iftttwall

Amid confusion over whether the massive Saudi Aramco IPO is on hold until 2019, or permanently shelved in favor of a private placement, Reuters suggests the latter is now more likely as 'sources familiar with the matter' say China is offering to buy up to 5 percent of Aramco directly (offering the Saudis the lack of transparency they may have been nervous of with a public placing).

 

As we noted previously, China has been very actively diversifying its sources of energy…

China has understandably played the leading role in Russia’s attempts to broaden its role as an energy supplier in Asia. Rosneft recently sold 14.16 percent of its shares to CEFC China Energy for about $9 billion by way of the Qatar Investment Authority and Glencore. The move reflected the challenges financial sanctions have created for the firm as well as China’s growing clout as an importer. Chinese demand hit 11.67 million barrels per day (bpd) and had risen 6 percent year-on-year in July. Rosneft was smart to finalize supply agreements with PetroChina set to boost its daily exports to China from 400,000 bpd to 600,000 bpd next year. Rosneft also signed an agreement with CEFC to jointly explore for Eastern Siberian reserves and increase direct deliveries to China.

 

These deals play into Russian-Saudi competition for the Chinese market. China’s oil imports are up 12.3 percent year-on-year, but cuts haven’t hit Russian exports. Saudi oil exports to China hovered at 1.03 million bpd so far this year, a 1.7 percent drop. Russia’s stood at 1.16 million bpd, a 13.2 percent increase. After closing the CEFC deal, Rosneft announced it expected to deliver 40 million tons of oil to China by year’s end, a 9 million ton increase on their expected deliveries. That would average out to around 800,000 bpd from Rosneft alone, assuring Rosneft’s dominant control over Russian supplies to the Chinese market. The increase in supplies has paralleled a long-standing project to develop a refinery in Tianjin. But the project, first announced in 2009, has no clear end date despite a press release concerning its implementation with CNPC in January.

 

Saudi Arabia has disproportionately lost share in China for several reasons. For one, it bears the burden of cut compliance. Angola overtook it because of China’s dominant position there and didn’t feel the need to comply. For another, Russian firms have built up new assets and export capacity in Eastern Siberia and the Far East. Russian blends have more physical access to Asia-Pacific markets, making them more competitive than they’ve historically been. Finally, spreads on the market between light and heavy crude have narrowed, making Russia’s lighter crudes more competitive against Saudi heavy crudes. But Saudi Arabia is not without a means of responding.

 

Saudi Aramco reached a refinery deal with state-owned China North Industries Group Corp. in May around the Belt and Road summit. Though the refinery is smaller than that proposed in Tianjin, Saudi Aramco has one considerable advantage over Rosneft: it lacks the same messy history Rosneft has with China’s state firms and it’s not sanctioned. CEFC was a logical partner for Rosneft in China because, unlike CNPC and state-owned players, it could more easily afford to take the sanctions risk. It can also dangle shares to China. Further, the refinery deal signals a willingness to work with China’s independent refiners. These so-called “teapot” refineries have driven demand growth and provide Aramco greater diversity in business opportunities longer-term than Rosneft’s relationships with CNPC and CEFC afford it.

 

Ever since the company started talking about an IPO of 5 percent of its shares, China has been a logical partner. A sale to Chinese firms in exchange for investments into China’s downstream would be huge win. The Kingdom also signed a similar agreement for an investment platform with China worth $20 billion in late August, just as it became clear CEFC would acquire stakes in Rosneft. That throws a fair bit of shade on Russia’s $1 billion fund agreed to this last visit. Topping it all off, King Salman and Aramco also signed deals reportedly worth $65 billion with China in March.

And than last week, headlines hit regarding delays/shelving of the IPO…

The FT notes that talks about a private sale to foreign governments – including China – and other investors have gathered pace in recent weeks, according to five people familiar with the IPO preparations, amid growing concerns about the feasibility of an international listing.

The Saudi state oil company has struggled to select a suitable international venue for its shares, as New York and London have vied for what has been billed as the largest ever flotation.

 

The company would still aim to list shares on the kingdom’s Tadawul exchange next year if they pursue the private sale, the people said.

 

The latest proposal by the company’s financial advisers was described by one of the people as a “face-saving” option for Saudi Aramco, which has worked on plans to list its shares internationally for more than a year.

Desk chatter included comments that the Saudis were anxious about the level of due diligence and transparency involved in a public offering.

