GRIM CHARTS: Earnings and S&P Negatively Correlating

Since mid-2015, corporate earnings and the S&P 500 have been moving in the complete opposite direction. Last time they had a complete negative relationship, it was back in 2009—when the stock market crashed.

Stock Market Crash: These Charts Are a Grim Warning for Investors

3 Charts Investors Shouldn’t Overlook

Mainstream stock advisors will never tell you this, but it’s true: the odds of an economic collapse and stock market crash in 2016 are stacking up higher each day.

When I want to know where the stock market is headed, I look at three indicators and they are very powerful predictors over a longer-term period. Those indicators are copper prices, corporate earnings, and how investors treat utilities stocks compared to technology stocks.

Please look at the chart below of copper prices and the S&P 500. At the bottom of the chart, I have plotted the correlation between the two.

Since at least 2013, copper prices and the S&P 500 have had a positive correlation. You see, the stock market is generally considered a good indicator of economic growth/industrial production. And with copper being an industrial metal, the positive correlation between the two makes perfect sense.

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China’s Biggest Oil Company Posts 52% Decline in 2015 Profit

Total oil, gas output rose 1.8% to 259.5 million metric tons China National Petroleum Corp., the country’s biggest oil and gas producer and the parent of PetroChina Co., said profit fell 52 percent as lower oil prices punished global explorers. Profit last year fell to 82.5 billion yuan ($12.7 billion), the Beijing-based company said in a statement on its website Wednesday. The unlisted, state-owned company didn’t specify whether the profit is pretax, gross or net. Revenue fell 26 percent to 2 trillion yuan, while oil and gas output rose 1.8 percent to 259.5 million metric tons, it said. “We properly dealt with all the risks and challenges and steered the company from the model of chasing speedy expansion to a model focusing more on quality growth,” Chairman Wang Yilin said in the statement. CNPC owns oil and gas assets in politically unstable areas, including Sudan, and controls 86 percent […]

 bloomberg.com

Saudi Aramco sets financing plans for industrial push

A surge of volatility in China’s once placid commodities futures markets has rattled industrial players who use them for hedging, with some taking losses or cutting exposure, driven out by a flood of speculative money from hedge funds and retail investors. NEW YORK Expectations for chemical company earnings have been boosted by a combination of lower crude oil costs during the commodity’s slump along with strong demand for plastics that are used to make everything from shampoo bottles to grocery bags. LONDON Major oil companies’ first-quarter results have so far not been as bad as feared but volatile trading operations and a likely fall in production mean any respite could be short lived. NEW YORK Oil prices jumped about 3 percent on Wednesday, hitting new highs for 2016 as the dollar weakened after the Federal Reserve announced it would leave U.S. interest rates unchanged. HOUSTON Exxon Mobil Corp […]

 reuters.com

New oil discovery in Gulf of Mexico

 Otto Energy Ltd., a company with headquarters in Australia, said it made an oil discovery in the Gulf of Mexico that was productive enough to keep drilling. The company said it ran through columns of oil at its SM-71 well in the Gulf of Mexico and decided to deepen its drilling activity to ensure the entire targeted region will be evaluated. The cost to drill deeper, the company added, is within the original spending target. Matthew Allen, the company’s managing director, said he was “very encouraged” by the results so far. Otto Energy describes the prospect as part of a regional “low cost, high-chance-of-success” opportunity in […]

 upi.com 

Oil Prices Fall On Unexpected EIA Barrel Build

One hundred and sixteen years after the birth of Woody Woodpecker creator and animator Walter Lantz, and WTI crude oil is knocking on the door of $45 – and knocking on wood that U.S. production is wilting. Here are six things to consider about the oil market on this final Wednesday in April: 1) Today is set to be dominated by a game of two halves; inventories this morning, and Federal Reserve rumblings this afternoon. While the API inventory report points to a draw to crude stocks (h/t lower imports), expectations of dovish rhetoric from the Fed is putting downward pressure on the dollar. Hence, crude is once again pushing on to new highs for the year. The bullish sentiment for oil however did not last long after the DOE surprised by contradicting the API and reporting a significant build in U.S. crude stocks. 2) A piece today talking […]

  oilprice.com

Shocker as Exxon Downgraded by S&P

 

Cheap oil smudges Exxon's long-held sterling credit rating

Exxon Mobil Corp lost its top-tier credit rating from Standard & Poor's on Tuesday for the first time in almost 70 years, as slumping crude prices crimp the oil giant's ability to fund projects and return big amounts of cash to shareholders.

