Founder & CEO. Oil markets macro-analysis., Vanda Insights

Vandana Hari

Founder & CEO. Oil markets macro-analysis.

Vanda Insights

Vanda Insights is a Singapore-based boutique provider of intelligence on the global energy markets, launched in September 2016. The venture was born out of a desire to extract the signal from the noise in the complex and often volatile oil markets. Our succinct and clear macro analysis is relied upon by thousands of readers globally, including those doing business directly or indirectly in the physical commodity and derivatives markets; wealth managers; governments, regulatory bodies and think-tanks; as well as trade organizations and educational institutions.

Global Energy Markets

Commodities

<p>Crude continued its breathless rally through the early part of last week, but ended with a sharp pullback on Friday. </p><p>We inspect the three “Fs” in crude’s spectacular 18% surge through February – fundamentals, financial markets and froth – to gauge of their influence in the coming days and weeks.</p><p>While the support from fundamentals looks solid, how might it be impacted by the OPEC/non-OPEC alliance's meeting on March 4 to decide on their production policy for April?</p><p>Plus: Our view on the oil market this year makes us sceptical of the chorus of calls for a "commodities super cycle". </p>

Crude continued its breathless rally through the early part of last week, but ended with a sharp pullback on Friday. We inspect the three “Fs” in crude’s spectacular 18% surge through February – fundamentals, financial markets and froth – to gauge of their influence in the coming days and weeks.While the support from fundamentals looks solid, how might it be impacted by the OPEC/non-OPEC alliance's meeting on March 4 to decide on their production policy for April?Plus: Our view on the oil market this year makes us sceptical of the chorus of calls for a "commodities super cycle". 

Weekly Oil Views: Crude's Incessant Rally Halts Just Before OPEC+ Meet. What Next?

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Cross Asset Strategy

<ul>
<li>Earlier this month we saw coverage of infrastructure &amp; clean energy themes surging across the media in anticipation of President Biden unveiling a large follow-on infrastructure plan beyond the original $1.9tr relief package</li>
<li>As the energy crisis unfolded in Texas, the infrastructure theme received an additional boost last week with particular focus on the potential for large-scale copper-intensive power grid upgrades given the extent of damage and degree of unpreparedness</li>
<li>In Q4, the PBOC tightening theme trended sharply higher on a wave of bond defaults and lingering fears on the Three Red Lines policy; though anticipation of a shift in monetary policy continues given re-pricing of global bond yields, our data suggests the theme has stabilized relative to peak momentum seen in November-December</li>
<li>DXY appears to be on the verge of resuming a downtrend; aggregate futures positioning has been unchanged for weeks, and our text-mining sees a sharp drop in the "strong USD" side of the diffusion despite the yield spike</li>
</ul>


Earlier this month we saw coverage of infrastructure &amp; clean energy themes surging across the media in anticipation of President Biden unveiling a large follow-on infrastructure plan beyond the original $1.9tr relief package
As the energy crisis unfolded in Texas, the infrastructure theme received an additional boost last week with particular focus on the potential for large-scale copper-intensive power grid upgrades given the extent of damage and degree of unpreparedness
In Q4, the PBOC tightening theme trended sharply higher on a wave of bond defaults and lingering fears on the Three Red Lines policy; though anticipation of a shift in monetary policy continues given re-pricing of global bond yields, our data suggests the theme has stabilized relative to peak momentum seen in November-December
DXY appears to be on the verge of resuming a downtrend; aggregate futures positioning has been unchanged for weeks, and our text-mining sees a sharp drop in the "strong USD" side of the diffusion despite the yield spike


TMI Snapshot: Texas Boost to Copper & Infra Themes, PBOC Tightening Theme Stable, USD Downtrend

<ul>
<li>Last month our text-mined indicators pointed to a year-end surge in raw materials restocking coupled with an extraordinary spike in general reporting on price increases globally</li>
<li>With a seasonal slowdown ahead of the Lunar New Year holiday and mobility restrictions, the restocking has faded; buildups in iron ore, steel and zinc inventories confirm a pause in momentum</li>
<li>Despite crowded positioning, copper maintained low beta to mining equities with a single-digit correction vs. the equities correcting closer to -10%; so far both remain near 50DMAs</li>
<li>Our text-mined copper sentiment indicator peaked at a multi-year high of +4.2x STDEVs on January 2, pulling back in recent weeks closer to neutral readings; however sharp, attribution finds the pullback is still primarily associated with pre-LNY seasonal slowdown and the relatively firm USD (as conviction levels on structural copper tightness remain high amid lean inventories)</li>
<li>Lithium sentiment stands out in the YTD, improving to +2x STDEVs on the lithium carbonate spot recovery and improving EV data points</li>
<li>Iron ore and steel diffusion indices have been dropping sharply in the YTD on falling utilization, building inventories and compressing mill margins, finally down to outright negative territory on first signs of vol in iron ore this week</li>
</ul><div class="content-highlight"><p>TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tool text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </p></div>


