

ECB President Mario Draghi, who is on his way out, will, as we’re learning more and more, do anything to push his agenda and make it stick at the ECB long after he leaves, but whatever his agenda may be, it’s clearly unrelated to the European economy which has been buckling under the consequences of his agenda: the destructive weight of negative interest rates and QE. And in the process, he is destroying the legitimacy of the ECB’s policy.

The latest incident was on Thursday. During the press conference following the ECB’s policy meeting, he lied to reporters, claiming that the “consensus was so broad there was no need to take a vote,” when in fact he had a revolt on his hand during the meeting by the presidents of the national central banks that represented half of the economy of the Eurozone, and by members of the Executive Board.

Among the key policy changes the ECB announced on Thursday was the restart of QE to the tune of €20 billion a month and a tiny 10-basis point cut in its deposit rate, from the old negative -0.4% to the new negative -0.5%.

The announcement also included a provision to help banks – which have been getting re-crushed by these idiotic negative interest rates – to survive those negative interest rates: the ECB would exempt part of the banks’ deposits at the ECB from negative rates in a two-tier system.

It was the QE portion of the decision that had triggered the unprecedented revolt during the meeting. “Officials with knowledge of the matter” told Bloomberg that during the contentious meeting, the members of the Governing Council and of the Executive Board who vigorously opposed the restart of QE included but was not limited to:

Jens Weidmann, President of the Bundesbank
Francois Villeroy de Galhau, Governor of the Bank of France
Klaas Knot, President of the Dutch central bank
Ewald Nowotny, Governor of the Austrian central bank
Ardo Hansson, Governor of the Bank of Estonia
Sabine Lautenschlaeger, Member of the Executive Board
Benoit Coeure, Member of the Executive Board

The countries of the five heads of the national central banks, from Weidmann to Hansson, account for about half of the economy of the Eurozone.

They opposed the restart of QE, but there was no vote – which is common in ECB proceedings when there is a consensus. But there was no consensus. And Draghi simply imposed his agenda.

“Such disagreement over a major monetary policy measure has never been seen during Draghi’s eight-year tenure,” according to Bloomberg’s sources.

Among the key reasons cited against relaunching QE now, according to the sources, was that there is no emergency, and it’s better to save QE for an emergency, such as some big turmoil in the Eurozone following a no-deal Brexit.

Nevertheless, during the press conference after the contentious meeting, Draghi lied to reporters about it, when he told them ridiculously:

“There was more diversity of views on APP [asset purchase program]. But then, in the end, a consensus was so broad there was no need to take a vote. So the decision in the end showed a very broad consensus. As I said, there was no need to take a vote. There was such a clear majority.”

But this wasn’t the first time that Draghi was exposed as having lied blatantly about what had transpired during the policy meeting.

In a speech in June about an unrelated historical topic he said that “additional stimulus will be required,” in form of “further cuts in policy interest rates” and additional bond purchases, and that “all these options were raised and discussed at our last meeting.”

But those were blatant lies too. Sources who were part of the ECB’s June meeting told Reuters that no such options were discussed. Draghi had simply sallied forth on his own, pushing his agenda, and trying to force the ECB’s hand [read… No, Rate Cuts Were Not Discussed: ECB Insiders Out Draghi as Fabricator & Schemer, and Talk to Reuters]

The fact that both of these blatant and manipulative lies – concerning the Thursday meeting and concerning the June meeting – were leaked at all indicates that internally within the ECB, Draghi is going down in flames and that the revolters are offering tidbits of his shenanigans up for public consumption, even as he’s trying to force the ECB on a track it cannot get off after he leaves.

The ECB already has two mega-problems on its hand: Acknowledging that negative interest rates are a destructive experiment that is now blowing up into their faces and that they need to somehow back away from; and acknowledging that QE as standard monetary policy is an economic failure that creates all kinds of wild distortions – though it glued to Eurozone together by having prevented more sovereign defaults after Greece’s default, particularly a default by Italy.

