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Kicking off this Global Week Ahead, OPEC countries and Russia meet (via webcam) for a two-day meeting.
This virtual OPEC+ meeting convenes against the backdrop of a month-long oil price rally.
Looking across all of 2020, the price of oil has more than doubled, after tumbling below $20 a barrel and hitting 21-year lows last April.
Last Friday, the price of Brent crude oil closed near $48 a barrel. The WTI oil price traded a tad above $45 a barrel. Monday’s pre-market was little changed from that.
Announcing an OPEC+ plan — to add 2 million barrels of oil a day back on the global market — poses a supply risk to this fragile oil price recovery.
On the other hand, maintaining deep production cuts limits the income collected by OPEC+ members.
Splitting the difference, most oil analysts expect OPEC+ to stand pat.
Down the road, Goldman Sachs, a respected authority on the global oil market, believes in this forward look: The oil market is ripe for a comeback in 2021 – after a “winter speed bump” of renewed Covid-19 restrictions – as demand for natural resources returns.
However, other observers are less convinced.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) OPEC+ Meets Nov. 30th to Dec. 1st. Will They Delay Oil Output Raises?
OPEC and its allies had been due to raise oil output by 2 million barrels per day (bpd) from January to ease the record supply cuts that were implemented as crude prices slumped earlier in 2020.
But when the group — known as OPEC+ — meets on Nov. 30-Dec. 1, it is expected to delay those output increase plans by at least three months.
While crude futures have rallied to eight-month highs near $50 a barrel, OPEC+ is reportedly still considering delaying the increase because rising Libyan production and continued restrictions on movement are seen capping energy prices.
Sources tell Reuters a rollover of current 7.7 million bpd curbs until end-Q1 has support within the group. Analysts seem to agree — most reckon a rollover of at least three months is necessary to bring down high oil inventory levels.
(2) Friday’s Nonfarm Payroll Data Will Be Closely Watched
An explosion in new COVID-19 infections and business restrictions have been undermining the U.S. labor market recovery so Friday’s November payrolls figures will be closely watched.
Last month saw 638,000 new jobs amid signs the economy was healing from the pandemic-induced downturn. But it was the smallest gain since the jobs recovery started in May, and left employment 10.1 million below its February peak.
November is likely to be the seventh straight month of jobs gains, but expectations are that only 520,000 jobs were added.
(3) Pitfalls Facing Risk Markets… to Year-end
It has been a year many would prefer to forget and a month of 2020 yet remains — one replete with events that could trip up markets.
Here they are:
Dec. 1: A month before the UK-EU transition deal ends.
Dec. 8: Deadline to complete U.S. state-level vote recounts and court contests over the election.
Dec. 10: European Central Bank meets and should increase emergency stimulus.
Dec. 11: U.S. government funding lapses unless lawmakers agree a 12-bill spending package.
Dec. 10-11: EU council meeting. Issues are Brexit and the risk that Poland and Hungary will scupper an EU stimulus spending plan.
Dec. 14: The U.S. electoral college votes, with the risk that some “faithless” electors break the rule requiring them to vote in line with the popular vote.
Dec. 15-16: U.S. Federal Reserve meets. Will it expand bond-buying or signal a yield cap?
Dec. 28: European Parliament could vote on any Brexit deal.
(4) Eurozone Consumer Prices Come Out
Eurozone consumer prices are likely to have fallen further in November — a 0.3% year-on-year drop is expected from Tuesday’s “flash” reading.
The numbers won’t surprise the ECB, which expects inflation to average -0.2% year-on-year in Q4. But a fourth straight month of negative price growth may not sit well — ECB chief economist Philip Lane warned recently against tolerating low inflation.
And while a COVID-19 vaccine may lift growth prospects, it may not do much for inflation -- inflation-adjusted bond yields remain deeply negative. The data will only reinforce the need for more stimulus and that will come in December, with the ECB seen expanding bond-buying and cheap loans for banks.
(5) Japan Unveils Its Budget
Japanese trend-setters are protecting themselves against COVID-19 with diamond and pearl-studded masks. Prime Minister Yoshihide Suga’s ruling party will spend big too, draft budget plans due to be presented to parliament show.
The draft contains plans for green investment and extended subsidies for households and businesses.
Upcoming data will show what impact previous stimulus packages of 234 trillion yen had. We could see an expansion in factory output and possibly the first signs of retail sales growth.
Top Zacks #1 Rank (STRONG BUY) Stocks
My picks this week are diversified across industries.
(1) Dish Network : Yes. The Cable TV company. This is a $36 a share stock with a market cap of $18.9B. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of F.