Last month our text-mined indicators pointed to a year-end surge in raw materials restocking coupled with an extraordinary spike in general reporting on price increases globally
With a seasonal slowdown ahead of the Lunar New Year holiday and mobility restrictions, the restocking has faded; buildups in iron ore, steel and zinc inventories confirm a pause in momentum
Despite crowded positioning, copper maintained low beta to mining equities with a single-digit correction vs. the equities correcting closer to -10%; so far both remain near 50DMAs
Our text-mined copper sentiment indicator peaked at a multi-year high of +4.2x STDEVs on January 2, pulling back in recent weeks closer to neutral readings; however sharp, attribution finds the pullback is still primarily associated with pre-LNY seasonal slowdown and the relatively firm USD (as conviction levels on structural copper tightness remain high amid lean inventories)
Lithium sentiment stands out in the YTD, improving to +2x STDEVs on the lithium carbonate spot recovery and improving EV data points
Iron ore and steel diffusion indices have been dropping sharply in the YTD on falling utilization, building inventories and compressing mill margins, finally down to outright negative territory on first signs of vol in iron ore this week
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tool text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Snapshot:  Metals Points - Restocking Pauses, Copper Sentiment Pulls Back from Extremes

<ul>
<li>Last month our text-mined indicators highlighted a notable raw materials restocking underway for the second time since August; this theme did not slow down throughout December, ending the month at a new high</li>
<li>Though with very little discernible impact on commodities, our indicators saw Chinese macro sentiment peak earlier in December at +3x STDEV with some momentum lost on the margin since, driven by below-consensus Chinese retail sales and home price readings, continuing in recent days on lower-than-expected NBS and Caixin PMI releases</li>
<li>In the context of USD weakness, a wildly inflationary mindset in markets and a general restocking, commodity optimism has not wavered </li>
<li>Our commodity sentiment indicators saw broader momentum in December, with already-surging copper momentum joined by crude, aluminum, uranium and nickel; iron ore and steel may be coming off the boil, but markets remain extraordinarily tight</li>
<li>Gold sentiment appears to have fully stabilized after the post-election risk-on shock</li>
</ul><div class="content-highlight"><p>TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </p></div>


Last month our text-mined indicators highlighted a notable raw materials restocking underway for the second time since August; this theme did not slow down throughout December, ending the month at a new high
Though with very little discernible impact on commodities, our indicators saw Chinese macro sentiment peak earlier in December at +3x STDEV with some momentum lost on the margin since, driven by below-consensus Chinese retail sales and home price readings, continuing in recent days on lower-than-expected NBS and Caixin PMI releases
In the context of USD weakness, a wildly inflationary mindset in markets and a general restocking, commodity optimism has not wavered 
Our commodity sentiment indicators saw broader momentum in December, with already-surging copper momentum joined by crude, aluminum, uranium and nickel; iron ore and steel may be coming off the boil, but markets remain extraordinarily tight
Gold sentiment appears to have fully stabilized after the post-election risk-on shock
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Indicators: Commodity Sentiment Review - Restocking On, But China Macro Momentum May Have Peaked

