Trump Pumps Fake Oil Price Crisis While Strangling Venezuelan Exports

Donald Trump sent the oil market into a tailspin Monday with one tweet claiming oil prices are too high and blaming OPEC for it. Is Trump unaware that oil prices are a function of supply and demand? Or is he deliberately shifting the blame off his destructive embargo of Venezuela?

Though it is a fact that oil prices are at a three month high, “Oil prices are getting too high,” is merely Donald Trump’s opinion.

And calling the world “fragile” and suggesting higher oil prices would be some kind of catastrophe is an alarmist narrative.

Trump is Being a Drama Queen About Oil Prices

Trump’s overly-dramatic tweet fits in nicely with the Goldman Sachs report from earlier today predicting that Brent Crude oil will go even higher to $75/bbl before the end of the year.

But trying to scare up a panic over oil prices is a cry for attention from the sitting president, one that fits in with his television persona as a tough world negotiator.

That Goldman Sachs report also said the $70-$75/bbl trading range would be temporary:

“‘While prices could easily trade in a $70-$75/bbl trading range, we believe such an environment would likely prove fleeting,’ according to Goldman’s global head of commodities research Jeffrey Currie and senior commodity strategist Damien Courvalin.”

And oil prices are determined by supply and demand. So they’re not “too high,” as Donald Trump avers. They’re at the level that reflects supply and demand.

Oil Prices are Higher Because of Involuntary Supply Curbs in Libya and Nigeria

In Libya, the National Oil Corporation refuses to start production in the Sharara oil field, the North African country’s biggest. | Source: Wikimedia Commons

One reason oil prices are higher is because of involuntary supply curbs in socially and politically unstable Libya and Nigeria.

In Libya, the National Oil Corporation refuses to start production in the Sharara oil field, the North African country’s biggest.

The facilities were recently seized by a Libyan militia group, and the oil company’s chairman says the militia has “committed violent and terrorizing acts against workers.”

In Nigeria, contentious political elections underway now have dampened the country’s oil production. Western military interventions have destabilized both countries.

Libya and Nigeria Are Both Obama and Clinton’s Fault

The Obama administration’s regime change intervention in 2011 is partly to blame for the oil crisis. | Source: U.S. Navy

That includes a bill signed by President Obama in 2016 to station U.S. military boots on the ground in Nigeria, stirring up more armed conflict there.

It also includes the Obama administration’s 2011 regime change intervention in Libya, backed by British and French intelligence, as well as U.S. air power.

The result was an unmitigated catastrophe of violent civil disorder, warring factions, and a deluge of new terrorist recruitment, training, and planning in the power vacuum left by the relatively stable, secular government of Muammar Gaddafi.

What makes the intervention in Libya all the more baffling is what a close partner Gaddafi had been with both the Bush and Obama administrations in the Global War on Terror/Overseas Contingency Operation after 9-11.

So the previous administration and both major political parties in Washington deserve their share of the blame for the 300,000 barrels a day that aren’t pumping through Sharara.

Venezuela is Trump and Bolton’s Fault

Nicolas Maduro Petro
Donald Trump himself is to blame for high oil prices, given his administration’s intervention in Venezuela. | Source: Shutterstock

Oil prices are also higher than they would have been otherwise as a result of Donald Trump’s own half-baked geopolitical interventions as president of the United States.

Most notably, the White House blockaded oil shipments to and from Venezuela with an embargo on Venezuelan oil last month.

In a research note Monday, Goldman Sachs said the disruption in oil supply from Trump’s embargo on Venezuela is likely to reach as high as 300,000 bbl/d in the coming months:

“While the decline in net exports has been softened so far by the use of domestic light crude for blending, we believe Venezuelan disruptions are likely to accelerate in coming months to potentially 200-300 kb/d if no political resolution occurs.”

At today’s OPEC Reference Basket price of $66/bbl, that’s $6.8 billion worth of oil annually that Donald Trump is personally responsible for keeping stuck in Venezuela.

So if the world is really so fragile that it can’t take an oil price hike, then instead of telling OPEC to loosen up and take it easy, Donald Trump should take it easy on Venezuela.

Donald Trump Image from AFP PHOTO / JIM WATSON


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Author: Wes Messamore
Image Credit: Source: AFP PHOTO / JIM WATSON

Dow Jones Winning: Why China’s Stock Market Surging For First Time in 3 Months is Crucial

For the first time in 3 months, the Chinese stock market has recorded a 3 percent increase triggered by the optimistic prospect of a comprehensive trade deal. The Dow Jones is nearing the 26,000 point mark after initiating a strong rally in the past two weeks.

