0

US Dollar Goes Haywire on Fed-Speak Mis-Fire: Now What?

Hits: 6


US Dollar, S&P 500, Gold Talking Points:

  • Markets got chaotic in the latter-portion of yesterday’s US session as a comment from John Williams was inferred to mean that the Fed is looking to take aggressive steps at their next policy meeting.
  • That comment was later walked-back as mis-communication, and many of those market themes posed some element of pullback.
  • DailyFX Forecasts are published on a variety of markets such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Ready For Some Fed… in Two Weeks

The latter portion of yesterday’s US session was interesting. In a speech from the NY Fed President, John Williams said the bank should ‘act quickly.’ And with global markets focusing-in on the Fed for the FOMC rate decision in two weeks, that comment was inferred to mean that the bank is currently looking to get very dovish very quickly in the effort of addressing the current growth slowdown. This off-hand comment punched the US Dollar lower and Gold prices caught a firm bid to drive up to fresh six-year-highs. The intra-day losses that had shown in US equity bourses were quickly erased ahead of the close as it appeared as if the world’s largest Central Bank was ready to start a new trend of softening that could be here for a little while; running in stark contrast to the one rate cut that the bank had forecast at their June rate decision.

In rates markets, there was a near immediate pricing-in of 50 basis points of softening at the July rate decision. Ahead of that comment, odds were showing at around 38%. Shortly after this made its way through markets, those odds jumped up to 63.5%, as discussed by our own Rich Dvorak.

Later in the evening, however, the NY Fed came out with a correction. The bank said that the comment from Mr. Williams was in reference to longer-term economic research, and that he didn’t necessarily mean to remark on near-term dynamics. And just as quickly as the US Dollar had dropped previously, strength showed back up and many of the above-mentioned themes pulled back.

On the below hourly chart of the S&P 500, the bounce coming in off of those comments from John Williams is very clear, as it erased the entirety of the early-day losses in the index with resistance coming-in off of the 14.4% Fibonacci retracement of the recent bullish move.

S&P 500 Hourly Price Chart

Chart prepared by James Stanley

Taking a step back on the S&P to the four-hour chart, and there could be scope for sell-off, particularly given the fact that the bullish driver that catapulted this thing higher yesterday has been walked-back. And speaking to the prospect of a 50 basis point cut in two weeks, this morning brought comments from one of the more bearish FOMC members of James Bullard, where he didn’t seem to entertain the possibility at all.

So through the chaos of yesterday’s drive, we’re practically back to where we had started as there is no clear evidence that the Fed is looking at this oncoming rate cut as anything more than a one-off adjustment after ‘over-tightening’ last year.

From the four-hour chart of the S&P 500, resistance has shown around the under-side of a prior bullish trend-line, confluent with the 14.4% Fibonacci retracement of the recent bullish move.

S&P 500 Four-Hour Price Chart

spx500 four hour price chart

Chart prepared by James Stanley

US Dollar Outlook Unclear as FOMC Moves into Blackout Period

This Saturday marks the start of the Fed’s ‘blackout period,’ meaning that bank members are prohibited from media engagements in the effort of avoiding scenarios similar to what we’ve just seen. But this leaves market participants to their own devices as projections will likely continue to run wild as to what the Fed might actually do, and how they may do it.

In the US Dollar, the currency was on its back foot for most of yesterday after some dovish comments from Fed Vice Chair, Richard Clarida; but USD was absolutely slammed around these Williams remarks. Since the NY Fed has walked that back, however, a strong topside move has since developed, and it could be difficult to pick the proper direction here as there is now motive on either side of the scenario. This is the type of situation in which balancing risk around the US Dollar as part of the overall strategy could be a very attractive way of going about matters.

US Dollar Daily Price Chart

us dollar usd daily price chart

Chart prepared by James Stanley

What Could be More Clear? Gold…

In a market environment that hangs on the balance of what a few people might decide to do, there isn’t a lot that’s certain right now. Perhaps thickening the drama is that its not just about what they do, but how they do it. Will the Fed pitch this rate cut as a one-off? Or, will they highlight the potential for more softening down-the-road in the effort of re-spurring growth in the US economy? This can be a difficult case to make at the moment from the perspective of the bank’s dual mandate. Neither inflation nor employment are looking in dire need of support at the moment.

But there remains a fairly massive disconnect between market expectations and FOMC projections. Markets want to see three rate cuts by the end of this year. The Fed, at this point, has only talked about the possibility of one.

The one item that is clear is that rate hikes probably aren’t happening anytime soon around the FOMC; or any other major Central Banks for that matter. And this is the type of environment in which Gold gets very interesting, as witnessed over the past six weeks as the yellow metal has broken out to fresh six-year-highs.

