Stocks and Securities
Dow futures started the day down more than 100 points on Wednesday, as global equities sold off on revived fears about a full-scale U.S-China trade war, with investors worried about how Beijing will respond to U.S. President Donald Trump’s policy moves. Sign of renewed nerves over trade tensions, as U.S. President Trump continues to promote his protectionist policies, though he did back off on some threats on Chinese investment in technology. China’s Ministry of Commerce said Wednesday that is closely watching the U.S.’s plan to restrict Chinese investment as trade hostilities escalate. Futures turned green as Trump stated that he would protect U.S. technology from “China stealing it”.[finviz ticker=SPY width=400] [finviz ticker=IYY width=400] [finviz ticker=QQQE width=400] [finviz ticker=IWM width=400]
The biggest fear to the U.S. marked is that the People’s Bank of China is ready to refrain from buying U.S. Treasury’s, or even cut its purchases. This could put upward pressure on bond yields in at a time when the U.S. government is facing mounting refinancing on its 2-10 year government debt. To stem some of the pressure, the Federal Reserve could cut the number of interest-rate hikes in its current tightening cycle, stirring a rally in bonds. Though a few members of the Fed’s policy-setting committee have insisted trade uncertainty won’t stop the central bank from following through with its gradual rate hikes, other members have started to hint at refraining until some sort of trade war resolution emerge. As a result we highlight our recent yield pick, Annaly Capital (NLY) [stock_quote symbol=”NLY”], below which trades ex-dividend tomorrow.
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We nailed the Oil call right on the head yesterday. US crude futures increased 0.4% on Wednesday to trade at $70.80 per barrel [stock_quote symbol=”WTI”].Thus, our Daily Stock on the Radar, Anadarko Petroleum [stock_quote symbol=”APC”] made significant moves throughout yesterday’s trading session. Prices jumped by over 3.5% on Tuesday after the US State Department said it expects all countries to end imports of Iranian oil by November 4. The news suggests the Trump administration is holding a hard line as it withdraws from the 2015 Iran nuclear agreement under which Iran rolled back its nuclear program in exchange for broad sanctions relief. Although, the Saudi Arabia has stated that it is its number one priority to avoid a situation such as that of 2007 – 2008 where we saw crude oil rise o $150 / barrel, experts suggest that $100 / barrel could be a possibility. This could do well for APC. US crude inventories will be released at 10:30 a.m. ET. We would use any pullback in prices to add to our recent “Morning Coffee” pick Anadarko Petroleum (APC) [stock_quote symbol=”APC”].
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Blockchain and cryptocurrency
Yesterday we wrote a piece titled: Technical Analysis: Bitcoin Price Action and Prediction, and it seems that Bitcoin continues to trade within range of what we expected. Facebook has stated that they will continue with their ban on Cryptocurrency ads. Bloomberg noted that according to Finder.com, over 80% of the cryptocurrencies decreased in price in the last seven days. Finder.com stated that Tokens fell 19% on average. Trading volume has been decreasing as well, having declined 6% from the previous week. This is something that we have noted over and over again in our Morning Coffee segments and our last article highlighted above. One of the biggest drivers of price action is volume, whether on the sell or buy side.
Tether recently announced that they have issued 250m tokens – about $250m USD. Some, including the founder of LTC, Charlie Lee, believes that this could be bullish sign for Bitcoin. In a recent tweet, he stated that issuance of Tether Tokens generally corresponds with an increase in the price of Bitcoin. Well he is right. The last time this happened, the price of Bitcoin went up about $300, and then it continued on its downward trend.
Andressen Horowitz and his team – The Sillicon Valley Venture Capital (VC) firm – stated that they will be launching a $300m USD cryptocurrency fund. In an open letter, in which they introduced a16z crypto – the name of the fund – they stated that they plan to hold these assets longterm. They plan to hold these assets for 10+ years. This is an interesting concept. The space certainly needs more longterm investors that are willing to support growth and are willing to give these projects time to develop. The current market sentiment is still very much “When moon?” and “When lambo?”. This may be the reason why Apple co-founder and noted bitcoin bull Steve Wozniak recently stated that the hype around blockchain is similar to what he saw around the dotcom era. His main concern was the fact that companies are going belly-up at a rapid rate, leaving investors with nothing to show for.
Bitcoin continues to stay within range. The price has not moved significantly since our publication of our previous report. We will post another update today, so please look forward to that. However, it is imperative to note that our bearish sentiment continues to stand.
Ethereum is up slightly this morning, however, looking at the chart in comparison to the Bitcoin chart, you can see that where Bitcoin goes, as does Ethereum. Therefore, our sentiment continues to be bearish for Ethereum as well.
Stocks on the radar overview
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Stocks on the Radar
Anadarko Petroleum Corporation (APC) [stock_quote symbol=”APC”] as stated above, operating primarily in the Delaware Basin in West Texas and New Mexico as well as in Northeast Colorado and the Gulf of Mexico. Anadarko currently produces approximately 643,000 barrels per day and expects that number to increase to an average of 658,000 to 685,000 barrels per day for the full year 2018. Having topped analyst estimates in the most recent quarter, reporting revenues of $3.045 billion and earnings of $0.52/share, the company is expected to earn $2.73/share in 2018. While oil prices may come down over the next few weeks, any period of strong global economic growth and uncertain foreign oil production, especially from Venezuela and Iran, should boost prices later this year and steady growing U.S production should place Anadarko Petroleum as a top beneficiary in the oil sector. US crude inventories will be released at 10:30 a.m. ET. We would use any pullback in prices to add to our recent “Morning Coffee” pick Anadarko Petroleum (APC) .
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Annaly Capital Management (NLY) [stock_quote symbol=”NLY”] – With U.S. equities under significant pressure this morning we decided to look at a yield play in Annaly Capital Management. As a REIT, Annaly must distribute at least 90% of its taxable income to shareholders to qualify for pass-through tax treatment. If it does so, then Annaly doesn’t have to pay corporate income taxes on its earnings. The reason that an otherwise company like Annaly hits our radar stems from the size of its dividend payout. At present, shares of Annaly yield 11.4%. That’s almost six times greater than the 1.8% yield on the S&P 500. In addition to the dividend, NLY trades at a slight discount to its book value which could lend support to its share price during turbulent equity markets.
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Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. The Author does not hold any of the securities discussed above.
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