The solid movement of the CSI 300 Index, which replicates the performance of top 300 stocks in the Shanghai and Shenzhen stock exchanges, has shown that investors in Asia highly anticipate the trade talks with the U.S. to see significant progress in the weeks to come.

The CSI 300 Index made robust gains in anticipation of satisfactory trade talks between the US and China. | Source: TradingView

The Dow Jones recorded a 1.3 percent rise on February 17 and is en route to breaking out of the 26,000 point level for the first time since November.

Dow Jones Rally Expected, Analysts Say Trade Deal Fears are Exaggerated

With jobs growth and household balance sheets at record highs, the U.S. is arguably in a better position than China in any given time frame.

The growing number of defaults in China has placed more pressure on the domestic market and the authorities to achieve a deal with the U.S.

A full-scale trade agreement is crucial for both countries in the short-term as it would alleviate significant pressure from the Chinese economy and strengthen the rally of the Dow Jones and the U.S. stock market in general.

The stock market of China and the rest of Asia are recovering in a period during which the outcome of the trade deals remains uncertain.

The Trump administration has publicly expressed its intent to consider a 60-day extension on the March 1 deadline, a move that could destabilize major markets.

However, the Chinese market has rebounded strongly in the last 24 hours, demonstrating the growing confidence of investors in the prospect of the ongoing trade talks.

Baird vice chairman for equities Patric Spencer said that the fear around the result of the trade talks has been overblown. With the newly adopted patient approach by the Federal Reserve, the executive stated that the market is in a decent place to maintain its momentum.

“The market has been worried about the China tariffs but Trump wants a deal and a lot of the fears are generally overblown. The more patient terminology from the Fed has been fairly accommodative for markets so far.”

Recently, as Admisi strategist Marc Ostwald said, investors have begun to focus on the positives over potentially negative factors that could lead the stock market to the downside.

Similarly, Direxion Investments managing director Paul Brigandi said last week that investors in the U.S. market have been trading based on momentum and the strong performance of the Dow Jones.

The Dow Jones Industrial Index has also seen momentum stick since the turn of the year. | Chart via TradingView

As such, if the trade talks with China continue to show progress in certain areas, the near-term rally of the Dow Jones and the rest of the U.S. market could be sustained.

“Momentum is a key component right now. A lot of people are jumping in to get on board,” he said.

Some Difficulties in the Trade Talks

The stalemate in the trade discussions with China seems to derive from the requests of the U.S. on fundamental changes to the structure of the Chinese economy.

The U.S. government has reportedly asked Chinese negotiators implement significant changes in the country’s industrial policies.

Despite the speed bump in the U.S.-China trade talks, the optimism stems from the intent of both countries to move forward with the discussions without imposing additional tariffs or restoring previous tariffs.

Most of the positive movements in the stock market of the U.S. and China are fueled by the certainty of investors that while the trade deal could be pushed beyond the original deadline, the two countries are not in a rush to impose higher tariffs in the short-term.


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Author: Joseph Young 
Image Credit: Source: AP Photo/Richard Drew)

JPMorgan Bank is Set to Develop its Own Cryptocurrency—JPM Coin

JPMorgan is making moves targeted at cementing its stance as a force to reckon with in the emerging digital asset market. The financial institution has recently made it known that it has plans to launch its own cryptocurrency — JPM Coin. Although, still an agenda for the future, it will be a major milestone in the bank’s plan for a worldwide crypto dominance.

JPMorgan has Plans For In-House  Development

The coin is going to get worked on by engineers in the bank and its development won’t be outsourced. According to a recent report announcing the intention of the bank to develops the coin, it was stated that the coin development is moving to real world trials in “a few months”.

The announcement also made it known that the bank intends on using JPM Coin to “settle some portion of its transactions between clients of its wholesale payments business in real time”

Currently, the bank moves more than $6 trillion daily as part of its business, in light of this, even a small portion of this will significantly increase the overall capitalisation of the crypto market.