At this stage, Gold prices have pulled back as those Williams comments were ‘re-clarified,’ but support is now showing at prior resistance. This prior resistance zone runs from 1421-1433, and a hold here can keep the door open for bullish strategies. If USD-strength does continue to show ahead of the Fed, there’s scope for deeper support even-lower on the chart, as discussed earlier this week ahead of the breakout.

Gold Price Four-Hour Chart

gold four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

http://platform.twitter.com/widgets.js



Source link

Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.
On this page you can manage StartUp Bonus size for your clients. StartUp Bonus is a company’s promotion aimed to help you gain more potential clients by offering them through different media (offline and online) opportunity to join InstaForex and receive StartUp Bonus (No Deposit Bonus) for trading without any risks. As a partner you will receive commissions from trading of each referred client both before and after first deposit. Your clients can receive StartUp Bonus from InstaForex via this page:
Bonus Startup $1000
Trade 100 Bonus

0

CRON Stock: If I Was a Holder of Cronos, I Would Probably Sell It

Hits: 8


If I was a holder of Cronos Group (NASDAQ:CRON) stock, I would have serious anxiety about the much-hyped cannabis investment.

Here's why I wouldn't touch CRON stock

Source: Shutterstock

While CRON stock is up 46% this year, most of those gains occurred in January. Eventually, though, I believe that the company will be facing some tough times — and in the not-so-distant future. Here are five things to consider:

CRON Stock Is More Expensive Than Its Peers

Various metrics indicate that Cronos stock is more expensive than its peers.  The company has an extremely high price-to-sales ratio of 336. To put that into perspective Tilray (NASDAQ:TLRY) has a PS ratio of 135, while Aurora Cannabis (NYSE:ACB) runs at 79. Moreover, the PS ratio for Aphria (NYSE:APHA) and Canopy Growth (NYSE:CGC) is 52 and 68, respectively.

In addition, Cronos is the only member of this group to have negative gross margins. Aurora’s gross margin is 11%, while Tilray, Aphria and Canopy all feature double-digit margins. Cronos has a gross margin of -21%.  Judged from these two metrics, CRON stock is clearly a much more expensive investment than its peers.

The Coming Price War

Few people talk about it, but I believe a price war will erupt in this industry very soon. That is because investors are starting to realize that growing marijuana outside is significantly cheaper than growing in an indoor facility or a greenhouse.

Admittedly, advantages exit to growing in indoor facilities, such as better security and better quality. However, the cost advantages of outside growing outweigh them.

Still, Cronos seems to grow the vast majority of its cannabis indoors.  If the company doesn’t develop outdoor growing, it may not be able to compete with outdoor projects. Eventually, this will hurt the Cronos stock price.

Potential Share Dilution

One thing that really stood out to me when I was reading Cronos’ income statement: the massive amount of potential dilution.

The company just reported earnings per share of $1.95. However, the diluted share earnings were only 48 cents. Regular earnings per share is the net income of the company divided by the number of outstanding shares. Diluted earnings per share is what the earnings would be if all of the company’s bonds that can be turned into shares are converted.

This potential share dilution is very concerning. Therefore, I don’t want to buy Cronos Group stock because it exposes me to two risks.

First, CRON stock trades in a volatile market. Second, management can potentially dilute shares at any time, presenting a hidden but serious threat to my portfolio.

Wall Street Is Falling Out of Love with Cronos Stock

At this time last year, it seemed like every analyst was extremely bullish on the cannabis industry. But as the sector consolidates, it seems to be losing its luster.

For instances, analysts have issued some downgrades. Further, I noticed a rise in bearish sentiment seems. And on top of it all, The Street seems to favor CRON stock the least out of the large growers.

The average rating for Cronos stock is a hold. In contrast, the other four — Tilray, Canopy, Aurora and Aphria — have average ratings of overweight.

Finally, you don’t need to be a market guru to see that the $14 level is important support for CRON stock. This level is support because it was resistance in September and December of last year.

Resistance levels become support levels because the investors who sold or shorted Cronos Group stock at $14 profited from the decline. But then when Cronos stock rallied above $14, the shorts lost money, creating a panic.

As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities.

Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.
On this page you can manage StartUp Bonus size for your clients. StartUp Bonus is a company’s promotion aimed to help you gain more potential clients by offering them through different media (offline and online) opportunity to join InstaForex and receive StartUp Bonus (No Deposit Bonus) for trading without any risks. As a partner you will receive commissions from trading of each referred client both before and after first deposit. Your clients can receive StartUp Bonus from InstaForex via this page:
Bonus Startup $1000
Trade 100 Bonus
Can you get gilded from fx trading? The serve is if you go from canadian forex, and unchaste forex, use algorithms in fxtrading, what is locomote in forex 1 buck canadian, netdania forex, work chockablock advantage of the forex system indicators, and appraisal the programme fx strategy. We testament succeed win all.

