(ZH) Investors Have Become Super-Bullish On Oil, Pile Into Futures At Fastest Ra

Investors Have Become Super-Bullish On Oil, Pile Into Futures At Fastest Rate Since Dec 2020

By John Kemp, senior energy analyst at Reuters
Portfolio investors have piled into petroleum futures and options at the fastest rate since the first successful coronavirus vaccines were announced in late 2020. China’s exit from a zero-COVID strategy, along with hopes the global economy can avoid a recession and low oil inventories, have contributed to an extraordinary wave of buying across the petroleum complex.
Hedge funds and other money managers purchased the equivalent of 232 million barrels in the six most important futures and options contracts over the six weeks ended January 24.
Purchases were the fastest for any six-week period since December 2020, according to an analysis of position records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission.
In the most recent week, fund managers purchased the equivalent of 70 million barrels, mostly in Brent (+40 million) and to a much lesser extent NYMEX and ICE WTI (+4 million).
But the wave of buying spread beyond crude to encompass U.S. gasoline (+11 million barrels), U.S. diesel (+8 million) and European gas oil (+7 million).
Refinery shutdowns linked to seasonal maintenance as well as sanctions on Russia’s diesel exports are expected to deplete fuel inventories further.
The net position across all six contracts climbed to 575 million barrels (47th percentile for all weeks since 2013), up from 343 million barrels (11th percentile) on December 13.
The net position is at highest since November 8 and before that June 14.
There was a strongly bullish orientation, with long positions outnumbering short ones by a ratio of 5.93:1 (80th percentile) up from 2.58:1 (23rd percentile) five weeks earlier.
The most bullish ratios are concentrated in Brent (86th percentile), U.S. gasoline (85th percentile) and U.S. diesel (86th percentile), with less optimism about European gas oil (65th percentile) and WTI (41st percentile).
Refinery maintenance in the United States is expected to deplete fuel inventories there but leave WTI prices trailing Brent, which probably explains the differential performance.

Hedge funds became more bullish about Brent than at any time since May 2019, before the pandemic erupted and upended the oil industry.
There is a growing tension at the heart of investor positioning. In the bond market, investors are increasingly confident inflation will moderate, allowing central banks to bring an early end to interest rate rises.
In the oil market, investors are increasingly sure continued growth will cause supplies to tighten and send prices higher. But that would be inflationary – and contradicts to the benign outlook assumed by the bond market.
Oil traders and bond traders cannot both be right.

WSJ : Russia Boosts China Trade to Counter Western Sanctions

Russia Boosts China Trade to Counter Western Sanctions
China has become a supplier of key technologies that can have a military purpose

Trade between China and Russia boomed last year, providing a lifeline to Russia’s beleaguered economy and showing the limits of Western sanctions, according to a new report.

Moscow boosted imports of technologies critical to its war in Ukraine including semiconductors and microchips from China, the report by the D.C.-based nongovernmental organization Free Russia Foundation said. China’s increased purchases of Russian exports, driven by energy sales, more than offset the declines from major Western trading partners including the U.S., U.K. and some European Union countries.

“As the U.S., EU, the U.K. have all scaled back operations with Russia, China has emerged, by a wide margin, to be Russia’s most important trade partner,” the report says.

Based on 40 million entries of customs records obtained by the Free Russia Foundation, the report offers a granular view of Russia’s trade, which was obscured after the imposition of Western sanctions. In April, Russian customs authorities suspended their monthly publication of data on exports and imports, among other statistics, saying at the time that it wanted to avoid “incorrect estimates, speculations and discrepancies in terms of import deliveries.” Its January 2022 data are the latest available.

Russian and Chinese trade authorities didn’t respond to requests for comment.

China has become a supplier of some key technologies that can have a military purpose despite the Western sanctions. China sold $3.3 million worth of unmanned aerial vehicles, or drones, to Russia last year, according to the data. The report noted that drone deliveries to Russia continued in November and December from the United Arab Emirates, Hong Kong, China and Singapore.