Proposed Uses of the JPM coin

In a recent statement Umar Farooq, JPMorgan’s blockchain lead, has noted three of the likely uses of the JPM coin. Farooq stated that the bank token can be used for “replacing wire transfers for international payments by large corporate clients and cutting settlement times from days to just moments. It could also be used to provide instant settlement for securities issuances, as well as to replace U.S. dollars at held internationally by subsidiaries of major corporations using JPMorgan’s treasury services.” Farooq continued that: “Is there a way to ensure that a subsidiary can represent cash on the balance sheet without having to actually wire it to the unit? That way, they can consolidate their money and probably get better rates for it.”“Pretty much every big corporation is our client, and most of the major banks in the world are, too,” he concluded.


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Author: Joshua Tayo
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How Apple & Google Transformed into a Systemic Risk to the US Stock Market

According to Credit Suisse strategists, the “reversal of fortunes” seen by tech behemoths Apple and Google-parent Alphabet are dragging down the performance of the overall US stock market. The S&P 500 forecast has been “skewed” by companies suddenly transitioning from high growth forecasts to much more modest outlooks.

This Bad Apple Could Roil the S&P 500

An “unusually high” number of big US companies have revised previously-bullish earnings forecasts downwards. These include Alphabet and Apple, as well as Exxon Mobile, GM, Micron, Chevron, and ConocoPhillips. Oil and technology companies are also pushing US stock market growth downward.

The S&P 500, according to Refinitiv, will now only grow by 0.3% in the first quarter of 2019 compared to 23% in all four quarters of 2018. Overall S&P 500 growth for 2019 is now expected to be 4.5%.

Apple, Alphabet, and Others See a Reversal of Fortune in 2019 Impacting the US Stock Market | Source: Credit Suisse

There have only been three other times since 1990 that so many companies have seen such a reversal of growth. Per the chart above, 71 quarters have seen two or fewer top 20 growth contributors move to the worst-performing segment. Thirty-five quarters have seen less than a handful of companies reverse so rapidly, and just three have seen more than seven do so, including the first quarter of 2019.

Cited in CNBC, Patrick Palfrey, a US equities strategist at Credit Suisse, says:

“For the typical company, are they seeing a problem? The answer is not really. You can get a few bad apples distort the underlying trend.”

US Stock Market at Mercy of Mega Companies and Tax Cuts

Palfrey believes other companies on the S&P 500 are growing at between 5% and 6%, adding:

“There is this massive skew for these mega cap companies that had really great years, over the past several years and in 2019, the trends are uninspiring for them.”

Credit Suisse also points to the importance of Trump’s recent tax cuts in skewing stock market growth. The cuts added 7% to 8% to earnings growth in 2018 but are now acting as a headwind, dropping profit growth by 1%. Benefits included last year, like deductions for capital expenditures, are no longer available.

Breaking Down Growth Struggles at Apple and Google

Apple reported profit growth of over 40% in the third-quarter of 2018 and is now expected to see a 12.3% decline. Alphabet’s profits grew 23.9% in the third-quarter of 2018 but are likely to fall 21% in the first quarter of 2019.

S&P 500 (Blue) Apple (Red) Alphabet (Orange) Performance Over the Last Year Source: TradingView

The two have moved from being at the top of the S&P 500 for growth to the bottom 20%. They are joined by Exxon Mobil – dropping from 51% growth to a 14.5% decline – and Chevron, dropping from 148% growth to a 21% decline for the same period.

Apple’s ability to swing the US stock market has never been in doubt. Its shocking sales forecast revision in early January dropped its own share price 10% and sent the Dow Jones Industrial Average plummeting by a whopping 500 points. Apple and Microsoft are still battling to be America’s largest company by market value and are closely followed by Alphabet and Amazon.

These Silicon Valley giants helped propel the US stock market to record highs in 2018, but as the economy moves deeper into 2019, they may prove to be its greatest foil.


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Author: Melanie Kramer
Image Credit: Featured Image from AP Photo / dapd, Martin Oeser

Tesla Cheats with New Battery Supplier, Panasonic Forecast Plunges

Panasonic wasted no time lowering its guidance after its bread-and-butter customer, Tesla, announced it was buying another battery supplier to power its electric vehicles.

The lucky company Tesla chose to replace Japan-based Panasonic is California-based Maxwell Technologies.

On the news, Panasonic lowered its profit expectations by 9%. The possible loss of Tesla isn’t the only culprit that led to the lowered guidance. The struggling tech player revealed it was also being hurt by weak demand in China for auto components and factory equipment. China’s slowing economy and the overhang of trade wars have weighed on countries and tech companies all over the world.