S&P, a unit of McGraw Hill Financial Inc, cut Exxon's rating to "AA+" from "AAA," a one-notch demotion that leaves drugmaker Johnson & Johnson and Microsoft Corp as the only U.S. companies with the coveted, sterling rating that dozens of U.S. corporations enjoyed in the 1980s.

Though the downgrade was a symbolic blow for a company that prides itself on strength and discipline, the new S&P rating for Exxon is still as high as its ratings for the U.S. government bonds, widely seen as among the world's safest investments. Only two other U.S. companies, General Electric Co. and Apple Inc., have S&P's "AA+" rating.

Shares of Exxon, which is slated to post quarterly results on Friday, shrugged off the news, rising 0.34 percent to close at $87.63.

Exxon and other energy companies have been under pressure to return money to shareholders. It spent $210 billion on share repurchases over the last decade, and during the fourth quarter, paid out $3.6 billion in dividends and share repurchases, more than it earned.

Reuters

Oil prices jump on weak dollar, strong investor appetite

Crude oil futures rose half a dollar in early Asian trading on Wednesday and remained near 2016 highs on the back of strong investor sentiment and a weak dollar, although analysts warned this month’s bull-run could soon run out of steam. International Brent crude futures were trading at $46.26 per barrel at 0023 GMT, up 52 cents, or 1.1 percent, from their last settlement. U.S. West Texas Intermediate (WTI) crude was also up 52 cents, or 1.2 percent, at $44.56 a barrel. WTI was further lifted after the American Petroleum Institute (API) reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week versus a 2.4 million-barrel build expected by analysts in a Reuters poll. Both Brent and WTI were near 2016 highs of $46.49 and $44.83, respectively reached the previous session. Beyond […]

 reuters.com  

Chesapeake Has Bought Itself Time But Can It Survive?

The last year has been a bumpy one for Chesapeake Energy. When natural gas prices collapsed several years ago, many firms across the industry moved towards liquids as a panacea. The same group of execs that tanked the natural gas markets in the U.S. through over production went on to overproduce in shale, resulting in the current morass. It is little wonder then that firms like Chesapeake have had little refuge from the chaos in recent quarters. CHK reported a $2.2 billion loss in its most recent quarter, reflecting the market carnage. After a collapse of 90 percent in the 12 months ending in February, the stock bottomed at $1.50 a share. Since that time, CHK has rallied more than 400 percent, closing close to $7.00 a share by late April. While the company has been humbled, the stock still sports a market capitalization of more than $4 billion. […]

 oilprice.com

Gov. Cuomo Rejects the Constitution Pipeline, Huge Win for the Anti-Fracking Movement

In a win for climate activists and the anti-fracking movement , and a blow to fossil fuel polluters and the federal regulatory agencies that enable them, the New York State Department of Environmental Conservation (DEC) denied a key permit to companies seeking to build a 124-mile fracked gas pipeline. The Constitution Pipeline Project —a joint venture between four oil and gas companies—was proposed to transport fracked natural gas from Susquehanna County in Pennsylvania through Broome, Chenango, Delaware and Schoharie counties in New York to existing interstate pipelines. The pipeline route would have crossed hundreds of streams and wetlands, including those supplying drinking water to families along the proposed route. Using the power granted under the Clean Water Act, DEC officials rejected the companies’ permit application, citing damage the project would do to water supplies along the pipeline route. “Today is an incredible Earth Day! Thank you again to Governor […]

 resilience.org

BP eyes more spending cuts after 80 percent profit drop

BP said on Tuesday it could cut capital spending further after reporting an 80 percent drop in profits in the first quarter of the year, when oil prices touched a near 13-year low. The British oil company, the first major to report on one of the weakest quarters, lowered its 2016 spending target to $17 billion, from $17-19 billion, and said the marker could fall to $15-$17 billion next year if oil prices remain weak. These cost reductions have enabled the oil producer to forecast it can balance its books at an oil price of $50-55 a barrel in 2017, it said, down from $60 previously eyed. BP shares opened 3 percent higher on the London Stock Exchange on Tuesday, the second-biggest gainer in the blue-chip FTSE 100 index. Chief Executive Bob Dudley said he […]

