Wednesday, 24 April 2019

S&P 500 hovers below record highs on mixed earnings

(Reuters) - U.S. stocks hovered below their all-time highs on Wednesday, as investors digested a mixed batch of earnings reports and losses in energy stocks limited gains on the indexes.

The S&P 500 is 0.3% below its record high of 2,940.91 hit in late September. The index has rallied 17% this year, supported by a dovish Federal Reserve, hopes of a U.S.-China trade resolution and a largely upbeat earnings season.

The tech-heavy Nasdaq hit an all-time high of 8,139.55 earlier, helped by eBay Inc’s upbeat earnings and a rally in shares of chipmakers.

“Heading into earnings season, there was a lot of fear of earnings contraction and as earnings come out, a lot of that seems to be very unfounded,” said Mary Ryan, senior equity options strategist at E*Trade Financial Corp.

“Traders are watching earnings very closely to see if the continued surprises can ease some of those concerns, and continue to push these markets into even higher record territory.”

Profits of S&P 500 companies are expected to decline 1.1% for the first quarter, still a large improvement from the 2.3% drop estimated at the start of April. Nearly 78% of the 129 companies that have reported so far have surpassed earnings estimates, according to Refinitiv data.

Boeing Co gained 1.3%. The planemaker scrapped its 2019 outlook and reported quarterly revenue below estimates due to grounding of its 737 MAX jets. Its shares have lost 11% since the deadly Ethiopian crash in early March.

Caterpillar Inc fell 2.5% as rising costs hit margins in its construction equipment business and the company reported tepid sales in the Asia Pacific region.

AT&T Inc declined 4.4% after the second-largest U.S. wireless carrier reported quarterly revenue below Wall Street estimates.

At 12:42 p.m. ET, the Dow Jones Industrial Average was down 7.35 points, or 0.03%, at 26,649.04, the S&P 500 was down 1.07 points, or 0.04%, at 2,932.61 and the Nasdaq Composite was up 3.45 points, or 0.04%, at 8,124.27.

Microsoft Corp, Facebook Inc and Tesla Inc, set to report after the closing bell on Wednesday, were down slightly.

Chip stocks rose as much as 1.9% to a record high after shares of Texas Instruments clawed back losses.

EBay jumped 4.6% after the company raised its full-year sales and profit forecasts.

Anadarko Petroleum Corp jumped 12%, providing the biggest boost to the S&P 500, after Occidental Petroleum Corp sought to scuttle Chevron Corp’s takeover of the company with a $57 billion bid. Occidental’s shares fell 2.5%.

Oil majors Chevron and Exxon Mobil Corp fell about 2%, dragging down the S&P energy index as oil prices slipped.

Advancing issues outnumbered decliners by a 1.31-to-1 ratio on the NYSE and a 1.25-to-1 ratio on the Nasdaq.

The S&P index recorded 47 new 52-week highs and one new low, while the Nasdaq recorded 84 new highs and 25 new lows.

Reporting by Sruthi Shankar and Amy Caren Daniel

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CANADA FX DEBT-Canadian dollar hits 4-week low ahead of BoC rate decision

Loonie falls 0.4% against the U.S. dollar
Canadian wholesale rises by 0.3 percent in February
Price of U.S. oil increases 0.3%
Canadian bond prices edge higher across the yield curve

TORONTO, April 23 (Reuters) - The Canadian dollar weakened
to a nearly four-week low against its U.S. counterpart on
Tuesday as the greenback broadly climbed and as investors
awaited a Bank of Canada interest rate decision on Wednesday. 
The U.S. dollar rose against a basket of major
currencies, supported by this month's rise in U.S. bond yields.
The Bank of Canada is expected to hold its benchmark
interest rate steady at 1.75% on Wednesday and for the rest of
this year, with calls for the next hike in early 2020 resting on
a knife's edge, a Reuters poll showed.
At 9:12 a.m. (1312 GMT), the Canadian dollar was
trading 0.4% lower at 1.3399 to the greenback, or 74.63 U.S.
cents. The currency touched its weakest since March 29 at

The decline for the loonie came despite a nearly six-month
high for the price of oil, one of Canada's major exports, after
Washington announced all waivers on imports of sanctions-hit
Iranian oil would end next week, pressuring importers to stop
buying from Tehran.
U.S. crude prices were up 0.3% at $65.77 a barrel.
Canadian wholesale trade increased by 0.3 percent in
February from January on stronger sales in the motor vehicle and
parts subsector, Statistics Canada said. Analysts surveyed by
Reuters had forecast a 0.1 percent increase.
Canadian government bond prices edged higher across the
yield curve in sympathy with U.S. Treasuries. The two-year
was up 1.5 Canadian cents to yield 1.612% and the
10-year gained 2 Canadian cents to yield 1.785%.   

Reporting by Fergal Smith

Tuesday, 23 April 2019

Sterling slides to two-month low as Brexit pressure builds on PM May

LONDON (Reuters) - Sterling slid to a two-month low on Tuesday as hopes for a breakthrough in Brexit talks between the ruling and opposition parties faded and British Prime Minister Theresa May faced growing pressure to quit.