But now the ECB has a third problem on its hand: The legitimacy of its policy decisions has been revealed to be a joke; and that this circus has become a one-man show driven by Draghi’s own agenda.

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2019-09-13 05:44:34Z
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Asian Markets Rise as Trump Considers Interim Trade Agreement with China - Investing.com

Investing.com - Asian markets rose in morning trade on Friday after U.S. President Donald Trump said he is considering an interim trade deal with China.

Hong Kong’s gained 0.3% by 10:30 PM ET (02:30 GMT).

Citing five unnamed person familiar with the matter, Bloomberg reported that the Trump administration officials are considering to offer a limited trade agreement to China that would delay and even roll back some U.S. tariffs.

The discussions are preliminary and Trump has yet to sign off on it, Bloomberg noted.

“A lot of people are talking about, and I see a lot of analysts are saying: an interim deal, meaning we’ll do pieces of it, the easy ones first,” Trump told reporters late Thursday. “But there’s no easy or hard. There’s a deal or there’s not a deal. But it’s something we would consider.”

The president added that he would preferred to “get the whole deal done,” but did not rule the possibility of an interim pact.

In-person negotiations between the two sides are set to take place in October in Washington.

Elsewhere, the European Central Bank (ECB) announced overnight a quantitative easing program that entails 20 billion euros per month. The central bank also cut its main deposit rate by 10 basis points to -0.5%, in line with market expectations.

The ECB will likely keep rates at present or lower levels until the inflation outlook “robustly converge to a level sufficiently close to but below 2% within its projection horizon, and such convergence has been persistent.”

“In view of the weakening economic outlook and the continued prominence of downside risk, governments with fiscal space should act in an effective and timely manner,” ECB President Mario Draghi said.

“In countries where public debt is high, governments need to pursue prudent policies that will create the conditions for automatic stabilizers to operate freely. All countries should reinforce their efforts to achieve a more growth-friendly composition of public finances,” he added.

Japan’s traded 0.9% higher.

Down under, Australia’s inched up 0.1%.

Markets in China and South Korea are closed for holidays.

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2019-09-13 03:35:00Z
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Kamis, 12 September 2019

Silver Gains Ground, CPI Slips - FX Empire

Silver has gained ground on Thursday. In the North American session, XAG/USD is trading at $18.33, up 1.2% on the day. These are the strongest gains we’ve seen in a week and could signal a breakout for the metal.

CPI Within Expectations, Retail Sales Next

Silver has shown considerable upward movement on Thursday. Will this trend continue? That could well depend on investor reaction to U.S. inflation and retail sales reports for August. On Thursday, inflation releases were mixed. CPI slipped to 0.1%, down from 0.3%. Still the headline release matched the estimate. Core CPI remained steady at 0.3%, edging above the estimate of 0.2%.

We’ll get a look at consumer spending on Friday, with the release of retail sales reports of August. The markets are bracing for soft numbers. Retail sales are expected to drop to 0.2%, down from 0.7% a month earlier. The core release is forecast to slow to 0.1%, after a sparkling gain of 1.0% in July.

Safe Haven Status for Silver

Traders should keep in mind that investors have been treating silver as a save-haven asset (much like gold), and this stance has been especially notable over the past few months. Both commodities have benefited from escalating trade tensions between the U.S. and China, as well as the dovish stance of major central banks worldwide, especially the Federal Reserve. In a summer which saw plenty of turmoil in the markets, investors have snapped up silver, which has surged some 24% since June 1.

Technical Analysis

With the gains made on Thursday, silver is fast approaching an important resistance line at 18.60. If XAG/USD can break past this line, there is room for the pair to climb back into 19-territory. The next resistance line is at 19.50. On the downside, support has strengthened at the round number of 18.00.

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https://www.fxempire.com/forecasts/article/silver-gains-ground-cpi-slips-599830

2019-09-12 12:51:36Z
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European Central Bank launches new bond-buying program - CNBC

Mario Draghi, President of the European central Bank (ECB) attends a news conference on the outcome of the Governing Council meeting at the ECB headquarters in Frankfurt, Germany, March 7, 2019.