(2) Magna International (MGA - Free Report) : This is an Auto Parts supplier. This is a $62 a share stock with a market cap of $18.4B. I see a Zacks Value score of A, a Zacks Growth score of B, and a Zacks Momentum score of A.
(3) Hologic (HOLX - Free Report) : This is a Medical Instruments company. This is a $69 a share stock, with a market cap of $17.9B. I see a Zacks Value score of C, a Zacks Growth score of B, and a Zacks Momentum score of A.
The first one has a very poor Zacks Momentum score. The second two picks have the very best Zacks Momentum scores.
If following the money is your game, pay attention.
Key Global Macro
Focus on the nonfarm payroll data for November. That data is out on Friday.
But also learn from China PMIs. This has been a bullish narrative.
On Monday, watch out for the China Non-Manufacturing PMI (consensus is 52.1) and the Manufacturing PMI (consensus has 51.5).
The OPEC+ meeting kicks off. What about the straights of the U.S. oil & gas industry?
The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 320 in the week through Nov 25th, versus a prior-week count of 310.
Thus, the tally has increased in 10 of the past 11 weeks.
However, the current U.S. national rig count is below the year-ago level’s 802.
U.S. pending home sales for October should be up +1.0% m/m.
On Tuesday, the Jibun Bank Manufacturing PMI for Japan should be 48.3.
The Reserve Bank of Australia (RBA) tees up a rate decision. The 0.1% policy rate is not expected to change.
Eurozone Markit Manufacturing PMI should be 54.4. If so, that will be good to see.
On Wednesday, U.S. ADP private payrolls should go up +420K.
On Thursday, China’s Caixin Services PMI comes out. The last reading was 56.8.
Eurozone retail sales for October should be up +0.5% m/m and +2.9% y/y.
On Friday, U.S. nonfarm payrolls should be +520K in November after +638 in October.
The household unemployment rate should get to 6.8% from 6.9%.
Conclusion
I have written this before. But it bears repeating.
The global economy is better thought of as an aquarium, than a tempest of untamed seas. The fix is usually in.
Metaphorically, the proprietors of this global markets aquarium, such as OPEC+ and the world’s central banks, tend to the fish food, and the temperature of the water.
Within OPEC+, just the Saudis and the Russians call the shots. So much for a ‘global’ oil market.
That’s it for me,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Image: Bigstock
OPEC+ Meets: Global Week Ahead
Kicking off this Global Week Ahead, OPEC countries and Russia meet (via webcam) for a two-day meeting.
This virtual OPEC+ meeting convenes against the backdrop of a month-long oil price rally.
Looking across all of 2020, the price of oil has more than doubled, after tumbling below $20 a barrel and hitting 21-year lows last April.
Last Friday, the price of Brent crude oil closed near $48 a barrel. The WTI oil price traded a tad above $45 a barrel. Monday’s pre-market was little changed from that.
Announcing an OPEC+ plan — to add 2 million barrels of oil a day back on the global market — poses a supply risk to this fragile oil price recovery.
On the other hand, maintaining deep production cuts limits the income collected by OPEC+ members.
Splitting the difference, most oil analysts expect OPEC+ to stand pat.
Down the road, Goldman Sachs, a respected authority on the global oil market, believes in this forward look: The oil market is ripe for a comeback in 2021 – after a “winter speed bump” of renewed Covid-19 restrictions – as demand for natural resources returns.
However, other observers are less convinced.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) OPEC+ Meets Nov. 30th to Dec. 1st. Will They Delay Oil Output Raises?
OPEC and its allies had been due to raise oil output by 2 million barrels per day (bpd) from January to ease the record supply cuts that were implemented as crude prices slumped earlier in 2020.
But when the group — known as OPEC+ — meets on Nov. 30-Dec. 1, it is expected to delay those output increase plans by at least three months.
While crude futures have rallied to eight-month highs near $50 a barrel, OPEC+ is reportedly still considering delaying the increase because rising Libyan production and continued restrictions on movement are seen capping energy prices.
Sources tell Reuters a rollover of current 7.7 million bpd curbs until end-Q1 has support within the group. Analysts seem to agree — most reckon a rollover of at least three months is necessary to bring down high oil inventory levels.
(2) Friday’s Nonfarm Payroll Data Will Be Closely Watched
An explosion in new COVID-19 infections and business restrictions have been undermining the U.S. labor market recovery so Friday’s November payrolls figures will be closely watched.
Last month saw 638,000 new jobs amid signs the economy was healing from the pandemic-induced downturn. But it was the smallest gain since the jobs recovery started in May, and left employment 10.1 million below its February peak.
November is likely to be the seventh straight month of jobs gains, but expectations are that only 520,000 jobs were added.