Musk Praised Panasonic Just Three Months Ago

Back in November, it appeared that the partnership between Tesla and Panasonic was going well. CEO Elon Musk took to Twitter to sing the praises about Panasonic helping it boost profits.

Here’s the tweet.

However, Musk had other plans. CCN raised the caution flag on Panasonic last month. We pointed to Tesla’s November indication that it would diversify its sources after experiencing several problems with its Model 3 supply chain.

On the heels of that announcement, rumors swirled that Tesla was on the lookout for a new battery supplier.

In previous reports, CCN noted that Panasonic was also feeling the effects of the possibility of losing Tesla. Its stock price was down by more than 2% on the news that the carmaker was looking for a new supplier.

Tesla Giveth Then Taketh Away

Elon Musk | Source: Shutterstock

Interestingly, when this supply agreement was announced, Tesla stated:

“The agreement supplies Tesla with Panasonic’s lithium-ion battery cells to build more than 80,000 vehicles over the next four years. It guarantees the availability of enough cells in 2012 to meet Tesla’s aggressive production ramp-up and fulfillment of more than 6,000 existing Model S reservations. This supply agreement helps ensure Tesla will meet its cost and margin targets for Model S.”

The purchase of Maxwell Technologies comes less than a decade since Musk and company inked the deal with Panasonic. The electric vehicle maker had lauded Panasonic as being a battery cell manufacturer and a diverse supplier to the global automotive industry.

Musk’s Always Up To Something, Could Be Good This Time

The move is a disappointing one for Panasonic, but it’s a solid one for Tesla, which has been under financial pressure.

In January, CCN reported that Tesla enjoyed a solid Q4 2018 with record production and delivery numbers driving the company’s first profit in two years. The company posted a net profit of $311.5 million and $891 million in free cash flow. However, the company’s stock price slumped 9% after it failed to meet investor targets for delivery and production numbers.

Tesla’s stock price has traded wildly over the past several months.

Owning battery supplier Maxwell should help the company lower its operating costs. The heavily indebted electric car company, whose CFO stepped down just four days ago, is making the acquisition in an all-stock deal.

A Tesla stock shorter (Musk has extreme disdain for them) responded to the Maxwell announcement with this tweet.

Maxwell already supplies batteries to General Motors and Volkswagen subsidiary Lamborghini. Specifically, it provides so-called ultracapacitors that store electricity and complement battery cells.


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Author: Tedra DeSue 
Image Credit: Featured Image from Shutterstock

First Look: Elon Musk Teases SpaceX’s Bold New Raptor Rocket

Elon Musk posted four tweets last night demonstrating the new Raptor rocket engine. SpaceX engineers have been hard at work finalizing the next-generation rocket technology that will eventually power trips for the exploration of Mars.

Musk Tweets Proof of Rocketry

While most of America was focused on the Super Bowl, Musk was in Texas at the SpaceX testing site. The rockets had recently been shipped from California to the testing site near McGregor, Texas. Musk and his team were up late preparing for the first test late Sunday night. A few hours later, the first video went live on Twitter.

Viewed more than a million times by press time, the 4-second video shows an extremely long flame shooting out of the Raptor. A second video went shortly thereafter, twice as long and loud:

Local Civilian Spots Reusable Rocket Test at SpaceX Facility

A Central Texas local reportedly noticed what was going on at SpaceX and tweeted about it:

Intended to be reusable, the engines use cryogenic liquid methane and liquid oxygen. Previous SpaceX rockets used RP-1 Kerosene and liquid oxygen. Developing the rockets in-house was part of Musk’s business plan from the start, according to an early SpaceX investor.

When the rockets were first shipped from California to Texas, Musk noted that the company is working hard to get a moon-worthy rocket to ready. The ultimate goal of the Raptor rockets is still for Mars exploration. The Raptor is intended to replace existing rockets already in production, the Falcon 9, Falcon Heavy, and Dragon.

The Raptor product is currently on track. Musk has previously tweeted that the company will attempt a moon trip first.

SpaceX: Mars Exploration is the Goal

While SpaceX keeps its eyes on human exploration of Mars, heavily developing the Raptor, it is under financial pressure to actually develop revenues. The company is good at winning open contracts from governments and large companies around the world, but recently suffered a spate of layoffs. Musk blamed these layoffs on the “absolutely insane”  Starlink global high-speed internet project as well as a co-existing Mars rocket project.