Kai Pfaffenbach | Reuters

The European Central Bank (ECB) announced a massive new bond-buying program Thursday in a bid to stimulate the ailing euro zone economy.

The central bank's quantitative easing (QE) program will entail 20 billion euros ($21.9 billion) per month of net asset purchases for as long as it deems necessary.

The ECB also cut its main deposit rate by 10 basis points to -0.5%, a record low but in line with market expectations.

It now expects interest rates to remain at their present or lower levels until it has seen its inflation outlook "robustly converge to a level sufficiently close to but below 2% within its projection horizon, and such convergence has been persistent."

In a press conference following the decision, ECB President Mario Draghi urged governments to take fiscal measures to supplement the central bank's monetary stimulus and reinvigorate the euro zone economy.

"In view of the weakening economic outlook and the continued prominence of downside risk, governments with fiscal space should act in an effective and timely manner," Draghi said.

"In countries where public debt is high, governments need to pursue prudent policies that will create the conditions for automatic stabilizers to operate freely. All countries should reinforce their efforts to achieve a more growth-friendly composition of public finances," he added.

Additionally, the ECB changed its TLTRO (targeted long-term refinancing operations) rate to provide more favorable bank lending conditions and match that of its refinancing rate, erasing a previous 10 basis point spread.

A new system will see borrowers receive preferential rates if their eligible net lending exceeds a benchmark, providing an incentive for banks to use that money.

In line with market expectations, the ECB also introduced a two-tier rate system, a measure encouraged by the heads of various major European banks during the latest earnings season. The move is intended to alleviate some of the pressure of negative interest rates on the balance sheets of European banks, which have seen profits squeezed by the persistent low rate environment.

Draghi added in his press conference: "In order to support the bank-based transmission of monetary policy, the Governing Council decided to introduce a two-tier system for reserve remuneration, in which part of banks' holdings of excess liquidity will be exempt from the negative deposit facility rate."

'Draghi's final stunt'

Markets had widely expected some form of stimulus package, though hawks within the European Central Bank (ECB) Governing Council had moved in recent weeks to downplay the scale of the impending measures.

A slowing euro zone economy, persistent low inflation and the U.S.-China trade war had all pointed toward the central bank being forced to inject stimulus.

Recent economic data has not been promising, though the latest Purchasing Managers' Indexes (PMIs) had indicated some stability despite enduring industrial weakness.

This will be the second round of QE from the ECB, the first coming four years ago in response to the chaotic fallout of the euro zone sovereign debt crisis.

Outgoing President Mario Draghi will be hoping his final policy decision at the helm will help the bloc avoid a recession and get growth and inflation back on track.

Incoming replacement Christine Lagarde has already called for more fiscal stimulus to complement the ECB's policy.

ING Chief Economist Carsten Brzeski said in a note Thursday that "despite all market excitement now, the question remains whether this will be enough to get growth and inflation back on track as the real elephant in the room is fiscal policy."

"It is clear that without fiscal stimulus, Draghi's final stunt will not necessarily lead to a happy end," Brzeski added.

Market reaction

The pan-European Stoxx 600 index jumped 0.6% immediately after the first announcement, as markets reacted positively to ECB President Mario Draghi delivering on expectations of a "bazooka" stimulus package.

Euro zone bond yields tumbled and the euro weakened as a result of the new measures. Germany's benchmark 10-year bond yield tumbled 8 basis points to -0.64% while the euro slid back below $1.10.

European banking stocks plunged, however, giving back early gains to slip 0.9% below the flatline.

Artur Baluszynski, head of research at Henderson Rowe, said the ECB pushing rates further into negative territory is "essentially a tax on euro zone banks, and for the already weakened bank-financed economy like the euro zone, this move could spell more trouble."

