In today’s briefing:
- Oil and Gas Weather Black Monday Storm Relatively Unscathed
- Wheat, Corn and Soy Remain Insulated From Global Shakedown
- Oil & Gas Giants Hit by Recession-Driven Sell-Off but Outperform the S&P 500
- Japan: Normalizing Interest Rates as Nominal GDP Surges, Ending Deflation Era
- Champion Iron Q1 2025: Inline, High-Grade Iron Ore on Critical Minerals List in Canada
- CX Daily: How to Better Protect Procedural Justice for Criminal Suspects in China
Oil and Gas Weather Black Monday Storm Relatively Unscathed
- Crude oil prices ended Monday lower but fell less than other commodities and equities. WTI dropped 0.79% and Brent fell 0.66%, while the S&P 500 declined 3%.
- Crude oil prices were supported by rising Middle East tensions, the shutdown of Libya’s largest oil field, and a sharp decline in the DXY.
- Henry Hub futures fell 1.27% due to surplus stockpiles, cooler US weather forecasts, and the impact of Hurricane Debby.
Wheat, Corn and Soy Remain Insulated From Global Shakedown
- Wheat, Corn and Soy gained on Monday even as US indices and commodities tumbled over recession woes.
- Weaker dollar supports stronger US exports of agri-commodities. Grains and oilseeds rise as dollar weakens.
- Technical indicators and fundamental outlook remains bearish for agri-commoties. IV remains subdued at multi-month lows.
Oil & Gas Giants Hit by Recession-Driven Sell-Off but Outperform the S&P 500
- The milder drop in crude oil prices was reflected in energy stocks on Monday, with most major oil and gas companies, outperforming the S&P 500.
- Most of the oil companies’ volume PCR was elevated on Monday and Friday, with Haliburton’s volume PCR exceptionally high at 3.66 on Monday (5/Aug).
- On 5/Aug, all major energy companies saw a rise in implied volatility due to recession fears, except Shell, whose IV dropped slightly to 20.01% from 20.28% on Friday.
Japan: Normalizing Interest Rates as Nominal GDP Surges, Ending Deflation Era
- With nominal GDP growing 6%YoY in the latest 3 quarters, Japanese interest rates will be gradually normalized. The JPY rebound, however, precludes the need for rapid BoJ hikes.
- Unwinding of Yen carry-trades should take JPY to ¥125/US$ by end-2024, which will contribute to tightening monetary conditions sufficiently, further slowing inflation (from 2.85%YoY in May-Jun’24).
- Appreciating JPY is bad for Japanese equities, so stay Underweight, with a defensive portfolio comprising utilities, pharmaceuticals and consumer staples.
Champion Iron Q1 2025: Inline, High-Grade Iron Ore on Critical Minerals List in Canada
- Champion Iron (CIA AU) reported an inline Q1 FY25, with revenue/earnings up 57%/308% YoY owing to a 34% YoY volume increase and better pricing.
- The company reiterated its guidance for 15 million tons of production and equivalent sales. It is working on improving logistics after forest fires and other port/rail issues.
- The stock trades at 8.5x PE and a 6% dividend yield for FY25e ( assuming iron ore prices of USD 108/ton with a 15 USD/ton premium on 65% Fe).
CX Daily: How to Better Protect Procedural Justice for Criminal Suspects in China
- Law / In Depth: How to better protect procedural justice for criminal suspects in China
- Default /: State-backed leasing firm misses $55.9 million bond payment
- Corruption /: Former boss of Shanghai’s state-owned conglomerate tried for embezzlement and bribery
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