Russia last year increased its imports of semiconductors and microchips by around 34%, with China emerging as the major source. That has helped Russia increase its overall import of chips to $2.45 billion in 2022 from $1.82 billion in 2021, despite Western sanctions targeting that trade.

Russia and China have spent years forging stronger economic ties, including a $55 billion gas pipeline and Russia’s increased usage of China’s yuan. The economic relationship has deepened even as long-simmering concerns remain among officials in Moscow that Russia could become captive to China’s economic orbit.

The Free Russia Foundation obtained the data in coordination with Madrid-based IE University from a third-party data provider that offers value-chain analysis to companies. The team that worked on the report included Russian economists and former Russian officials based outside of Russia, including Sergey Aleksashenko, a former central bank deputy chairman, and Vladimir Milov, a former deputy energy minister and an opposition politician.

To verify its validity, the authors compared the data set with official Russian trade statistics published up to January 2022 and Russia’s trade partners’ 2022 data. One of the limitations of the data set, the report says, is that the records are partially redacted for military transactions.

Trade between Russia and China rose by roughly $27 billion between March and September of last year compared with the same period in 2021, according to the report, to reach $99 billion.

Much of the growth was because of higher sales of crude, which Russia began diverting to China and other markets such as India and Turkey as Western countries restricted purchases of Russia’s energy products.

Russia also grew more dependent on Chinese goods. About 36% of its imports were from China in the period from March to September. That is up sharply from 21% in 2021 in the same period.

After Russia’s invasion, the U.S., South Korea and Japan all banned the sales of high-tech products including semiconductors on which Russia relies.

As some of Russia’s traditional suppliers of high-tech goods, such as Germany, the Netherlands and South Korea scaled back their shipments, imports from China more than doubled. In the March to September period, the value of Chinese semiconductor exports to Russia jumped from $200 million in 2021 to over $500 million last year. The number of transactions rose as well, the report says.

Russia also imported semiconductors from Turkey, Kazakhstan and Kyrgyzstan. While these countries don’t have substantial domestic semiconductor industries, Russia can purchase widely accessible chips from distributors there, analysts say.

“China is capable of producing many types of lower-tech chips domestically, so it is unsurprising Russia is buying these,” said Chris Miller, associate professor at Tufts University who wasn’t involved in the report.

Still, Mr. Miller said, “military systems use a wide array of chips and so they could be facing shortages for specific chips even if they’re able to buy large volumes of other chips.”