"Also, with the Fed still being the tightest of the G-7 central banks, the eurodollar liquidity could come under pressure adding further stress to the increasingly challenged European banking system," he added.

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https://www.cnbc.com/2019/09/12/european-central-bank-launches-new-bond-buying-program.html

2019-09-12 13:10:17Z
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European Central Bank launches new bond-buying program - CNBC

Mario Draghi, President of the European central Bank (ECB) attends a news conference on the outcome of the Governing Council meeting at the ECB headquarters in Frankfurt, Germany, March 7, 2019.

Kai Pfaffenbach | Reuters

The European Central Bank (ECB) announced a massive new bond-buying program Thursday in a bid to stimulate the ailing euro zone economy.

The central bank's quantitative easing program will entail 20 billion euros ($21.9 billion) per month of net asset purchases for as long as it deems necessary.

The central bank also cut its main deposit rate by 10 basis points to -0.5%, a record low but in line with market expectations.

The ECB now expects interest rates to remain at their present or lower levels until it has seen its inflation outlook "robustly converge to a level sufficiently close to but below 2% within its projection horizon, and such convergence has been persistent."

A new system will see borrowers receive preferential rates if their eligible net lending exceeds a benchmark, providing an incentive for banks to use that money.

A slowing euro zone economy, persistent low inflation and the U.S.-China trade war had all pointed toward the central bank being forced to inject stimulus.

Recent economic data has not been promising, though the latest Purchasing Managers' Indexes (PMIs) had indicated some stability despite enduring industrial weakness.

Market reaction

Euro zone bond yields tumbled and the euro weakened as a result of the new measures. Germany's benchmark 10-year bond yield tumbled 8 basis points to -0.64% while the euro slid back below $1.10.

European banking stocks plunged, however, giving back early gains to slip 0.9% below the flatline.

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https://www.cnbc.com/2019/09/12/european-central-bank-launches-new-bond-buying-program.html

2019-09-12 11:47:09Z
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Aurora Cannabis: Are Its Q4 Results Good or Bad News? - Market Realist

Aurora Cannabis (ACB) is a prominent player in the cannabis industry. After Canopy Growth reported disastrous results last month and took a piece out of the cannabis sector, investors waited for Aurora Cannabis’s earnings. The company reported its fourth-quarter results on Wednesday after the market closed. Did the company impress investors?

Did Aurora Cannabis deliver as promised?

Aurora Cannabis generated a net revenue increase of 52% to 98.9 million Canadian dollars YoY (year-over-year) in the fourth quarter. The company missed its revenue guidance, which was 100 million–107 million Canadian dollars. The company also missed analysts’ estimate of 108.2 million Canadian dollars.

Aurora Cannabis didn’t deliver most of its promises when it increased the guidance. However, the results weren’t completely bad news.

Notably, the company’s net cannabis revenues were in line with the guidance. The revenues rose 61% sequentially to 94.6 million Canadian dollars. The company expected growth in all of its business segments. Canadian consumer cannabis revenues rose 52% to 44.9 Canadian dollars. Medical cannabis revenues also rose 10% to 29.7 million Canadian dollars. The company’s wholesale revenues were around 20.1 million Canadian dollars.

Aurora Cannabis expected an increase in the cash cost to produce per gram and gross margin. The gross margin on cannabis net revenues rose 3% to 58% sequentially. However, the cash cost to produce per gram fell 20% sequentially to 1.14 Canadian dollars per gram.

What drove the revenues and gross margin?

There was growth in all of the business segments in Aurora Cannabis’s fourth-quarter results. Notably, higher production capacity and supply from Aurora Sky and Aurora River drove the revenues. A decline in the cash cost to produce per gram drove the gross margin. A higher gross margin on bulk sales also drove the gross margin. The cannabis produced in the fourth quarter rose to 29,034 kilograms compared to 15,590 kilograms. Higher production capacity by the Aurora Sky, Aurora River, and Ridge facilities contributed to the increased production.

Did Aurora Cannabis’s profitability increase?

