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Value Stocks Are in Position to Swamp Growth: Markets Live 2020

If you’re upbeat about value companies, which are cyclical in nature, then you’re probably optimistic about the global economy. The good news is central bankers are doing everything they can to help the economy get back on track

Resolution - Value Stocks Are in Position to Swamp Growth: Markets Live 2020

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Comments of the Day

12 December 2019

 

 

Video commentary for December 11th 2019

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: Dollar susceptible to additional weakness, Precious metals firm, coffee accelerating, sugar steady, Australian Dollar steady, New Zealand Dollar firm, Swedish Krona breaking out, UK trading at valuation discount with potential for outperformance on favourable election result.  

 

 

Value Stocks Are in Position to Swamp Growth: Markets Live 2020

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

* If you’re upbeat about value companies, which are cyclical in nature, then you’re probably optimistic about the global economy. The good news is central bankers are doing everything they can to help the economy get back on track

* Fidelity’s sector strategist Denise Chisholm favors cyclical stocks now that the Fed and ECB are cutting rates at the same time. “That has happened only about 10% of the time since the ECB’s inception in 1998, and when it has, the U.S. market has surged in the subsequent 12 months. Cyclical stocks have fared especially well under these conditions, outperforming the market 71% of the time.”

* Even a limited resolution to the U.S.-China trade conflict should help a global economic revival by reducing uncertainty. That should release animal spirits by boosting new orders for
machinery, industrial supplies and energy. All that would make the case for value stronger than it’s been in years

 

Eoin Treacy's view

Sometimes there is a difference between cheap stocks and value stocks. For over a decade a torrent of liquidity hitting the market has rewarded risk taking and favoured growth at any cost. By comparison the slow and steady business models pursued by many classic value companies has appeared staid. The additional complication of technological obsolescence has resulted in companies with low P/Es and high dividends languishing because investors fear for their survival.

 

 

Chevron, Facing Fossil Fuels Glut, Takes $10 Billion Charge

This article by Christopher M. Matthews and Rebecca Elliott for the Wall Street Journal may be of interest to subscribers. Here is a section:

“We have to make the tough choices to high-grade our portfolio and invest in the highest-return projects in the world we see ahead of us, and that’s a different world than the one that lies behind us,” Mr. Wirth said.

Chevron’s shares closed up less than a percentage point at $117.90 prior to the announcement Tuesday. Reaction to the news was muted in after-hours trading.

The sobering reappraisal by Chevron, one of the world’s largest and best-performing oil companies, is likely to ripple through the oil-and-gas industry, forcing others to publicly reassess the value of their holdings in the face of a global supply glut and growing investor concerns about the long-term future of fossil fuels. Particular pressure is falling on shale producers, especially those focused on natural gas in places like Pennsylvania, which are struggling with historically low U.S. prices caused by oversupply.

Chevron’s move follows a $5 billion write-down by Spain’s Repsol SA earlier this month and an impairment of $2.6 billion by the U.K.’s BP PLC in October. Industry executives and analysts anticipate that many more oil-and-gas companies will soon write down billions in value to comply with accounting standards because low commodity prices have undermined the economics of many projects.

 

Eoin Treacy's view

In last night’s audio I was searching for the term high grading when discussing the performance of mining companies but it of course also extends to any commodity market where prices have declined to such an extent that many sources of supply become uneconomic.

 

 

Does corporate America have a debt problem?

Thanks to a subscriber for this report by Dan Heron, Ryan Primmer for UBS Asset Management which may be of interest. Here is a section:

 

Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area. 

Corporations have jumped at the once in a generation opportunity to borrow at record low levels in record amounts. That has understandably increased leverage ratios. Equity is generally more expensive that fixed income as a source of capital, so buybacks have been a logical financial engineering solution to reduce the average cost of capital.

 

 

Eoin's personal portfolio: precious metals long increased

 

Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.

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