David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Bets on July Fed Rate Cut Gain Momentum After U.S. Jobs Report

    This article by Susanne Barton, Katherine Greifeld and Liz Capo McCormick for Bloomberg may be of interest to subscribers. Here is a section:

    Bond traders’ conviction that the Federal Reserve will cut interest rates within months in response to a weakening growth outlook and escalating trade tensions firmed after a batch of weaker-than-expected U.S. jobs data.

    Fed funds futures show a quarter-point cut almost fully priced in for July, and indicate about 70 basis points of easing by the end of 2019. The two-year Treasury yield fell as much as 11 basis points to 1.77%, close to the 2019 low reached Wednesday, and it was on course for its fifth weekly decline.

    The last time that happened was back in July 2016, when the U.S. central bank’s target range was 2 percentage points lower than right now.

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    Shell's Floating Prelude LNG Poised to Load First Cargo

    This article by Stephen Stapczynski for Bloomberg may be of interest to subscribers. Here it is full:

    Shell’s Prelude floating LNG plant offshore Australia is expected to load its first cargo on the vessel Valencia Knutsen, which is currently idled in the area, according to commodity shipment tracker Kpler.

    * The vessel arrived near Prelude on June 4 and was likely attempting to load from the facility, but it left berth range a few hours after arrival, Kpler analysts said

    ** The vessel will probably be moored alongside the Prelude facility before the end of the week: Kpler

    * NOTE: Shipment of the first LNG cargo is “imminent,” Platts reported on June 4, citing Shell’s head of integrated gas, Maarten Wetselaar

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    Beyond Meat's Forecast Wows Wall Street as IPO Darling Delivers

    This article by Janet Freund for Bloomberg may be of interest to subscribers. Here is a section:

    “As long as Street forecasts fail to properly reflect BYND’s remarkable potential, we remain overweight.” Notes that “eventually this stock’s hefty valuation will more than offset the fast-growing fundamentals.”

    Notes the importance of CEO Ethan Brown calling the forecast “very conservative” and telling investors that the company doesn’t include foodservice customers in guidance until they are past the testing stage.

    JPMorgan has a $233 million 2019 sales target -- vs the company forecast of $210 million -- and the analyst says his estimate may be conservative. “It is conceivable that Tim Hortons alone (a current customer with nearly 5,000 locations that is not yet in guidance) could account for most of that
    gap.” Rates overweight, price target to $120 from $97

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    Email of the day on ETF holdings of gold

    I have been particularly taking note of the chart for The Total Known ETF holdings of gold over the past two weeks and observe it has bounced emphatically off the trend mean. Does this reinforce your view that gold is due for a bullish outlook?

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    The rise and rise of private markets

    Thanks to a subscriber for this report from McKinsey which may be of interest. Here is a section:

    Dry powder: How much is too much? With competition rising and deals hard to find, GPs’ stocks of uncommitted capital, or dry powder, reached a record high of $1.8 trillion in 2017 (Exhibit 14). That was up 9 percent year on year; indeed, dry powder has grown by 10 percent on average every year since 2012. Does the industry have too much capital? Probably not, or at least not yet. If we compare dry powder to other measures, such as funds raised and AUM, “stocks” of capital available for investment have changed little over the past few years vis-à-vis the size of the industry. Dry powder as a percentage of in-year fundraising has been between 220 and 280 percent for the past six years. As a percentage of AUM, dry powder has been similarly consistent, at 30 to 34 percent. Nor are there any significant variations among asset classes, suggesting that GPs are finding adequate opportunities in every field. Furthermore, by the metric we introduced in the 2017 edition of this report, years of PE inventory on hand, dry powder still seems adequate to deal flow. If we divide dry powder by deal volume on a seven-year trailing basis, the industry seems to have cycled through its capital in a stable way for the past several years (Exhibit 15).

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    Investors Signal Draghi Is Running Out of Time and Ammunition

    This article by Paul Gordon, John Ainger and Piotr Skolimowski for Bloomberg may be of interest to subscribers. Here is a section:

    While Draghi is using similar tactics to U.S. Federal Reserve Chair Jerome Powell in promising to react to any deterioration in the outlook, the challenge is that he’s seen as having less room for maneuver. ECB rates are still at record lows and the balance sheet hasn’t started to be wound down.

    Moreover, he has less than five months left in office and there’s no clear sign who his successor will be, nor whether they’ll have the same commitment to the radical measures that hallmarked the Italian’s eight-year term.

    “The market believes Draghi’s take on inflation is wishful thinking,” said Christoph Rieger, head of fixed-rate strategy at Commerzbank AG, which predicts the ECB will cut the deposit rate toward the end of this year and extend its low-rate pledge to mid-2021. “The talk about contingencies is cheap, but to reverse the decline in inflation expectations he will have to walk the walk.”

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    "Record 3,000" Hong Kong lawyers in silent march against controversial extradition bill

    This article by Alvin Lum may be of interest to subscribers. Here is a section:

    If passed, the new legislation would allow the transfer of fugitives from Hong Kong to jurisdictions with which it has no extradition deal, including mainland China.

    Organisers estimated the turnout to be between 2,500 and 3,000, but police said attendance peaked at 880.

    Four Nordic chambers of commerce also jointly expressed concern that the bill had been “fast tracked without the thorough consultation and full legislative scrutiny that is customary for a piece of legislation of this nature”.

    The city’s last colonial governor Chris Patten meanwhile urged the government to shelve the bill, arguing it would “strike a terrible blow” to Hong Kong’s rule of law.

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