A Saudi Aramco spokesperson said:

“A range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track.”

The planned listing of a 5 per cent stake in Saudi Aramco is the centrepiece of an economic reform programme led by Saudi Arabia’s powerful crown prince Mohammed bin Salman, who is keen for a 2018 IPO. He has said the company could be worth $2tn although a Financial Times analysis put the valuation figure at around $1tn.

An economic recession in the kingdom is piling pressure on the prince, the king’s son and next in line for the throne, amid calls for the government to increase investment and ease austerity.

And now, as Reuters reports, perhaps the king has options…

Chinese state-owned oil companies PetroChina and Sinopec have written to Saudi Aramco in recent weeks to express an interest in a direct deal, industry sources told Reuters. The companies are part of a state-run consortium including China’s sovereign wealth fund, the sources say.

 

Saudi Arabia’s Crown Prince Mohammed bin Salman said last year the kingdom was considering listing about 5 percent of Aramco in 2018 in a deal that could raise $100 billion, if the company is valued at about $2 trillion as hoped.

 

“The Chinese want to secure oil supplies,” one of the industry sources said. “They are willing to take the whole 5 percent, or even more, alone.”

 

PetroChina and Sinopec declined to comment.

Two senior industry sources said Riyadh was keen on China, its biggest buyer of oil, becoming a cornerstone investor in Aramco.

But no decision has yet been taken on whether to accept China’s offer, or how much stock could be offered to cornerstone investors, the sources said.

Two sources told Reuters that sovereign wealth funds from South Korea and Japan, which are also major buyers of Saudi oil, were also interested in acquiring a stake in Aramco.

Critically though, as The Wall Street Journal reports, the oil rally could have the legs kicked out from under it if Saudi Aramco opts to forgo a public listing of its shares.

“I think the market is clinging to the IPO as the rationale,” said Robert McNally, president of the Rapidan Group.

 

Conventional wisdom has it that “the Saudis, as long as they were planning this IPO next year, they had almost no choice but to unilaterally, if necessary, cut production to keep oil prices from falling.”

Mr. McNally and other analysts said a delayed or canceled IPO wouldn’t necessarily weaken Saudi Arabia’s resolve. The kingdom needs higher oil prices to shore up its budget–not just to ensure the success of its offering.

But convincing investors of that may be a tougher sell.

“It does seem like a large number of people put significance on that Saudi IPO,” said Kyle Cooper, a consultant at ION Energy Group.

Bill O’Grady, chief market strategist at Confluence Investment Management, has said that prospect of a 2018 IPO was part of the reason he believed U.S. crude futures could climb as high as $60 a barrel. But the market may have been pricing in some skepticism.

“It is bearish news, but the market hasn’t seemed to put 2+2 together on this issue,” he said in an email Friday.

 

“If the market had discounted that the Saudis would do whatever necessary to get oil to $60 for the IPO, it would already be there.”

via http://ift.tt/2wZMZM6 Tyler Durden

According to a surprising, and not altogether pleasant for Tim Cook and AAPL shareholders new report by KeyBanc Capital Analyst John Vinh, channel checks have revealed that Apple’s older iPhone 7 models are outselling the recently launched iPhone 8 ahead of the early November debut of the premium iPhone X.

As traditionally new editions of the iPhone have sold quickly as fans queue for the latest upgrade, this time it’s clearly different as pent up demand for the iPhone X is clearly cannibalizing sales, and the surveys add to signs that the iPhone 8 is not proving as popular as its predecessors. A chronological breakdown of iPhone features by generation courtesy of Nomura is shown below.

“Many respondents indicated that a meaningful portion of customers are buying iPhone 7 in lieu of the new iPhone 8, given the lack of significant enhancements in the new phone,” Vinh wrote in his research report, which relied on channel checks in the United States and United Kingdom.

Apple last month introduced the iPhone 8 and iPhone 8 Plus, which resemble the iPhone 7 line but have a glass back for wireless charging. The iPhone 8 starts at $699 in the United States, higher than where its predecessor launched while the latest price of the cheapest iPhone 7 retails from $549 after a price cut.

A comparison of the PCBs of the iPhone 7 and 8, respectively, is shown below.

“Feedback from stores indicate customers are waiting to purchase the iPhone X or to compare the iPhone X before buying the iPhone 8,” wrote Vinh, who is rated four out of five stars by Thomson Reuters StarMine for his recommendation accuracy on the Apple stock.