Aurora Cannabis expected to report a positive EBITDA. However, the company reported a negative EBITDA of 11.7 million Canadian dollars. The EBITDA was lower than analysts’ estimate of 19.5 million Canadian dollars and the EBITDA during the same period last year.

We know why a positive EBITDA is important for a company. Most of the cannabis players reported a negative EBITDA in their recent quarter, which implies that their operational costs are higher. The Canadian consumer channel continues to pose a challenge for Aurora Cannabis. The company is working with its regulatory and channel partners to streamline distribution to improve profitability.

Tilray might report a negative EBITDA of $17.5 million in the third quarter, which is lower than its EBITDA in the third quarter of 2018. The company might report a loss of $0.31 per share in the third quarter compared to a loss of $0.20 per share in the third quarter of 2018.

Canopy Growth (CGC) (WEED) reported a negative EBITDA of 92.06 million Canadian dollars in the first quarter of 2020. The company also reported wide losses of 0.30 Canadian dollars per share.

Aphria (APHA) reported a negative EBITDA of 0.2 million Canadian dollars in the fourth quarter. However, the company reported a profit of $0.05 per share in the fourth quarter.

Management’s view

For fiscal 2019, Aurora Cannabis’s revenues rose 349% to 247.9 million Canadian dollars. The gross margin also increased to 55% compared to 65% in 2018.

Talking about the results and outlook, Aurora Cannabis’s CFO, Glen Ibbott, said, “We continue to see strong growth in cannabis revenues in both medical and consumer categories. Our cultivation execution continues to drive production costs lower and improve gross margins. Aurora’s diversified product portfolio remains in demand with patients and consumers alike.”

Aurora Cannabis’s stock performance

Aurora Cannabis has gained 18%, while Aphria and Canopy Growth have gained 10.2% and 16.2% in September. The company closed 3.3% higher yesterday. However, Aurora Cannabis is trading 8.1% down in pre-market trading today.

The Horizons Marijuana Life Sciences ETF (HMMJ) has gained 6.7% in September. HMMJ tracks the North American cannabis industry. Tilray fell in August after its results. However, the company has increased 20% in September.

What’s the next step?

All of the cannabis companies are gearing up for Cannabis 2.0—the second phase of cannabis legalization in Canada. Cannabis 2.0 will legalize edibles, cannabis-infused beverages, extracts, and various other products. To learn more, read Cannabis 2.0 Legalization: Canada Is Ready.

Aurora Cannabis’s management said, “With the Canadian launch of derivative products in the coming months, we have made the necessary investments to ensure readiness and focus on a variety of value-added products. We are very excited to supply an expanded consumer market with premium cannabis and new product forms.”

Along with Canopy Growth, Tilray, Cronos Group, and other Canadian cannabis companies, Aurora Cannabis plans to expand its edibles business after legalization.

Aurora Cannabis plans to have a strong product lineup ready to launch in December. The company doesn’t expect increased revenues from the edibles business. However, the company is optimistic that the adjusted EBITDA could improve in the future due to higher revenue growth and an improvement in the gross margin. The company also plans to advance its hemp business in the US with the passing of the US Farm Act.

Cannabis industry

We know how important regulations are for the cannabis industry. I think cannabis players could benefit from federal marijuana legalization. Regulation violations hit the industry hard in the last few months. As a result, presidential candidates are pushing for legalization. Aurora Cannabis mentioned that it’s taking steps to ensure that its expansion in the US market meets state and federal laws. To learn more, read Cannabis: While the US Waits, the World Opens Up.

So far, September has been good for cannabis companies. Markets and analysts were optimistic about Aurora Cannabis’s results. Will the company’s results take a toll on the sector? The company will hold its earnings call today when the market opens.

We’ll provide an in-depth review of Aurora Cannabis’s fourth-quarter results after its earnings call.

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https://marketrealist.com/2019/09/aurora-cannabis-are-q4-results-good-bad-news/

2019-09-12 11:39:28Z
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