 reuters.com

Results for Twitter & Apple Conveys Dimming Prospects

Twitter shares tumble on missed revenue, downbeat outlook

Twitter Inc. shares TWTR, -14.73% tumbled 11% in after-hours trades Tuesday following the company's miss of first-quarter revenue expectations and its downbeat outlook. Twitter reported a net loss of $79.7 million, or 12 cents per share, compared with a net loss of $162.4 million, or 25 cents per share, in the year-earlier period. 

Market Watch

Apple earnings miss across the board, stock falls:

Apple Inc. AAPL  reported its first year-over-year decline in iPhone sales Tuesday, a sign of an increasingly saturated smartphone market. Compounding the issue are signs people are upgrading their phones less frequently, a slowdown in demand in China, a broader economic decline and expectations that the new iPhone SE and Apple Watch are selling below expectations.

Market Watch

Saudi Aramco: The Oil Giant’s Known Unknowns

If Saudi Aramco were to become a holding company with 5% or so of its… Saudi Arabian Oil Co.: A company that enriched its private investors for decades through what was called a “golden gimmick” beckons to foreign capital once again. That foreshadows how tantalizing, yet complicated, an investment in what is known as Saudi Aramco may be. If the national oil champion were to become a holding company with 5% or so of its shares listed on the stock market, it would be too large for investors to ignore. Based on what Saudi Arabia’s Prince Mohammed bin Salman estimated to be a potential market value of $2 trillion to $2.5 trillion, just its proposed float would be larger than supermajor BP BP -1.12 % or as valuable as ConocoPhillips COP -2.83 % and Italy’s ENI E 0.38 % combined. But a proposed initial public offering of the company […]

 wsj.com

7 Must-See Commodities Charts  

Gold, being one of the leading commodities, has shown great strength in 2016. Uncoincidentally, gold has bounced right at secular support in January of this year. This is another proof that secular trend lines are extemely powerful. Note how this trend line was the last of three secular trend lines. As gold will retrace in the near future, it is imperative that the trend line is not broken to the downside, which would be the ultimate confirmation that the secular bull market is intact.

Oil and Gas Companies Turn to Digital Technology as Low Energy Prices Pressure Business

Oil and gas companies are turning to digital technologies to lower costs and improve efficiency as the industry struggles with low energy prices. Information technology budgets have decreased by 10% or more at oil and gas companies during the slump, according to IDC. Analysts say companies still are strategically spending in areas such as analytics, mobile, and cloud that can lower costs and, in some cases, help improve well production. Oil prices started to fall after a peak of $114.81 a barrel on June 20, 2014. The global Brent benchmark on the ICE Futures Europe exchange has dropped 61.2% over the last 22 months to $44.53 on April 21. During the same period average gas prices in the U.S. fell to $2.09 a gallon from about $3.70 a gallon. Plunging oil and gas has spurred cutbacks with 84,000 jobs lost in Texas, according to the Texas Alliance of Energy […]

 wsj.com

Weakened Saudi Arabia Could See Social 

Unrest After Economic Shakeup

Despite oil’s rebound from cyclical lows and the world’s exuberance that the energy space may be saved (on the basis of headline-reading algo pumping momentum into commodity futures products that only leveraged Chinese speculators could find value in), something ugly is occurring in Saudi Arabian money-markets. There appears to be a growing funding squeeze in The Kingdom as 3-month interbank rates spike above 2 percent for the first time since January 2009, prompting King Salman to approve a ‘post-oil economic plan’. (Click to enlarge) Whether this spike is responsible or not, The Kingdom is clearly seeking ways to reduce its reliance on crude. As Bloomberg reports, King Salman approved a blueprint for diversifying the country’s economy away from oil on Monday, a package of developmental, economic, social and other programs. Saudi Arabia’s plan for the post-hydrocarbon era will have to overcome habits developed over decades of relying on crude […]

 oilprice.com

Bankers Desperately Monetize Energy Loans to Mitigate Losses

• Reserves-backed loans trading hands amid regulatory pressure
• Some lenders selling RBLs at steep discounts: Haynes & Boone

 Wary Energy Bankers Trying to Sell Loans Backed by Oil Reserves   

Banks are trying to unload loans once thought to be the safest form of energy credit.