Another reason for the slow uptick of the iPhone 8 could be the modest promotion by U.S. carriers, Vinh said. “While carriers continue to offer promotions for the new iPhone 8, they have been much more modest compared to the iPhone 7 launch last year,” he wrote.

Meanwhile, as Apple bull hopes fall on the iPhone X, a key unknown factor is what the price will be. The much-anticipated iPhone X, a glass and stainless steel device with an edge-to-edge display, will start shipping from Nov. 3 with the 10th-anniversary iPhone priced from $999, Apple’s most expensive mobile till date.

Meanwhile for those seeking more details on what one can find inside the iPhone 7 vs iPhone 8, the following comparison from Bloomberg should come in handy.

iPhone 7:

iPhone 8:

via http://ift.tt/2gfckuY Tyler Durden

Probably nothing…

The last two times the spread between 30Y and 5Y Treasury bonds was below 90bps, the US economy entered recession…

 

And the 2s10s curve is tumbling too – to its flattest since the crisis…

 

But, but, but, how can a recession be coming with stocks are record highs?

 

via http://ift.tt/2ylQWie Tyler Durden

In a move that is set to further infurate the Catalan separatists for whom the breakaway region’s police chief has emerged as a quasi-folk hero, and prompting an even more vocal push for independence, moments ago the Spanish Public Prosecutor’s Office petitioned Madrid Judge Carmela Lamela, investigating charges of sedition in Barcelona on September 20, to jail Catalan Police chief Josep Lluis Trapero on remand, court reporters for Spanish media tweeted.

Josep Lluis Trapero , Catalan police chief

According to Bloomberg, Jordi Sanchez, head of the pro-independence campaign group the Catalan National Assembly, and Jordi Cuixart, who leads the Catalan cultural lobby group Omnium, are also to be interrogated by magistrates.

The judge is expected to make a decision at 6 p.m. on Monday.

According to the Spain Report, Major Trapero first appeared at the National High Court as part of the investigation on October 6, but was allowed to return to Barcelona and remain in his post after the hearing.

The current Spanish criminal code describes the crime of sedition as unlawfully preventing officers of the law from properly enforcing it or otherwise executing their duties. Organisers of sedition in positions of authority may be jailed for up to 15 years.

via http://ift.tt/2zcExdk Tyler Durden

 

Doc Copper has struggled over the past 6-years, as it has created a series of lower highs since 2011. Below looks at a chart of Doc Copper over the past decade.

CLICK ON CHART TO ENLARGE

Doc Copper has created a series of lower highs inside of falling channel (1) since the highs back in 2011. The rally by Copper since 2016, now has it testing the top of its 6-year falling channel at (2).

If Doc Copper breaks out at (2), it would send a positive message for Copper and could well attract new buyers on the breakout.

If Doc Copper would breakout, these assets could benefit, JJC, FCX, XLB & IYM.

 

Why do you see very few comments from me?  Because I believe the Power of the Pattern provides all you need to see what is taking place in an asset and determine the action to take

Receive my free research posted on the blog daily here 

Better yet, send an email if you would like to see sample research and take me up on a trial of my premium or weekly research where I provide actionable alerts on breakouts and reversals in broad market indices, sectors, commodities, the miners and select individual stocks 

 

 

Email services@kimblechartingsolutions.com  

Call us Toll free 877-721-7217 international 714-941-9381 

Website: KIMBLECHARTINGSOLUTIONS.COM 

 

 

 

 

via http://ift.tt/2xK4Pr9 kimblecharting

Today, the South Korean and U.S. navies kicked off massive combined drills off the coast of the Korean peninsula amid heightened tensions, a training exercise which North Korea has warned may prompt another ballistic missile launch potentially to coincide with the launch of the Chinese 19th Party Congress on October 18. The two allies plan to continue the Maritime Counter Special Operations Exercise (MCSOFEX) through Friday in the East Sea and the Yellow Sea.

As reported over the weekend, the drill involves the U.S. 7th Fleet’s aircraft carrier USS Ronald Reagan (CVN-76) and two Arleigh Burke-class destroyers – the USS Stethem (DDG-63) and the USS Mustin (DDG-89). The carrier strike group will train with South Korean warships and other defense assets, such as the Sejong the Great Aegis ship and P-3 Orion anti-submarine aircraft in the East Sea.