(3) Pitfalls Facing Risk Markets… to Year-end
It has been a year many would prefer to forget and a month of 2020 yet remains — one replete with events that could trip up markets.
Here they are:
Dec. 1: A month before the UK-EU transition deal ends.
Dec. 8: Deadline to complete U.S. state-level vote recounts and court contests over the election.
Dec. 10: European Central Bank meets and should increase emergency stimulus.
Dec. 11: U.S. government funding lapses unless lawmakers agree a 12-bill spending package.
Dec. 10-11: EU council meeting. Issues are Brexit and the risk that Poland and Hungary will scupper an EU stimulus spending plan.
Dec. 14: The U.S. electoral college votes, with the risk that some “faithless” electors break the rule requiring them to vote in line with the popular vote.
Dec. 15-16: U.S. Federal Reserve meets. Will it expand bond-buying or signal a yield cap?
Dec. 28: European Parliament could vote on any Brexit deal.
(4) Eurozone Consumer Prices Come Out
Eurozone consumer prices are likely to have fallen further in November — a 0.3% year-on-year drop is expected from Tuesday’s “flash” reading.
The numbers won’t surprise the ECB, which expects inflation to average -0.2% year-on-year in Q4. But a fourth straight month of negative price growth may not sit well — ECB chief economist Philip Lane warned recently against tolerating low inflation.
And while a COVID-19 vaccine may lift growth prospects, it may not do much for inflation -- inflation-adjusted bond yields remain deeply negative. The data will only reinforce the need for more stimulus and that will come in December, with the ECB seen expanding bond-buying and cheap loans for banks.
(5) Japan Unveils Its Budget
Japanese trend-setters are protecting themselves against COVID-19 with diamond and pearl-studded masks. Prime Minister Yoshihide Suga’s ruling party will spend big too, draft budget plans due to be presented to parliament show.
The draft contains plans for green investment and extended subsidies for households and businesses.
Upcoming data will show what impact previous stimulus packages of 234 trillion yen had. We could see an expansion in factory output and possibly the first signs of retail sales growth.
Top Zacks #1 Rank (STRONG BUY) Stocks
My picks this week are diversified across industries.
(1) Dish Network : Yes. The Cable TV company. This is a $36 a share stock with a market cap of $18.9B. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of F.
(2) Magna International (MGA - Free Report) : This is an Auto Parts supplier. This is a $62 a share stock with a market cap of $18.4B. I see a Zacks Value score of A, a Zacks Growth score of B, and a Zacks Momentum score of A.
(3) Hologic (HOLX - Free Report) : This is a Medical Instruments company. This is a $69 a share stock, with a market cap of $17.9B. I see a Zacks Value score of C, a Zacks Growth score of B, and a Zacks Momentum score of A.
The first one has a very poor Zacks Momentum score. The second two picks have the very best Zacks Momentum scores.
If following the money is your game, pay attention.
Key Global Macro
Focus on the nonfarm payroll data for November. That data is out on Friday.
But also learn from China PMIs. This has been a bullish narrative.
On Monday, watch out for the China Non-Manufacturing PMI (consensus is 52.1) and the Manufacturing PMI (consensus has 51.5).
The OPEC+ meeting kicks off. What about the straights of the U.S. oil & gas industry?
The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 320 in the week through Nov 25th, versus a prior-week count of 310.
Thus, the tally has increased in 10 of the past 11 weeks.
However, the current U.S. national rig count is below the year-ago level’s 802.
U.S. pending home sales for October should be up +1.0% m/m.
On Tuesday, the Jibun Bank Manufacturing PMI for Japan should be 48.3.
The Reserve Bank of Australia (RBA) tees up a rate decision. The 0.1% policy rate is not expected to change.
Eurozone Markit Manufacturing PMI should be 54.4. If so, that will be good to see.
On Wednesday, U.S. ADP private payrolls should go up +420K.
On Thursday, China’s Caixin Services PMI comes out. The last reading was 56.8.
Eurozone retail sales for October should be up +0.5% m/m and +2.9% y/y.
On Friday, U.S. nonfarm payrolls should be +520K in November after +638 in October.
The household unemployment rate should get to 6.8% from 6.9%.
Conclusion
I have written this before. But it bears repeating.
The global economy is better thought of as an aquarium, than a tempest of untamed seas. The fix is usually in.
Metaphorically, the proprietors of this global markets aquarium, such as OPEC+ and the world’s central banks, tend to the fish food, and the temperature of the water.
Within OPEC+, just the Saudis and the Russians call the shots. So much for a ‘global’ oil market.
That’s it for me,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Click to get it free >>