Debt backed by oil and gas reserves are being offered at discounts as increased scrutiny by regulators and investors has forced lenders to set aside more cash to cover losses, the law firm Haynes & Boone LLP said in a note to be delivered to clients Monday. Some banks that bought slices of syndicated loans may try to sell their entire portfolio, according to the note.

Reserves-based lending was long considered safe because banks historically got back every penny they lent, even after default, according to a 2013 Standard & Poor’s report. Moody’s Investors Service Inc. said in an April 7 report that lenders could lose 21 cents on the dollar on defaulted exploration and production loans, four times more than the historical average.

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Will Oil And Refugees Force European Intervention In Libya 

Europe is on track to send security experts to Libya after it successfully installed a so-called unity government that is willing to work with international agencies. A primary goal of this move will be to address the problem of the smuggling of people to Europe. The move is in the planning stage. EU officials have declared that help will be sent should the new government, called the Government of National Accord (GNA), ask for assistance, which it did earlier this week. The GNA has asked for help from the EU in general, with an emphasis on restoring the security of the country and dealing with militant groups. European officials have underlined that Europe’s involvement in Libya will not be military, but it seems this is a temporary decision. First of all, the GNA is not recognized by other unofficial governments that control different parts of the country, so its […]

 oilprice.com

Cheap Oil Doesn’t Light Fire for Big Japanese Utility

Like most energy importers, Japan’s gas utilities have enjoyed the collapse in crude oil prices. Yet the market is understating the risks at one utility, including its duplicate role as an energy investor. Osaka Gas , 9532 -1.49 % one of Japan’s largest suppliers of natural gas, imports liquefied natural gas that is often linked to oil prices. Though the utility passes on lower costs to customers, this comes with a lag, the effect of which is even more powerful if crude oil keeps falling. In the December quarter, Osaka Gas reported a 55.4% increase in net profit from the year before, despite a 10.5% decrease in sales. But while a sustainable oil rebound may be unlikely , neither may there be much room for it to continue falling . As some producers cut back, Brent futures are pricing a slight rise later this year. A liquefied natural gas […]

  www.wsj.com

AP Exclusive: Test finds Chernobyl residue in Belarus milk

On the edge of Belarus’ Chernobyl exclusion zone, down the road from the signs warning “Stop! Radiation,” a dairy farmer offers his visitors a glass of freshly drawn milk. Associated Press reporters politely decline the drink but pass on a bottled sample to a laboratory, which confirms it contains levels of a radioactive isotope at levels 10 times higher than the nation’s food safety limits. That finding on the eve of the 30th anniversary of the world’s worst nuclear accident indicates how fallout from the April 26, 1986, explosion at the plant in neighboring Ukraine continues to taint life in Belarus. The authoritarian government of this agriculture-dependent nation appears determined to restore long-idle land to farm use – and in a country where dissent is quashed, any objection to the policy is thin. The farmer, Nikolai Chubenok, proudly says his herd of […]

  hosted.ap.org 

Halliburton Fires One Third Of Global Staff: “What We Are Experiencing Today Is Far Beyond Headwinds”

In a brutally frank and painfully honest first quarter operational update, Halliburton president Jeff Miller poured freezing cold water all over the “oil is stabilizing, and everything is going to be awesome” narrative. After explaining that the firm has laid off one-third of its global employees, and pointing to the collapse in sequential revenues across every business unit, Miller exclaimed: “What we are experiencing today is far beyond headwinds; it is unsustainable.” Due to the deadline of its merger agreement with Baker Hughes Halliburtion has delayed its earnings conference call until May 3rd and so gave an operational update.