And while details of the drill were well-known in advance, what was reported for the first time overnight from Yonhap is that a unit of U.S. special forces tasked with carrying out “decapitation” operations is also aboard a nuclear-powered submarine in the group, according to a defense source. So far, little else is known about why said decapitation team is on location, or whether it will be put into use, although it presence may explain Trump’s “calm before the storm” comment that beffudled the media two weeks ago.

Among other assets mobilized for the joint drill are F-15K, FA-18 and A-10 fighter jets, as well as AH-64E Apache attack helicopters, Lynx and AW-159 Wild Cat naval choppers. The U.S. has also deployed a Joint Surveillance Target Attack Radar System (JSTARS) plane to closely monitor the North’s ground and naval forces.

Some more details about the drill from Yonhap:

The joint training is aimed at promoting “communications, interoperability and partnership in the (U.S.) 7th Fleet area of operations,” the fleet said. It initially announced that the practice around the peninsula will end next Thursday but later corrected the date to Friday. Meanwhile, the U.S. has sent a B-1B Lancer strategic bomber, F-22 Raptor stealth fighter jets and several other types of high-profile defense assets to the Seoul air show to open this week.

 

“Approximately 200 U.S. personnel are expected to participate in the Seoul International Aerospace and Defense Exhibition (ADEX) 2017, scheduled from Oct. 17-22 at the Seoul K-16 airport,” the 7th Air Force said.

 

Among the U.S. military aircraft to join the biennial event are the F-22 Raptor, B-1B Lancer, A-10 Thunderbolt II, C-17 Globemaster III, C-130J Hercules, KC-135 Stratotanker, E-3 Sentry, U-2 Dragon Lady and RQ-4 Global Hawk, it added. Also fielded will be the Air Force’s fifth-generation fighter, the F-35A Lightning II, U.S. Navy P-8A Poseidon and a U.S. Army CH-47F Chinook.

 

“This year’s air show will feature demonstrations from U.S. Air Force F-22 Raptors assigned to the 3rd Wing, Joint Base Elmendorf-Richardson, Alaska,” the 7th Air Force said. More than 400 defense firms from 33 countries plan to participate in the ADEX to begin Tuesday.

As part of the drills, the US military said on Monday that it would practice evacuating noncombatant Americans out of South Korea in the event of war and other emergencies, the NYT reported.  The evacuation drill, known as Courageous Channel, is aimed at preparing American “service members and their families to respond to a wide range of crisis management events such as noncombatant evacuation and natural or man-made disasters,” the United States military said in a statement.

The South Korean government of President Moon Jae-in has repeatedly warned that it opposes a military solution to the North Korean nuclear crisis because it could quickly escalate into a full-blown war in which Koreans would suffer the most, with some estimates predicting that over 2 million South Koreans could die in the North Korean retaliation.

Meanwhile, on Monday, North Korea accused the US of “pushing” the DPRK into making a hydrogen bomb, the head of North Korea’s delegation to the multinational Inter-Parliamentary Union (IPU) meeting has said.

“Exactly the US have pushed the DPRK [Democratic People’s Republic of Korea] to become a possessor of the hydrogen bomb,” the deputy chairman of the Supreme People’s Assembly of North Korea, An Tong Chun, announced Monday. The North Korean official was speaking at the assembly of the world’s oldest international body of lawmakers in St. Petersburg, Russia. Parliamentarians from more than 160 nations are attending the IPU session.

The question now is whether North Korea will once again test said Hydrogen bomb and, if so, whether the crack “decapiation” team meant to take out North Korea’s leadership will be put to use.

via http://ift.tt/2zqD3Nj Tyler Durden

Despite repeated denials from Bob Weinstein and the Weinstein Company Board that the Hollywood studio was exploring a sale or shutdown after former executive Harvey Weinstein's 30-year history of using his position to harass and assault actresses was exposed, the Weinstein Company revealed that it's negotiating a sale of all its major assets with Colony Capital.

The two companies have already entered into a preliminary agreement whereby Colony is providing Weinstein with a needed capital infusion – again appearing to contradict executives' claims that the studio is in strong financial health despite the scandal.

Colony Capital is owned by billionaire investor Thomas Barrack, a longtime friend and close adviser to President Donald Trump who recently publicly expressed his "disappointment" in the president during an interview with the Washington Post last week. During the interview, he said that Trump is "better than this" after criticizing the president's inflammatory tweets and rhetoric.