Musk says the company needs to be “spartan” in its expenditures. The revamped approach to Raptor appears to be an attempt to cut costs by developing the rocket in stages. First it will go to the Moon and potentially function as an orbiting product around Earth. Later it will be further developed and upgraded into a rocket with the potential to explore Mars.

While Musk believes that layoffs at his day job — electric carmaker Tesla — were necessary in order to keep the company’s products relatively affordable, he thinks the SpaceX research projects are costing too much and seems to regret the SpaceX layoffs. He reportedly said during an investor call last week:

“And so, SpaceX has to be incredibly spartan with expenditures until those programs reach fruition.”

When Musk says “insane,” he doesn’t necessarily mean it in a negative way. As a businessman, he’s referring to the fact that his company is engaged in services once only provided by governments with virtually unlimited resources. When SpaceX eventually develops a space highway to Mars for mankind, they will either be the only company doing it or the only one doing it well. Untold fortunes await SpaceX at that point.

SpaceX IPO: Will It Ever Happen?

Still, SpaceX has yet to reach out for public money via an IPO. In 2017, rumors rocked the investor community: SpaceX would be launching an IPO that year. A year later, the company went for more venture capital funding, selling some shares at $135 to Fidelity. Its valuation at that time was $27.5 billion.

While SpaceX could focus on more terrestrial projects like competitive satellites, which they are also into, the company’s true mission is deep space exploration. The potential for profit from space exploration is an unknown quantity, but it could easily go into the trillions. As profit goes, one potential area of investment would be minerals acquisition. The quantities of gold, platinum, and other rare materials in space by definition outsize supplies on earth. Developing a profitable method of extraction from foreign planets and space rocks is but one way that SpaceX could, in the long run, become the most profitable company in history.

Tesla Opens A Chaotic Trading Day After SpaceX Tweets

As for Tesla, trading early this morning showed a big sell-off. Buy orders kicked in and kicked it up momentarily. After an hour or so of trading, things were on a recovery path.

While SpaceX is a separate company from Tesla, its fate is very much tied to Tesla. Good news about SpaceX can reflect well on Tesla, and vice versa.

Certainly the weekend’s activities demonstrate one thing about Musk: he is fully grounded. He understands that SpaceX needs to get realistic in its endeavors, and completion of rockets for near-term use (and potential sale to governments and others) is one of many ways they can do so. As for SpaceX engineers, this was likely not the first or last time they’ll be putting in long weekend hours in pursuit of a noble dream.


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Author: P.H. Madore 
Image Credit: Featured Image from Shutterstock. Charts from Tradingview.

Dow Jones Sess Stunning 10% Recovery, But This One Key Factor Could Fuel Even More Growth

Since January 3, within a one-month span, the Dow Jones Industrial Average has recovered from 22,682 points to 25,102 points, by more than 10 percent.

It has been a stunning 30 days for the Dow Jones, which was at risk of entering a bear market after falling by 19 percent from its all-time high.

The short-term recovery of the Dow was mainly attributed to the Federal Reserve rate, which is expected to remain stable in the range of 2.25 percent to 2.5 percent.

But, another key factor may have largely affected the sentiment around the U.S. stock market throughout the past 48 hours.

Jobs, Jobs, Jobs: U.S. Shutdown Has Minimal Impact as Dow Jones Recovers Off of It

A Reuters report revealed that contrary to the expectations of investors, the shutdown of the U.S. government last month had minimal impact on jobs.

Throughout the 34-day period, more than 800,000 federal workers missed two paychecks, which account for around 0.5 percent of the workforce of the U.S.

Although the unemployment rate of the U.S. increased to 4 percent as a result of the shutdown, the Labor Department said it had no “discernible” effect on job growth.

Most major industries recorded a rise in job growth from December to January.

  • Employment in construction rose by 52,000 in January
  • Employment in manufacturing increased by 13,000 in January, following a 20,000 increase in December
  • 8,000 federal workers were hired by the government in January

Job growth rose In industries including healthcare, finance, and transportation as well, eliminating the concerns of investors that the shutdown could slow down the recovery of the U.S. Stock market.

With job growth strengthening and increasing at a gradual pace and the Federal Reserve vowing to remain patient on rate hikes, the stock market is expected to sustain its momentum throughout the short-term.