<ul>
<li>Our text-mining finds cyclicals sentiment momentum now up +3.3x STDEVs, highest in the history of our series and slightly above the highs we last saw in December '17</li>
<li>Defensives sentiment momentum bottomed in the first half of December at -1x STDEV, lowest reading since May, but has since recovered to marginally positive territory potentially aided by recent tech outperformance</li>
<li>In the past year, cyclicals sentiment has been &gt;80% correlated with Global Metals &amp; Materials, 68% correlated with Global Industrials, 35% correlated with Global Financials and uncorrelated with Global Energy</li>
<li>In December, only Global Metals appear to be strongly correlated with the surge in cyclicals sentiment as energy, financials and industrials performance has been flat; one explanation is the stark divergence in '21 estimate revision trends by sector, where materials analysts are struggling to catch up with surging metals prices vs. tepid industrials and energy revisions</li>
<li>Ironically, our copper sentiment indicator registered a +3x STDEV spike in November and remains elevated, preceding the final 2020 melt-up in cyclicals sentiment (as well as the move in copper); back-testing suggests trading MSCI Global Metals based on cyclicals sentiment outperforms a passive position, but trading based on copper sentiment would have generated superior returns - implying that getting the copper trade right is key to getting the overall cyclical trade right at this stage of the economic cycle</li>
<li>Do other cyclical sectors simply catch up with metals &amp; materials in Q1?  Industrials may hold the key to the next leg of cyclical recovery as the market looks through winter seasonality to improved operating leverage starting in Q2; investors may not be as forgiving in the short-term with energy, as long as mobility is depressed; but the promise of post-vaccine normalization remains compelling across the board</li>
</ul><div class="content-highlight"><p>TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </p></div>


Our text-mining finds cyclicals sentiment momentum now up +3.3x STDEVs, highest in the history of our series and slightly above the highs we last saw in December '17
Defensives sentiment momentum bottomed in the first half of December at -1x STDEV, lowest reading since May, but has since recovered to marginally positive territory potentially aided by recent tech outperformance
In the past year, cyclicals sentiment has been &gt;80% correlated with Global Metals &amp; Materials, 68% correlated with Global Industrials, 35% correlated with Global Financials and uncorrelated with Global Energy
In December, only Global Metals appear to be strongly correlated with the surge in cyclicals sentiment as energy, financials and industrials performance has been flat; one explanation is the stark divergence in '21 estimate revision trends by sector, where materials analysts are struggling to catch up with surging metals prices vs. tepid industrials and energy revisions
Ironically, our copper sentiment indicator registered a +3x STDEV spike in November and remains elevated, preceding the final 2020 melt-up in cyclicals sentiment (as well as the move in copper); back-testing suggests trading MSCI Global Metals based on cyclicals sentiment outperforms a passive position, but trading based on copper sentiment would have generated superior returns - implying that getting the copper trade right is key to getting the overall cyclical trade right at this stage of the economic cycle
Do other cyclical sectors simply catch up with metals &amp; materials in Q1?  Industrials may hold the key to the next leg of cyclical recovery as the market looks through winter seasonality to improved operating leverage starting in Q2; investors may not be as forgiving in the short-term with energy, as long as mobility is depressed; but the promise of post-vaccine normalization remains compelling across the board
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Snapshot:  Cyclicals Sentiment Melts Up into Year-End, Impact Concentrated in Materials Sector

United States

Copper is a chemical element with symbol Cu (from Latin: cuprum) and atomic number 29. It is a soft, malleable and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a reddish-orange color. It is used as a conductor of heat and electricity, as a building material and as a constituent of various metal alloys, such as Sterling silver used in jewelry, cupronickel used to make marine hardware and coins and constantan used in strain gauges and thermocouples for temperature measurement.

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Copper (COPPER COMDTY)

Weekly Oil Views: Crude's Incessant Rally Halts Just Before OPEC+ Meet. What Next?

Crude's breathless rally to fresh pre-Covid highs ended with a sharp pullback on Friday. All eyes will be on the OPEC+ meeting this week -- will...

Vandana Hari

TMI Snapshot: Texas Boost to Copper & Infra Themes, PBOC Tightening Theme Stable, USD Downtrend

Despite elevated momentum, the Texas energy crisis drove another boost to infrastructure themes with a focus on copper-intensive power grid...

Elan Gore

TMI Snapshot: Metals Points - Restocking Pauses, Copper Sentiment Pulls Back from Extremes

The year-end restocking trade has faded into the Lunar New Year, dragging on the reflation trade. Lithium sentiment is the only standout this...

Elan Gore

TMI Indicators: Commodity Sentiment Review - Restocking On, But China Macro Momentum May Have Peaked

TMI's commodity sentiment indicators saw improved breadth in December as restocking continues to drive reflation; but China macro momentum may have...

Elan Gore

TMI Snapshot: Cyclicals Sentiment Melts Up into Year-End, Impact Concentrated in Materials Sector

Our text-mining finds that cyclicals sentiment is surging into year-end. While a consensus theme, materials equities have benefited...

Elan Gore

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