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Morning Coffee: All-In on Oil, Crypto Fails to Find Traction

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Stocks and Securities

U.S. stocks futures pointed to a small rise at the open Tuesday, setting the Dow up for more gains after its 320-point rally pinned on strong economic data that offset trade-related fears.

Dow Industrial AverageS&P 500Nasdaq 100Russell 2000












President Donald Trump on Monday night picked Brett Kavanaugh to fill an open seat on the Supreme Court, potentially creating a very business-friendly high court. It will take 50 Senators to confirm a nominee. The Republicans currently hold a 51-49 majority in the Senate, however, Senator John Mccain (R-AZ) is unlikely to be able to vote. There are several Senators on both sides of the aisle that will be critical for the nominee. On the Republican side there are Susan Collins (R-ME), and Lisa Murkowski (R-AK). There are also 10 Democrats running in states President Trump won. Some of those include: Heidi Heitkamp (D-ND), Joe Donnelly (D-IN), and Joe Manchin (D-WV). All three of these Democratic Senators voted in favour of President Trump’s last Supreme Court choice Neil Gorsuch (along with all the Republicans). It took just over 2 months to confirm Neil Gorsuch to the Court. Look for a similar time frame in confirming this nominee.

Last month a NY Federal Judge ruled that the Consumer Financial Protection Bureau is unconstitutional. This is one of the cases that could find its way to the Supreme Court and could be positive for financials such as Citibank (C) and payment processors such as Visa (V).

Global crude prices are moving higher again Tuesday amid fresh concerns over more supply disruption, this time in the Knarr shelf off the coast of Norway. The Knarr disruption, along with questions as to whether OPEC members can effectively add to production rates when supply disruptions are holding back deliveries in Libya, political chaos has decimated capacity in Venezuela and upcoming U.S. sanctions on Iran have reduced appetite for it crude, is likely to keep both oil and gas prices elevated for much of the summer months. Brent crude contracts for September delivery, the global benchmark, were  $.95 cents higher from their Monday close in New York and changing hand at $79.02 per barrel by midday in London.

We believe this is a period to go “all in”.  The sentiment in the oil market has not been this good in years, with U.S. crude prices hitting a more than three-year high – a spectacular recovery from below $30 in early 2016. While it is extremely difficult to predict movements in oil prices, we have identified several drivers that support the commodity’s steadily rising trend. We believe the current higher oil prices are a result of improving fundamentals in addition to sanctions that are on the horizon with respect to Iran.

Crude oil WTI - Oil markets and oil pricesCrude oil Brent - oil markets and oil prices






Investors have pinned hopes of recovery over the U.S. Energy Department’s inventory releases that show multiple weeks of strong inventory draws in the domestic crude stockpiles, pointing to a tightening oil market. Oil stockpiles have shrunk in 35 of the last 47 weeks and are down approximately 110 million barrels since April last year. The gradual fall – stemming from a combination of lower imports and spiralling exports – has helped the U.S. crude market shift from year-over-year storage surplus to a deficit.

At 423.5 million barrels, current crude supplies are 19{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} below the year-ago period. The political landscape is also lending support to higher prices. The world’s top oil exporter and the Organization of Petroleum Exporting Country’s (OPEC) biggest producer pledged last month it would raise output to make up for lost supplies out of Libya, Venezuela and Iran. The Saudis’ pledges don’t seem to have satisfied U.S. President Donald Trump, who continues his verbal assault on Saudi Arabia for failing to moderate prices. This in the wake of the Trump administration pushing countries to cut all imports of Iranian oil beginning in November when the U.S. imposes sanctions against Tehran after Trump withdrew from the 2015 nuclear deal agreed between Iran and six major powers. So where do we see opportunity?

There are several names such as Anadarko Petroleum (APC) and Occidental Petroleum (OXY) which we believe will be one of the leading benefactors of higher oil prices going forward.



Blockchain and cryptocurrency

Bitcoin (BTC) and Ethereum (ETH) both had a brutal 24hrs. The Market capitalization increased from $273B to $257B USD (an decrease of just about 6{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15}). The 24hr volume of $13.6B is slightly higher than Monday’s $13.6B. BTC dominance of 43.2{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} is slightly higher than yesterday.

Bitcoin price - BTC/USD chartEthereum (ETH) chart - ETH/USD







Read our technical analysis on Bitcoin (BTC) and Ethereum (ETH) – the general consensus from analysts still seems to be very bullish, however, crypto continues to fail to gain traction due to lack of volume.

The decentralized cryptocurrency exchange Bancor was hacked yesterday, resulting in loss of $12m USD worth of ETH, $1m worth of NPXS and $10m worth of BNT. Bancor is working hard to make it hard for the thief to attempt to liquidate the wallet of ETH – which can actually be seen here.

Oasis Labs – consisting of a large group of researchers from MIT and Berkeley – have confirmed that they have raised more than $45m USD in a private pre-sale, with Binance being one of the largest investors.

The Oasis platform is being developed to rival Amazon’s cloud computing platform, and other alike, by working to enhance privacy and security protections on the blockchain. They are also aiming to work towards building AI applications on the blockchain platform.

Walmart Inc. (WMT) have also begun to attempt to solve the package delivery woes by turning to blockchain. They are hoping to turn to blockchain to help with their reserving capacity at the delivery hub, as indicated in their latest patent.


Stocks on the Radar

Anadarko Petroleum Corporation (APC) released news stated that they have added a $1B USD to their repurchase program in addition to a $500m USD increase to its debt-reduction program. Read more about APC here.

Occidental Petroleum (OXY) is engaged in acquisition, exploration and development of oil and gas properties in both the U.S. and Internationally.


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Disclaimer: The above references an opinion and is for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice. The Author does not hold any of the securities discussed above.
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Dr. Tiam Feridooni

Written by: Dr. Tiam Feridooni MD, PhD, BSc Dr. Feridooni, graduated from Dalhousie Medical School in May, 2018. Prior to enrolling in medical school, he completed his Bachelor of Science with Honours in 2010 in Biochemistry. He then obtained his PhD at Dalhousie University in Pharmacology in 2014, with a focus around regenerative medicine and stem cell transplantation. Dr. Feridooni has been published numerous high impact journals and has also co-authored a few books.

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