Stocks and Securities
Dow futures climbed roughly 100 points on Monday, taking a cue off a global rally for stocks overnight as investors took a break from trade-focused worries and remained encouraged by last week’s upbeat U.S. jobs report.
Oil prices continued to move modestly higher on Monday as an increase in U.S. drilling, likely to lead to higher shale production, balanced evidence of tightening supply. Benchmark Brent was up 40 cents at $77.51 a barrel. U.S. crude was down 30 cents at $73.50.
Last week’s price movement indicates the market appears to have absorbed the recent announcement that an OPEC-led group and Russia will raise output by about 1 million bpd. Most of the rally has been fuelled by supply disruptions in Canada, Venezuela and Libya as well as the sanctions against Iran.
Most shocking news in the oil patch is a fresh call by Bank of America which estimated that zero Iran exports could push oil up by $50 a barrel if Saudi Arabia caps out. We continue to recommend Anadarko Petroleum (APC) as a result.
Tencent (TCEHY) one of China’s biggest tech companies, said in a statement Sunday that it was planning to list its music streaming business in the United States. It didn’t provide a time line or details on the size of the proposed stock offering, but recent reports have suggested an IPO could value Tencent Music at more than $30 billion, putting it on a par with one of our latest “Radar” picks Spotify (SPOT).
In terms of what is on our “Stocks on the Radar” this morning…we are still buyers of technology. Most notable Netflix (NFLX) which is up 1.8% in pre-market trade. Subscriber growth is accelerating: Despite price increases (14% rise in ASP) Netflix set a record for growth in Q1, with net adds growing 50% and we expect them to post similar growth for Q2.
We also like Amazon (AMZN). When you look at the kind of growth that Amazon is posting, particularly in their AWS (Amazon Web Services) business, which is over half the value of the company, there’s a lot of potential for upside to the current stock price as estimates in that business are raised. Additionally, in-light of the joint venture to lower healthcare costs, Dr. Atul Gawande officially starts Monday as CEO of the J.P. Morgan-Berkshire Hathaway-Amazon venture. This could prove to be a positive catalyst for both Amazon and our other pick Teva Pharmaceutical Inc. (TEVA).
Blockchain and cryptocurrency
Bitcoin (BTC) and Ethereum (ETH) both had a better than expected weekend. The Market capitalization increased from $268B to $273B USD (an increase of just about 2%). The 24hr volume of $11.5B is significantly lower than Friday’s $16.6B. BTC dominance of 42.5% remains unchanged.
The Securities Exchange Commission (SEC) has indicated that they have received an application from Cboe Global Markets for a Bitcoin ETF. This positive news for the Bitcoin (BTC) bulls as it indicates another potential route for institutional investors and big money to come into the cryptospace. Although, there has been many such applications that have been rejected by the SEC on the basis of how unregulated the space is. We will continue to watch this development as it there seems to be some recent developing avenues for big money to find a safe route into cryptocurrency investing.
In addition to the above, during the recent G20 meeting, South Korea has agree to loosen its restrictions on cryptocurrencies and ICOs. The G20 are working diligently to come up with uniform rules and regulation so that they can all be on the same page as they approach a July deadline initially set.
According to The Korea Times, the Financial Services Commission (FSC), responsible for overseeing policies and who directs the Financial Supervisory Service (FSS), stated that they have revised guidelines relating to “all activities” of Korea’s leading cryptocurrency exchange operators.
“The FSC made revisions to its rules to apply strengthened policies in order to prevent or detect money laundering and illegal activities because the regulator isn’t opposed to cryptocurrencies…”
“Establishing unified rules is a complicated issue given the broader range of assessments between government agencies. This is why the country needs close international cooperation as it is still in the early stages of fine tuning guidelines…”
The main concern is the issue of money laundering that has been the main area of concern for the officials.
Additionally, the Bangko Sentral ng Pilipinas (BSP) recently stated that they approved the accreditation of two new virtual currency exchanges. This brings the total number of exchanges to a total of five.
Switzerland’s stock exchange – owned and managed by SIX – recently announced that it has begun to build a fully integrated trading, settlement and custody infrastructure for digital assest. SIX which is regulated as an operator of Financial Market Infrastructure (FMI) by Swiss Authorities, FINMA and the Swiss National Bank, has stated that it intends to take part in shaping the ‘digital asset ecosystem’. SIX Digital Exchange (“SDX”), will work with officials with the aim of meeting the appropriate standards of regulation.
Stocks on the Radar
Digibyte (DGB) – We are adding Digibyte ($DGB) to our list here. As a cryptocurrency, it has increased more than 100% in the last two weeks, however, we believe that it still has room to grow. They have created a superior alternative to Bitcoin, with more than 100,000 nodes, they plan to be a direct competition to PayPal and Western Union. Bitcoin’s average block-time is about 10-15min while DGB sits at about 10-15seconds. They also recently announced a partnership with UTRUST and there are rumours of Binance listing. We would suggest our readers to accumulate this coin on dips, as it may be one of the coins with exceptional returns within the next 12months. The next resistance level is 800sats (20%), 1000 (30%), with the ATH being about 2700 (75%).
Anadarko Petroleum Corporation (APC) released news stated that they have added a $1B USD to their repurchase program in addition to a $500m USD increase to its debt-reduction program. Read more about APC here.
Netflix Inc. (NFLX) with accelerating Subscriber despite price increases (14% rise in ASP) Netflix set a record for growth in Q1, with net adds growing 50% and we expect them to post similar growth for Q2.
Amazon Inc. (AMZN) has a lot of potential for upside to the current stock price as estimates in that business are raised.
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