Another Variable: U.S.-China Trade War, Trump Remains Positive

Earlier this week, the U.S. government filed more than 20 charges against Chinese telecom and electronics giant Huawei, fueling the tension between the U.S. and China.

The South China Morning Post reported that the trade talks had been overshadowed by the Huawei indictments, which analysts foresee could lead to a substantial fine for the Chinese company.

A professor at the National University of Singapore David De Cremer said:

“It is likely that Huawei will receive a very big fine. Such a decision would communicate to allies of the U.S. to join in this battle and push Huawei out of their markets.”

If the indictments lead to an export ban on Huawei, local analysts in China said that it could have a major impact on both Huawei and its partners.

Crucially, it could heavily affect the “Made in China 2025” roadmap set forth by the government of China that may alter the outcome of the trade talks.

Jia Mo, a Shanghai-based analyst, told SCMP:

“Imposing an export ban on Huawei will inevitably have a tremendous impact, whether for Huawei or for its business partners in the US.”

Analysts emphasized that the Huawei case has added another uncertainty to the trade discussions between the U.S. and China.

IDC Asia-Pacific vice president Simon Piff added:

“Whether [the Huawei indictments] are due to security concerns, business concerns or political concerns are now so blurred it is difficult to tell what the outcome would be.”

But, U.S. President Donald Trump has said that the meeting is going well with good intent from both sides despite the Huawei dispute, which could serve as a catalyst for the short-term growth of the U.S. economy.

If the job growth is sustained throughout the first quarter of 2019 and the Federal Reserve maintains its rate in the 2.25 to 2.5 percent range, the U.S. stock market could aim for a full-fledged recovery from its December downturn.


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Author: Joseph Young 
Image Credit: Featured Image from Shutterstock

This Pot Stock Just Surged 90% for the Stupidest Reason Ever

More than three dozen cannabis companies applied for the POT symbol on the Canadian Securities Exchange after it became available this week. Potash Corporation relinquished the symbol, and so many Canadian companies wanted it that the CSE ran a first-ever random lottery for the symbol. A small firm in Vancouver, Weekend Unlimited, won the ticker in the lottery.

The company formerly had the ticker YOLO, which stands for “you only live once.” Most sites like TradingView were still showing YOLO as the company’s ticker. In the 24 hours after it officially became POT, it surged 65%.

Pot Stock Almost Doubles after Winning Coveted Ticker Symbol

YOLO/POT (Weekend Unlimited) rose more than 90% in the 24-hour period.

At the time Bloomberg wrote on the subject earlier today, YOLO/POT was on the way up. By press time it had risen more than 90% over the 24-hour period. The stock market is a psychological game. Traders believe in brand recognition. The strategy is likely along these lines: as people come in and invest in the marijuana industry, one of the first symbols they will consider is POT.

In a prepared statement, Weekend Unlimited CEO Paul Chu says:

“Weekend Unlimited is thrilled to add the iconic POT trading symbol to its identity. As a fast-growing multi-state operator, Weekend Unlimited is developing lifestyle brands around recreational and wellness to help define the future of the cannabis industry. The POT sy+++mbol is a tremendous fit with our brand identity. […] The POT lottery served to raise the profile of Canada’s leadership in legal recreational cannabis and we believe it will also serve to raise Weekend Unlimited’s profile.”

“Weekend Unlimited was not on the list of 8 cannabis companies given a “buy” or “speculative buy” rating by Canaccord recently. Perhaps the only pot stock on the list with a memorable symbol is Curafleaf, whose ticker is CURA.

Other stock exchanges have POT symbols, but the CSE might be the only one where it is a cannabis company. The New Zealand exchange, for example, has POT – Port Of Tauranga NPV. According to Bloomberg, there may soon be another YOLO symbol on the New York Stock Exchange, created by AdvisorShares Pure Cannabis ETF.


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Author: P.H. Madore 
Image Credit: Featured Image from Shutterstock

Canaccord Says These 8 Pot Stocks Deserve a Look Thanks to the US Farm Bill

Pot stock analysts believe that the CBD industry is about to explode. The reason? The $867 billion Farm Bill, signed into law by US President Donald Trump on December 20, officially excluded all cannabis products with 0.3% or less THC from the Controlled Substances Act. (THC is the psychoactive element in marijuana that gets users “high.”)

CBD has medicinal uses and is already legal in many states, as is its psychoactive component. As a result, farmers anywhere in the United States can freely grow “hemp” for both industrial and medical purposes.