Britain’s parliament returned from an Easter recess on Tuesday as the government continued its talks with the opposition Labour party about forging a Brexit agreement that can win the support of lawmakers.

But such talks have made little headway, analysts said, and weekend media reports said the pressure on May to find a solution or name a date for her to step down was growing.

A report in the Financial Times on Tuesday also said that May planned a new vote on her Brexit agreement - which has been defeated three times already - next week in a high-risk push to break the deadlock.

“Everyone has been a bit disillusioned about the chances of a compromise,” said Jane Foley, currencies strategist at Rabobank, adding that the pound could test February lows of $1.2775 as the negative headlines around Brexit mount.

After earlier trading as high as $1.3019, the pound dropped to as low as $1.2943, down 0.2 percent on the day and its weakest since February 19. A broad rally in the dollar also hurt sterling.

Volatility in sterling has fallen sharply in recent weeks after the European Union and London agreed to delay Britain’s departure date by up to six months, removing any immediate risks of a no-deal Brexit that would have hit the pound hard.

Data showing stronger than expected retail sales in March and a slight slowdown in inflation failed to move the pound much last week, as Brexit continues to dominate trading.

“PM (Theresa) May will again ramp up Brexit negotiations this week as the House of Commons sits again and pound volatility is set to increase,” MUFG analysts said in a note.

Against a euro hit hard by the dollar’s rally, sterling strengthened 0.2 percent to 86.54 pence but remained near a one-week low.

Rabobank’s Foley said that after the market had focused on the outcome of Brexit negotiations for much of this year, the six-month delay had now brought into sharp relief the hit to the economy of prolonged uncertainty.

“With this extension to Halloween, what has become clear is the cost to the economy,” she said.

Reporting by Tommy Wilkes

Upbeat earnings boost Wall Street

(Reuters) - U.S. stocks edged higher on Tuesday, as upbeat results from Coca-Cola, Twitter and a host of industrial companies allayed investor concerns about slowing profits.

Wall Street’s main indexes hovered below record levels as investors wait to see if results from major companies ease concerns about an earnings recession.

Among the biggest boosts to the S&P 500 was Twitter Inc which surged 13.6%, touching a near nine-month high, after posting better-than-expected quarterly revenue and a surprise rise in monthly active users.

Coca-Cola Co rose 2.6% after its quarterly sales beat estimates.

Profits at S&P 500 companies are expected to decline 1.7% in the first quarter, in what could be the first earnings contraction since 2016. However, forecasts have improved slightly since the start of April.

“Nobody is quite sure what the earnings are going to look like and a lot of analysts have lowered expectations,” said Mark Grant, chief global strategist at B. Riley FBR Inc.

“So we may get some kind of a pop as people realize that things aren’t quite as bad as they feared.”

At 9:59 a.m. ET the Dow Jones Industrial Average was up 45.80 points, or 0.17%, at 26,556.85, the S&P 500 was up 7.65 points, or 0.26%, at 2,915.62 and the Nasdaq Composite was up 41.37 points, or 0.52%, at 8,056.63.

Seven of the 11 major S&P sectors were higher, with technology sector’s 0.6% gain providing the biggest boost.

Microsoft Corp, set to report later this week, rose 0.9%, while Qualcomm Inc gained 2.7% after Morgan Stanley upgraded the chipmaker to “overweight” from “equal-weight”.

Industrial stocks got a lift from gains in aerospace supplier United Technologies Corp and weapons maker Lockheed Martin Corp after both the companies raised full-year profit forecasts.

Walt Disney Co rose 1.6% ahead of the worldwide release of “Avengers: Endgame”, which is set to hit theaters around the globe on Wednesday.

Among decliners, Procter & Gamble Co fell 3.2% after its quarterly EBIT margin missed estimates, despite reporting better-than-expected quarterly results.

Advancing issues outnumbered decliners for a 1.53-to-1 ratio on the NYSE and a 1.45-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and 3 new lows, while the Nasdaq recorded 38 new highs and 24 new lows.

Reporting by Sruthi Shankar and Amy Caren Daniel

How to Search for the Ideal Metatrader EA

Trading Education

Important Risk Factors to Consider When Choosing a Metatrader Expert Advisor
With thousands of Metatrader EAs out there, it can be tough to cut through the noise and find one suitable for your trading style and risk tolerance. To help you in this search, I've compiled the statistics that many traders find to be very beneficial when analysing any Metatrader EA.
Keep in mind that many of these back testing statistics look solely at past performance. It's important to mention here that past performance is not indicative of future results.
With that said, the very first thing many traders look for, and this is rather intuitive, is: How well has this EA performed in the past? Obviously it's important to look for one that has shown profitable results, but stopping there could lead to some detrimental results.

These returns need to be adjusted for risk. If the Metatrader EA has shown some eye opening profits, but took on a ton of risk, these returns may not have been worth your while. To quantify profitability while also considering the risk taken on by the EA, many traders look at a statistic known as the “Profit Factor.”