>>> US Research Calls

Research Calls

  • Upgrades:
    • Axalta Coating Systems (AXTA) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $40
    • Axalta Coating Systems (AXTA) upgraded to Buy from Neutral at Citigroup; tgt raised to $35.19
    • Colgate-Palmolive (CL) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $82
    • Eagle Bulk Shipping (EGLE) upgraded to Buy from Hold at Fearnley; tgt raised to $66
    • Flowserve (FLS) upgraded to Buy from Neutral at BofA Securities; tgt raised to $40
    • G1 Therapeutics (GTHX) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $10
    • Genco Shipping & Trading (GNK) upgraded to Buy from Hold at Fearnley; tgt raised to $22
    • Golden Ocean (GOGL) upgraded to Buy from Hold at Fearnley; tgt raised to $11.50
    • Kemper (KMPR) upgraded to Neutral from Underperform at Credit Suisse; tgt raised to $56
    • Lockheed Martin (LMT) upgraded to Buy from Hold at DZ Bank; tgt $523
    • Okta (OKTA) upgraded to Buy from Hold at Stifel; tgt raised to $90
    • Regeneron Pharma (REGN) upgraded to Outperform from Market Perform at Cowen; tgt raised to $875
    • Seanergy Maritime (SHIP) upgraded to Buy from Hold at Fearnley; tgt $0.70
    • Shopify (SHOP) upgraded to Buy from Neutral at ROTH Capital; tgt raised to $56
    • Star Bulk Carriers (SBLK) upgraded to Buy from Hold at Fearnley; tgt raised to $30
    • Stellar Bancorp (STEL) upgraded to Overweight from Neutral at Piper Sandler; tgt lowered to $34
    • Tesla (TSLA) upgraded to Buy from Hold at Berenberg; tgt lowered to $200
    • Xero (XROLF) upgraded to Conviction Buy from Buy at Goldman
  • Downgrades:
    • AZEK (AZEK) downgraded to Neutral from Buy at BofA Securities; tgt raised to $25
    • Boot Barn Holdings (BOOT) downgraded to Neutral from Outperform at Robert W. Baird; tgt $86
    • Celularity (CELU) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $1
    • Eastern Bankshares (EBC) downgraded to Neutral from Buy at Janney; tgt $17
    • Eastman Chemical (EMN) downgraded to Sector Perform from Sector Outperform at Scotiabank; tgt lowered to $90
    • Edwards Lifesciences (EW) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $80
    • First Interstate Bancsystem (FIBK) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $38
    • Fortune Brands Innovations (FBIN) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $60
    • General Motors (GM) downgraded to Hold from Buy at Berenberg; tgt lowered to $41
    • Kinross Gold (KGC) downgraded to Equal Weight from Overweight at Barclays
    • Lulu's Fashion Lounge (LVLU) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
    • Old Dominion (ODFL) downgraded to Underperform from Neutral at Credit Suisse; tgt $323
    • Saia (SAIA) downgraded to Neutral from Outperform at Credit Suisse; tgt raised to $288
    • Sherwin-Williams (SHW) downgraded to Hold from Buy at Zelman
    • Tanger Factory (SKT) downgraded to Neutral from Buy at Compass Point; tgt $21
    • Varonis Systems (VRNS) downgraded to Neutral from Outperform at Robert W. Baird; tgt $30
  • Others:
    • 4D Molecular Therapeutics (FDMT) initiated with an Outperform at BMO Capital Markets; tgt $50
    • Accenture (ACN) initiated with an Equal Weight at Wells Fargo; tgt $289
    • Apellis Pharmaceuticals (APLS) placed on 30-day Positive Catalyst Watch at Citigroup
    • BioMarin Pharmaceutical (BMRN) initiated with a Market Perform at BMO Capital Markets; tgt $107
    • BRP Inc. (DOOO) initiated with a Neutral at Citigroup
    • Dr. Reddy's (RDY) initiated with an Underweight at JP Morgan
    • Denali Therapeutics (DNLI) initiated with an Outperform at SVB Securities; tgt $50
    • DoorDash (DASH) initiated with an Outperform at MoffettNathanson; tgt $79
    • Federal Realty (FRT) upgraded to Buy from Neutral at Compass Point; tgt $125
    • Hilton (HLT) placed on 30-day Positive Catalyst Watch at Citigroup
    • Independence Realty Trust (IRT) initiated with a Mkt Perform at JMP Securities
    • Kohl's (KSS) initiated with a Sell at Goldman; tgt $27
    • Lyft (LYFT) initiated with a Market Perform at MoffettNathanson; tgt $15
    • Macy's (M) initiated with a Buy at Goldman; tgt $28
    • Nordstrom (JWN) initiated with a Neutral at Goldman; tgt $20
    • Penumbra (PEN) initiated with an Overweight at Piper Sandler; tgt $275
    • The Bancorp (TBBK) initiated with an Outperform at Raymond James; tgt $38
    • Tricon Residential (TCN) placed on 90-day Positive Catalyst Watch at Citigroup
    • Uber (UBER) initiated with an Outperform at MoffettNathanson; tgt $47

>>> USGapping down

Gapping down

Select index ETFs showing early weakness:

  • QQQ -1.2%,  IWM -0.9%,  SPY -0.8%,  DIA -0.6%

News:

  • MNSO -4.3% (CFO resigns; names Eason Jingjing Zhang as CFO)
  • XPEV -2.5% (names Fengying Wang as President)
  • DNA -2.1% (files for 7279426 share common stock offering by selling shareholders)
  • BX -1.4% (buyout fund plans were below expectation)

Analyst comments:

  • ODFL -2% (downgraded to Underperform from Neutral at Credit Suisse)
  • GM -1.7% (downgraded to Hold from Buy at Berenberg)
  • EBC -1.6% (downgraded to Neutral from Buy at Janney)
  • EW -1.5% (downgraded to Neutral from Overweight at Piper Sandler)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • SOFI +8.6%, PHG +5.4%, CINF +0.8%

Other news:

  • GMVD +101.7% (announced that it has received a patent issue notification from the United States Patent and Trademark Office for its monitoring products marketed in the United States)
  • ARLP +12.3% (increases its quarterly distribution by 40% to $0.70/unit; also reported earnings)
  • SCLX +10% (Sorrento Issues "FAQ" Regarding the Dividend of Scilex Holding Company (SCLX) Common Stock)
  • MLEC +6.2% (files for 35865887 share common stock offering by selling shareholders; relates to warrants)
  • EVOK +4.2% (announces joint stipulation of dismissal in GIMOTI patent infringement case against Teva Pharma)
  • XERS +4% (FDA granted its subsidiary Xeris Pharmaceuticals orphan-drug exclusivity for Recorlev)
  • VZLA +3.1% (upsizes private placement financing to $39 mln)
  • GH +1.6% (receives FDA approval for Guardant360 CDx as companion diagnostic for Menarini Group's ORSERDU for treatment of patients with ESR1 mutations in ER+ HER2- advanced or metastatic breast cancer)

Analyst comments:

  • FLS +1.1% (upgraded to Buy from Neutral at BofA Securities)
  • CL +1% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • LMT +0.5% (upgraded to Buy from Hold at DZ Bank)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • SCLX +9.4%, EOLS +8.3%, ARLP +7.3%, PHG +6.6%, MLEC +6.2%, SRNE +5.9%, VZLA +3.1%, NVS +0.6%, HLN +0.5%
  • Gapping down:
    • MNSO -4.6%, XPEV -2.8%, BX -2%, NEWT -1.4%, QQQ -1.4%, BIIB -1.1%, IWM -1.1%, DNA -1%, SPY -1%, DIA -0.8%

>>> Europe : Brokers Upgrades & Downgrades - 30th of January 2023 V2(+)

>>> Up
* Amundi Raised to Buy at Deutsche Bank; PT 72 euros
* Atlas Copco Raised to Reduce at AlphaValue/Baader
* Auto Trader Raised to Overweight at Barclays; PT 725 pence
* Colgate-Palmolive Raised to Overweight at Morgan Stanley; PT $82
* HeidelbergCement Raised to Buy at HSBC; PT 68 euros
* H&M Raised to Buy at Deutsche Bank; PT 150 kronor
* IDS PT Raised to 135 pence from 115 pence at Liberum (+)
* J. Martins Raised to Add at AlphaValue/Baader
* Moneysupermarket Raised to Overweight at Barclays; PT 270 pence
* Netflix Raised to Buy at Masterlink Securities
* Snap Raised to Buy at CFRA on Cost Cuts, Engagement Levels
* Tesla Upgraded to Buy at Berenberg, BMW and GM Downgraded