 The headlines were horrific: 

*HAL SEES OVER 30% DROP IN YR GLOBAL DRILLING, COMPLETION SPEND *HALLIBURTON CUT ABOUT 1/3 OF STAFF GLOBALLY *HALLIBURTON CUT OVER 6,000 JOBS DURING 1Q *HALLIBURTON SEES ADDITIONAL 50% DECLINE IN NORTH AMERICA SPEND ’16 *HALLIBURTON SAYS WORLDWIDE RIG COUNT LOWEST LEVEL SINCE 1999 *HALLIBURTON SEES […]

 zerohedge.com

Schlumberger Profits Plunge 49% Cuts 2000 Jobs

 

  Schlumberger Cut Another 2,000 Jobs in First Quarter as Profit Fell 49%  

 

Schlumberger Ltd. said earnings and revenue fell as energy companies continued to spend less on… Schlumberger Ltd. on Thursday said it laid off another 2,000 employees during the first quarter as it reported that earnings for the period dropped 49% on significantly lower sales. Since November 2014, when the oil bust started to take hold of the energy industry, Schlumberger has cut 36,000 jobs, or 28% of its workforce. 

The first three months of the year were some of the worst yet in this downturn, as oil company customers continued to slash their spending and drilling and other well work ground to a halt, the company said. Schlumberger, the largest oil-field services outfit in the world, booked a profit of just $501 million amid tumbling revenue as energy producers dialed back their orders for the company’s services drilling and fracking wells. “The decline in global activity and the rate […]

 wsj.com 

"Puppy of the Week" 

  

$91 Billion In Capex Cuts, A Serious Hangover For Oil

Forty-seven years (!) after Simon and Garfunkel released ‘The Boxer’, and the bulls and the bears are slogging it out again. After trading blows in recent days, the bulls appear to have the upper hand, as technicals trump immediately weak fundamentals. Nonetheless, we are seeing a pullback today. Hark, here are six things to consider in oil markets today: 1) Jumping straight into economic data, we’ve had disappointing retail sales out of the UK before the Eurozone interest rate decision (still stuck at 0.0 percent, deposit rate still negative at -0.4 percent). We’ve subsequently had comments from ECB President Draghi that stimulus is working – and that loose monetary policy will persist for as long as it takes. The euro initially rallied, before unwinding again. 2) On to the U.S., and weekly jobless claims came in at 247.000, astoundingly a 42-year low. The Philly Fed was a party pooper, […]

 oilprice.com

Oil Majors Lose Faith In The North Sea – 100 Shut Downs Looming

Oil production from the North Sea posted gains in 2015 for the second year in a row, but the recent uptick in output could be a blip in the region’s long-term decline. Oil companies added 160,000 barrels per day last year from North Sea projects in the UK and Norway, according to the IEA . However, those gains came from projects that were planned years ago when oil prices traded above $100 per barrel. With Brent crude declining by more than 60 percent from mid-2014, North Sea oil producers have slashed spending, scrapped projects and are looking to sell off assets. The IEA summed it up in its latest monthly Oil Market Report: “North Sea projects fall victim to oil price slump.” For example, Det Norske, a Norwegian oil producer, is “shopping cheap assets” and is contemplating scrapping its Vette project, which it purchased from Premier Oil just last […]

 oilprice.com

Paris climate deal falls short, U.N. expert says

A U.N. expert says commitments so far under the Paris Climate Agreement are short of what’s needed to keep climate change in check. Photo by Debbie Hill/ UPI GENEVA, Switzerland, April 21 (UPI) — While the Paris Climate Agreement is a historic step in the right direction, commitments fall short of curbing global climate change, a U.N. expert said. Parties to an agreement adopted in December are set to sign off Friday on one of the more significant pieces of climate legislation in history. The agreement called for all parties to make strides to reduce greenhouse gas emissions to a level necessary to curb global warming to less than 2 degrees Celsius by the end of the century. Under the terms of the agreement, wealthier nations like China and the United States are expected to help finance the shift to a low-carbon economy from poor developing nations. “This target […]

  www.upi.com

Saudi Aramco IPO Could Be 5% of Value

Saudi Arabian Oil Co., the largest energy firm in the world, is considering listing up to 5% of its value on a stock exchange in New York within the next year, a top Saudi oil official said Thursday. By listing even a tiny fraction of the company, known as Saudi Aramco, the offering would create one of the world’s most valuable energy firms. Estimates of Saudi Aramco’s value have varied, but using a conservative number of $2.5 trillion , a 5% listing would give it a potential value of $125 billion—bigger than BP BP -0.38 % PLC and French oil titan Total SA TOT -0.49 % . The Saudis are considering listing Aramco at a time when the kingdom is trying to raise cash during a period of sharply lower oil prices and transition […]

 wsj.com

High Tech Meltdown Spreads to Google & Microsoft

What's Happening to High Flyers?