Several Pot Stocks Set to Explode

Charlotte’s Web is one of eight pot stocks that Canaccord thinks could go higher within the near future. | Source: Shutterstock

Canaccord Genuity, a wealth management firm and investment bank with offices all over the world, believes the effects of CBD legalization will be huge. They rated the following stocks as most promising in a note today:

  • Charlotte’s Web Holdings, Inc. (CWEB-CSE)
  • Canopy Growth Corporation (WEED-TSE)
  • Curaleaf Holdings, Inc. (CURA-CSE)
  • Liberty Health Sciences Inc. (LHS-CSE)
  • 1933 Industries, Inc. (TGIF-CSE)
  • DionyMed Brands, Inc. (DYME-CSE)
  • KushCo. Holdings, Inc. (KSHB-OTC)
  • MJardin Group, Inc. (MJAR-CSE)

Of these, only Charlotte’s Web Holdings was given a firm “buy” rating. The others were categorized as “speculative buys.” The CNBC article on the subject lists the buy targets. In the case of CWEB, that price is $21 Canadian. At press time, CWEB was trading at $19.70, down from its 24-hour high of $20.73. If the advice of Canaccord is to be taken, that means there is still ample room to buy CWEB. However, do note that this article is not intended to be financial advice.

CWEB opened around $10 last August. It has now nearly doubled in value. If Canaccord is correct, it could have a lot of room for growth in the near future as American farmers begin harvest CBD.

The first-quarter report from Canaccord has a message from CEO David Davieu regarding the strategization of the firm going forward. Davieu notes that growth stocks may face a challenging environment in the coming quarters. As a hedge, the firm is moving heavily into cryptocurrency and cannabis companies.

“With signs that the economic backdrop could become more challenging for growth stocks, we anticipate that rising commodity prices will drive increased activities in the natural resource sectors, a historic area of strength for our firm. We also anticipate growing interest in non-traditional sectors where Canaccord Genuity has established a strong market position, such as cannabis and digital assets.”

Canaccord Going Heavy on Cannabis and Cryptocurrency

Canada legalized marijuana nationwide last year. Pot stocks from the United States’ neighbor to the north have been booming as a result. For example, CWEB opened in August 2018 around $10, and has in the meantime almost doubled its per-share price.

Canaccord is continuing their expansion into digital assets despite lingering doubts about a Bitcoin ETF. Their doubts were again confirmed earlier this month when a Bitcoin ETF application was summarily withdrawn.

The note acknowledges that the Food and Drug Administration has yet to get fully on board with CBD legalization, but Canaccord this is a temporary situation.

“While the FDA’s stance has added some initial caution by retailers looking to enter the CBD space, we believe this to be transient, and expect many mass market retailers to begin distributing CBD products over the course of 2019.”

Marijuana legalization has revitalized several economies in the United States, most notably Colorado, which saw a $66 million marijuana tax surplus in fiscal year 2015, the first full year of total legalization. More than 60% of Americans now support legalization of marijuana, paving the way for what may amount to a mandate for elected officials in coming years.


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Author: P.H. Madore 
Image Credit: Featured Image from Shutterstock. CWEB chart from TradingView.com.

Dow Pounds Toward 250 Point Gain, Fidelity Brings out the Bitcoin Bulls

Both Dow futures and the bitcoin price are making strides ahead of the US trading session, with bulls in the stock market and nascent cryptocurrency sector finding much to be optimistic about.

Dow Pounds to Monster Gain

As of 8:31 am ET, Dow Jones Industrial Average futures had gained 223 points or 0.91 percent, implying a monster opening bell rally of 234 points. S&P 500 futures climbed 0.44 percent, and Nasdaq futures responded with a 0.88 percent upside pop.

Dow Jones Industrial Average (blue), S&P 500 (red), and Nasdaq (orange) futures are all trading up ahead of Wednesday’s open.

The US stock market had been a mixed bag for investors on Tuesday. Following a wobbly start, the Dow closed the day in the green with a 51.74 point or 0.21 percent gain. Both the S&P 500 and Nasdaq, on the other hand, slipped into the red. The S&P 500 posted a minor 0.15 percent decline, but the tech-heavy Nasdaq plunged 0.81 percent.