Here's the press release:

The Weinstein Company (“TWC” or the “Company”) today announced that it has entered into a preliminary agreement with Colony Capital (“Colony”) to provide an immediate capital infusion into the Company. In addition, the Company has entered a negotiating period with Colony Capital for a potential sale of all or a significant portion of the Company's assets.

TWC board member, Tarak Ben Ammar, said, “On behalf of the board, we are pleased to announce this agreement and potential strategic partnership with Colony Capital. We believe that Colony's investment and sponsorship will help stabilize the Company's current operations, as well as provide comfort to our critical distribution, production and talent partners around the world. Colony's successful experience and track record in media and entertainment will be invaluable to the Company as we move forward.”

Thomas J. Barrack, Jr., Founder and Executive Chairman of Colony Capital said, “We are pleased to invest in The Weinstein Company and to help it move forward. We believe the Company has substantial value and growth potential, and we look forward to working with the Company's critical strategic distribution and production partners to help preserve and create value for all stakeholders, including its employees. We will help return the Company to its rightful iconic position in the independent film and television industry.”

Neither the Company nor Colony will make any further comment beyond this announcement at this time.

via http://ift.tt/2yrUu1I Tyler Durden

Just a few days Bloomberg’s macro commentator Richard Breslow once again capitulated to this market which just refuses to post even the smallest downtick as it enters its blow off top phase, saying it is a bubble, but you have no choice but to buy it, it is now that other ex-Lehman trader and Bloomberg macro voice, Marc Cudmore’s turn to capitulate on his aggressive bearish bets on Emerging Markets, and to ask, Hollywoodishly, “Dude, where’s my emerging market contagion.” To be sure, Cudmore’s bearish EM forecasts featured prominently on these pages in recent weeks and months, with a sampling of his articles below:

• One Trader Thinks The Turkish Crash Will Lead To EM Contagion
• “Emerging Markets May Be Suddenly Hit On Multiple Fronts At Once”, Trader Warns
• Why One Trader Thinks Emerging Markets Are About To Get Slammed
• Cudmore Calls It: “The Correction Has Started”

And so on. Unfortunately for Cudmore, not only have emerging markets not been hit on “multiple fronts all at once”, even when they are hit on a single front, as in the case of Turkey last week, they quickly adjust to the “hit” and the dip is immediately bought, resulting to near record highs in EM risk assets as well as the tightest EM bond spreads since the financial crisis…

… and leading to a lot of head scartching among the macro commentator community, as well as the following mea culpa Macro View, published overnight from the former Lehman trader.

Dude, Where’s My Emerging-Market Contagion?

 

I’m a structural emerging-market bull who forecast a material tactical correction several times in the last few months. It hasn’t happened. So it’s time to re-evaluate the macro framework and review the roadmap.

 

Successful trading depends on a delicate balancing act between confidence and fear. If you stray off the path, it’s best to take a few minutes to get your bearings before rushing headlong again.

 

What is the macro environment for EM? Global growth is solid, led by Asia and China in particular. Liquidity is abundant, and financial conditions are easy. Few global equity markets appear cheap, but the bullish framework remains in place.

 

Emerging markets are resilient overall and far more fundamentally secure and independent than any previous cycle. This makes contagion from an idiosyncratic story much less likely. For the sector to experience a broader and larger correction, it’s likely to require a fundamental shift in key macro assets. But what could that be?

 

Technology, demographics and excess energy supply provide structural long-term disinflationary pressures. As a result, investors are extremely reluctant to buy into the concept of an extended Fed hiking cycle. Trump won’t want one either, which plays into the debate around the new Fed chair. And it’s not like other major central banks such as the ECB or BOJ are in a rush to withdraw liquidity.

 

An oil shock, maybe? Beyond a short-term spike, that seems unlikely. Energy supply is much more diversified and there are too many producers keen and able to step into the breach as soon as prices rise.

 

A steep pullback in the U.S. equity-market could have painful knock-on effects in the short term. But investors will soon realize that, on a relative basis, most EM stock markets provide far superior long-term stories

And most bonds in EM offer higher real yields, backed by better growth rates and also lower debt ratios.

 

When put like this, why try to be too clever? Overall, the outlook remains extremely constructive for most emerging markets. There may be periods to rein in enthusiasm, but that doesn’t justify a bearish stance.

And just like that one more bear capitulates.

Of course, it is only when the last EM bear has finally thrown in the towel, that then and only then will the “contagious” EM crash finally take place.

via http://ift.tt/2kRGxW6 Tyler Durden