Google stock has been dead money for a year – a source of 

frustration for investors who have taken a flyer on this risky stock. 

With the shareholder meeting raging, the question is, what’s wrong 

with The Goog?

USA Today Money

Google stock plunges as quarterly earnings miss

Market Watch

Shares of Alphabet Inc. tumbled 6.5% in after-hours trade Thursday after the company reported much weaker-than-expected quarterly earnings. The company reported net income of $5.3 billion versus $4.5 billion last year, an increase of 26%. However, adjusted earnings per share were $7.50, below the FactSet consensus estimate of $7.96. Revenue rose 17% to $20.3 billion, compared with $17.3 billion last year, topping the Wall Street estimate of $16.6 billion.

Microsoft shares slump as earnings miss Wall Street's estimates

Market Watch

Microsoft Corp. MSFT, -5.59% shares dropped in Thursday's extended session after the software giant missed Wall Street's estimates on quarterly earnings. Microsoft reported its fiscal third-quarter earnings fell to $3.76 billion, or 47 cents a share, from $4.99 billion, or 61 cents a share. On an adjusted basis, the company would have earned 62 cents a share. Revenue decreased to $20.5 billion versus $21.7 billion. Analysts surveyed by FactSet had forecast adjusted earnings of 64 cents a share on revenue of $22.1 billion. Shares fell 3.8% in after-hours trading.

Intel Confirms Major Layoff, 11 percent of Employees To Go  

Said Intel CEO Brian Krzanich in an email today to employees, “These are not changes I take lightly. We are saying goodbye to colleagues who have played an important role in Intel’s success. We are deeply committed to helping our employees through this transition and will do so with the utmost dignity and respect,” and promised more details soon.

IBM Layoff Epidemic Spreads Worldwide  

Here we are six weeks later. IBM has said little more about the layoffs publicly, yet they don’t appear to be over. The March round appears to have been the beginning, not the end. A Facebook group, Watching IBM, is gathering reports from around the world. These dispatches are by no means comprehensive, but are at least painting a rough picture of what is going on.

Thirsty cities begin to eye water from the Great Lakes  

The compact is a historic, and rare, regulatory framework. Unlike the divisive water-sharing laws for the Colorado River and others in the West, the Great Lakes compact includes language that emphasizes sustainability, transparency, conservation and efficiency.

"The compact is more about governing the resource collectively as a common pool for the public domain," said Jenny Kehl, a professor at the University of Wisconsin, Milwaukee, who studies water resource issues

Why Organized Religion Fears Educated Women

Educating women improves the welfare of families as they become empowered to contribute to the financial success of their household—which in turn creates more opportunities and resources available for their children.

For thousands of years women have been defined only in correlation to their relationship to men. They have been kept hidden, prohibited from speaking, forced into submission and treated as the “unclean” gender whose existence is that of mental and physical servitude to her human counterpart. Why has so much emphasis been placed upon the mind and actions of women? What does organized religion fear about the mind of an educated and logically-thinking woman?

Here are 5 reasons why organized religion fears educated women:

The loss of patriarchal control

It is a widely-known fact that the more educated and financially stable a woman becomes, the more likely she is to practice family-planning and have her children at a later age. Educated women are also more likely to have fewer children than their uneducated and impoverished female counterparts.

Furthermore, educated women are more likely to cultivate their own worldview, rather than simply following their traditional familiar teachings; and may contribute no followers to a religion when they do finally decide to start a family.

This is a problem for religion because women who choose the timing and size of their household don’t typically contribute the same amount of future-followers to a religion as those women who are restricted from pursuing an education and career. If a woman leaves the religion altogether as a direct result of becoming well-informed and financially stable and no longer needs the “comforts” that her religion once provided, she has not only removed herself from the ranks, but her children as well. For religion to perpetuate itself, it must have followers, or it ceases to exist.

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