Profit Factor:
This ratio essentially shows you how much you can expect to gain for each dollar put into the account, over how much you're at risk of losing. The profit factor is calculated as:
(profit - commission)/(max drawdown + commission)
A Metatrader EA with a profit factor less than 1 is a historically poor performing EA. The returns that it has produced do not justify the amount of risk taken on. Take a look at the table below for statistics of three hypothetical Metatrader EAs.

As you can see from this table, EA 3 has a profit factor less than one, and can be immediately eliminated from your decision. If you look closely, EA 3 actually was profitable (Total Gain - Total Loss = $890), however this return does not justify the amount of risk (drawdown) taken on.
The risk measurement that many traders tend to focus on are the drawdowns that the Metatrader expert advisor has produced.

Drawdown Analysis:
When first analysing the drawdowns of an EA, a good place to start is simply by looking at the equity curve. An EA with a choppy and sporadic equity curve shows a historically volatile EA (see the chart below to the left); whereas a smoother equity curve shows a historically more stable EA (see the chart to the right).

Equity Curve - Volatile EA

Equity Curve - More Stable EA

Now, to further quantify the drawdown analysis; there are three measures that many traders look at.

  1. Max Drawdown:
    • This is the largest drawdown (in percentage terms) that the EA has realized over its trading life
    • This is the best indicator of a worst case scenario
    • A good way to think about this is: If this drawdown occurred immediately after opening your account, could you stomach this type of risk?
  2. Average Drawdown:
    • The average drawdown size (in percentage terms) realized by the EA over its historical performance.
    • Calculated by summing up all the losses (%) and dividing by the actual number of losses.
      • In most cases this statistic can be provided by your EA vendor
    • The average drawdown will give you an idea of what you might typically see (on average) in a peak-to-trough cycle.
  3. Drawdown Recovery:
    • Shows the time frame the trading robot has taken, on average, to recover from a drawdown back to a positive balance.
    • A less volatile Metatrader expert advisor will often take longer to recover.
      • Keep this in mind before deciding that a fast recovery is a good attribute.
      • More volatile EAs often recover quicker, but this is due to large fluctuations and swings in performance.
These risk measurements will certainly be helpful when selecting the right EA for you. Keep each of these risk statistics in mind when analysing any Metatrader EA, and always evaluate how they fit your personal risk tolerance. There are many more statistics and factors to consider when choosing an EA.

Reference: Patrick Flynn

Oil prices climb as U.S. set to end Iran sanction waivers

SINGAPORE (Reuters) - Oil prices jumped on Monday as the United States looked set to announce that all buyers of Iranian oil must end their imports or be subject to sanctions.

Brent crude futures rose as much as 3.3 percent to $74.31 a barrel, the highest since Nov. 1, before easing back to $73.62 by 0647 GMT, which was still up 2.3 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures climbed by as much as 2.9 percent to $65.87 per barrel, the most since Oct. 31. They were at $65.41 at 0647 GMT, up 2.2 percent from their previous settlement.

News that the United States is preparing to announce on Monday that current buyers of Iranian oil would no longer be given waivers to sanctions was first reported on Sunday by the Washington Post.

Secretary of State Mike Pompeo will announce “that, as of May 2, the State Department will no longer grant sanctions waivers to any country that is currently importing Iranian crude or condensate”, a columnist for the newspaper said, citing two State Department officials that he did not name.

A person familiar with the situation confirmed to Reuters that the report was accurate, although a State Department spokesman declined to comment.

“Should Iran’s sanction waivers indeed be lifted, that could boost oil prices towards the $80 per barrel mark,” said Han Tan, analyst at futures brokerage FXTM.

Prior to the re-imposition of sanctions, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.

The United States put the sanctions back on Iranian oil exports after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers.

Washington, however, granted Iran’s eight main buyers of oil, mostly in Asia, waivers to the sanctions which allowed them limited purchases for six months.

Analysts said the end to the exemptions would hit Asian buyers hardest.

“(Removing waivers) is not a good policy for Trump,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corporation (JOGMEC), adding that “concerns over tightening global oil supply and lower excess production capacity are expected to bolster oil prices”.

He said that Brent prices were likely to rise toward $86.29 a barrel, the highest point they reached in 2018, while WTI may climb to $76.41.

Iran’s biggest oil customers are China and India, who have both been lobbying for extensions to sanction waivers.

South Korea is a major buyer of Iranian condensate, an ultra-light form of crude oil on which its refining and petrochemical industry relies heavily.

Removing the sanctions exemptions would reduce oil supply from a market that is already tight because of U.S. sanctions against Iran and fellow OPEC-member Venezuela.

Additionally, OPEC, along with other global oil producers, have already imposed supply cuts since the start of the year aimed at tightening global oil markets and propping up prices.

As a result, Brent prices have risen by more than a third this year, while WTI has climbed more than 40 percent over the same period.

JOGMEC’s Nogami said OPEC’s leading producers “Saudi (Arabia), the United Arab Emirates and Kuwait need to boost output to cover the shortfall” from Iran, warning Brent prices could rise to the mid-$80 per barrel if no alternative supply was found.

Reporting by Henning Gloystein