Apple, Boeing Earnings Reports Power Dow’s Pre-Market Advance

Wednesday’s major pre-market rally came the day after Silicon Valley giant Apple delivered its quarterly earnings report. Analysts weren’t exactly impressed with the firm’s results — Apple barely hit revenue estimates and iPhone revenue plunged — but most of this had already been baked in when CEO Tim Cook slashed guidance targets earlier in the month. For shareholders, it seems, no news is good news, and AAPL stock popped in after-market trading

The stock market rally continued ahead of Wednesday’s open, thanks to a blockbuster earnings report from Boeing, whose shares are up nearly 6 percent in pre-market trading.

Earning season has thus far not been the wrench-in-the-recovery that bears had warned it would be. According to FactSet, almost three-fourths of S&P 500 companies who have published their quarterly earnings have beat estimates.

Trump to Congress: Don’t Waste Your Time Negotiating if a Wall’s Not on the Table

Though not likely to influence the direction of the stock market today, a variety of storm clouds remain on the horizon.

One of these is the potential for a second US government shutdown, which would kick in when the three-week continuing resolution runs out on Feb. 15. President Donald Trump continues to demand the border wall funding he failed to achieve during the previous shutdown, which lasted a record 35 days.

Tweeting on Wednesday, he warned Congress that their spending package negotiations and border security proposals are a waste of time if they do not include wall funding, or at the very least what he calls a “physical barrier.”

“If the committee of Republicans and Democrats now meeting on Border Security is not discussing or contemplating a Wall or Physical Barrier,” Trump said, “they are Wasting their time!”

The first government shutdown already cost the US around $11 billion, according to a Congressional Budget Office estimate — almost double the $5.7 billion Trump wanted to spend on the wall.

Rating agency Moody’s warns that a second shutdown would hit the US economy even harder.

“If another shutdown occurs, there could be a more severe impact on the US economy than during the recently ended shutdown,” Moody’s said in a statement, per a Reuters report, forecasting that it would stunt GDP growth and batter corporate earnings.

Fidelity, SWIFT Spark Crypto Market Advance

On the cryptocurrency front, asset outlooks remain bearish, though bitcoin and most other large-cap tokens entered the day on a moderate incline.

Bitcoin Price Outlook Bearish, But Fidelity Brings Hope

The bitcoin price made an intraday recovery following reports that Fidelity would launch its crypto custody service in March.

The bitcoin price enters the day at $3,441, which represents a 24-hour recovery of around 1.38 percent.

That minor turnaround followed reports on Tuesday that major asset manager Fidelity is just weeks away from launching its long-awaited bitcoin custody service, which will allow institutional investors to store their cryptocurrency assets with a trusted name from the mainstream financial sector. Bulls such as Galaxy Digital founder and former Fortress principal Mike Novogratz have long said that developments such as these will help power the next bitcoin bull run, and now they’re finally beginning to arrive.

That said, many technical analysts remain bearish on the short-term direction of the bitcoin price. Most chart-watchers expect the flagship cryptocurrency to at least test its $3,000 support level, and how that support responds to the gravity of bitcoin’s 13-month bear market could determine whether the floor is in or if the bears have more room to run.

Ripple Price Pops on SWIFT Speculation

There was a bit more action in the altcoin markets, as bitcoin’s smaller competitors took advantage of the day’s positive sentiment to recoup a bit of market share from the dominant cryptocurrency.

Ripple (XRP), the second (or third) largest cryptocurrency, outperformed the large-cap cryptocurrency index thanks to some bullish news from mainstream finance, namely that enterprise blockchain consortium R3 signed a partnership with mega-payments network SWIFT.

Despite some past disagreements — and lawsuits — R3 and crypto startup Ripple are closely aligned. Indeed, Ripple CEO Brad Garlinghouse was on stage during the panel discussion where the R3-SWIFT partnership was announced, and SWIFT CEO Gottfried Leibbrandt had some kind words for XRP.

“I think that the big part of Ripple’s value proposition is the cryptocurrency XRP,” he said.

The ripple price surged on speculation that SWIFT could one day adopt XRP.

That was more than enough to shake the ripple bulls out of their slumber, and as of the time of writing XRP had leaped by nearly 7 percent to just under $0.31.

The majority of other large cryptocurrencies rose by 2 percent to 3 percent on the day, carrying the overall crypto market cap to a present value of almost $115 billion.


Source
Author: Josiah Wilmoth 
Image Credit: Featured Image from Shutterstock. Price Charts from TradingView.