>>> Down
* AUTO1 Cut to Equal-Weight at Barclays; PT 8.80 euros
* BMW Cut to Hold at Berenberg; PT 95 euros
* Castellum Cut to Underweight at JPMorgan; PT 140 kronor
* General Motors Cut to Hold at Berenberg; PT $41
* HelloFresh Cut to Equal-Weight at Barclays; PT 25.50 euros
* Hexpol Cut to Hold at DNB Markets; PT 120 kronor
* Instalco AB Cut to Hold at SEB Equities; PT 45 kronor
* InterContinental Hotels Cut to Hold at Peel Hunt; PT 5,750 pence (+)
* ISS Cut to Neutral at UBS; PT 165 kroner (+)
* Lulu's Cut to Sector Weight at KeyBanc
* Microsoft Cut to Hold at Fundamental Research; PT $259.47
* Montana Aerospace Cut to Neutral at Oddo BHF (+)
* Partners Group Cut to Hold at Deutsche Bank
* Rentokil Cut to Hold at Numis; PT 470 pence
* Seplat Energy Cut to Neutral at FBNQuest; PT 229.13 pence
* Siltronic Cut to Underperform at Oddo BHF; PT 75 euros (+)

>>> Initiation
* BioMarin Rated New Market Perform at BMO; PT $107
* Brenntag Rated New Overweight at Morgan Stanley; PT 85 euros
* Cloudberry Clean Energy Rated New Neutral at SpareBank
* Edda Wind Rated New Buy at Fearnley; PT 40 kroner (+)

>>> Call
* Amundi Has Strong Fundamentals, Raised to Buy: Deutsche Bank (+)
* AutoTrader Upgraded, HelloFresh and Auto1 Downgraded at Barclays (+)
* *EUROPEAN BANKS SECTOR UPGRADED TO OVERWEIGHT AT BARCLAYS (+)
* *EUROPEAN UTILITIES SECTOR CUT TO UNDERWEIGHT AT BARCLAYS (+)
* IHG Downgraded to Hold at Peel Hunt With Positives Now Priced In (+)
* JPMorgan Turning More Cautious on European Property Near-Term
* Morgan Stanley’s Wilson Says Don’t Buy the Rally as Fed Looms
* SGS Margin Outlook at Risk, Cut to Underweight at Morgan Stanley
* Sinch Re-Rating Has Gone Too Far, Morgan Stanley Downgrades
* Tesla Upgraded to Buy at Berenberg, BMW and GM Downgraded

WWD : Tiffany and Nike Tease Upcoming Collaboration After Sneaker Photos Leak

Tiffany and Nike Tease Upcoming Collaboration After Sneaker Photos Leak
Tiffany & Co. and Nike released teasers to their social media accounts that confirm rumors of an upcoming collaboration between the two brands.

Call it a meeting of the minds. Speculation that Tiffany & Co. is collaborating with Nike was confirmed Sunday when the two brands released a visual teaser to officially reveal their tie-up.

The teaser was posted to both Tiffany and Nike’s social media accounts, and was also featured in a New York Times ad in the paper’s Sunday print edition. It shows a Tiffany blue shoe box with a Nike swoosh and says, “A legendary pair.”

Rumors around the collaboration began circulating on Jan. 24, when leaked images of a black suede, low-top Air Force 1 featuring a Tiffany blue leather swoosh hit the internet. The images also depict a sterling silver back plate on the sneaker that appears to take visual reference from the jeweler’s classic Return to Tiffany designs.

Representatives for Tiffany declined to comment at this time.

The teaser did not provide any specifics relating to product, but if the sneaker speculation is true — as the teaser’s shoe box may indicate — it would mark Tiffany’s first foray into footwear. In 2005, the jeweler got an unofficial taste of its potential in the category. Then, Nike enlisted Nicholas Tershay, also known as Nicky Diamonds, to design a pair of low-top dunks on behalf of his skater label Diamond Supply Co.

The resulting sneaker — featuring stamped black crocodile leather trim and a silver swoosh set against a backdrop of Tiffany blue mesh and leather — was dubbed the “Tiffany.”

The jeweler did not have any involvement in the design, but the sneaker has been considered a classic and is available for sale on Sotheby’s website for $3,850.

Tiffany has engaged in an increased number of brand collaborations since its 2021 acquisition by LVMH Moët Hennessy Louis Vuitton. The jeweler has teamed with companies including Supreme, Fendi and Patek Philippe, as well as artist Daniel Arsham and The Andy Warhol Foundation for the Visual Arts.