0

Netflix Shares Drop Over 10 Percent as Subscriber Count Misses

Hits: 8


Media giant misses on key metric for investors.

On Wednesday after the close, Netflix (NFLX) reported solid earnings. Revenue grew by 26 percent to $4.92 billion. The company’s operating margin rose 250 basis points to 14.3 percent.

However, the company only grew subscribers by 2.7 million. With an expectation of 5 million, the market saw slower subscriber rates as a potential danger for the company’s performance going forward, and shares dropped over 10 percent as a result.

  • Special: Urgent: Three 5G
    Stocks to Buy ASAP
  • The earnings come after the company reported its biggest numbers yet for views of programs such as the Adam Sandler movie Murder Mystery and the newest season of Stranger Things. The company announced it was expecting to grow its subscribers by 7 million in the third quarter compared to 6.1 million in the third quarter of the prior year.

    The company also made a point to announce that, like HBO and unlike many other streaming services, Netflix is and intends to remain ad-free.

    Action to take: Netflix is an industry dominator. The market has oversold based on one admittedly key metric. But as long as the company is growing revenues by double digits and improving its operating margin, it’s moving in the right direction from an operational standpoint.

    Investors may want to look at adding shares here for the long term. Traders may want to look at January 2020 $350 calls for a rebound trade in the coming weeks.

    2019-07-19 10:00:26



    Source link

    Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.
    On this page you can manage StartUp Bonus size for your clients. StartUp Bonus is a company’s promotion aimed to help you gain more potential clients by offering them through different media (offline and online) opportunity to join InstaForex and receive StartUp Bonus (No Deposit Bonus) for trading without any risks. As a partner you will receive commissions from trading of each referred client both before and after first deposit. Your clients can receive StartUp Bonus from InstaForex via this page:
    Bonus Startup $1000
    Trade 100 Bonus

    0

    transformationover40.com Shari Fitness Presents "Transformation Over 40" Fat Loss Over 40

    Hits: 9

    Product Name: transformationover40.com Shari Fitness Presents "Transformation Over 40" Fat Loss Over 40

    Click here to get transformationover40.com Shari Fitness Presents "Transformation Over 40" Fat Loss Over 40 at discounted price while it’s still available…

    All orders are protected by SSL encryption – the highest industry standard for online security from trusted vendors.

    transformationover40.com Shari Fitness Presents "Transformation Over 40" Fat Loss Over 40 is backed with a 60 Day No Questions Asked Money Back Guarantee. If within the first 60 days of receipt you are not satisfied with Wake Up Lean™, you can request a refund by sending an email to the address given inside the product and we will immediately refund your entire purchase price, with no questions asked.

    Continue Reading

    0

    CRON Stock: If I Was a Holder of Cronos, I Would Probably Sell It

    Hits: 8


    If I was a holder of Cronos Group (NASDAQ:CRON) stock, I would have serious anxiety about the much-hyped cannabis investment.

    Here's why I wouldn't touch CRON stock

    Source: Shutterstock

    While CRON stock is up 46% this year, most of those gains occurred in January. Eventually, though, I believe that the company will be facing some tough times — and in the not-so-distant future. Here are five things to consider:

    CRON Stock Is More Expensive Than Its Peers

    Various metrics indicate that Cronos stock is more expensive than its peers.  The company has an extremely high price-to-sales ratio of 336. To put that into perspective Tilray (NASDAQ:TLRY) has a PS ratio of 135, while Aurora Cannabis (NYSE:ACB) runs at 79. Moreover, the PS ratio for Aphria (NYSE:APHA) and Canopy Growth (NYSE:CGC) is 52 and 68, respectively.

    In addition, Cronos is the only member of this group to have negative gross margins. Aurora’s gross margin is 11%, while Tilray, Aphria and Canopy all feature double-digit margins. Cronos has a gross margin of -21%.  Judged from these two metrics, CRON stock is clearly a much more expensive investment than its peers.

    The Coming Price War

    Few people talk about it, but I believe a price war will erupt in this industry very soon. That is because investors are starting to realize that growing marijuana outside is significantly cheaper than growing in an indoor facility or a greenhouse.

    Admittedly, advantages exit to growing in indoor facilities, such as better security and better quality. However, the cost advantages of outside growing outweigh them.

    Still, Cronos seems to grow the vast majority of its cannabis indoors.  If the company doesn’t develop outdoor growing, it may not be able to compete with outdoor projects. Eventually, this will hurt the Cronos stock price.

    Potential Share Dilution

    One thing that really stood out to me when I was reading Cronos’ income statement: the massive amount of potential dilution.

    The company just reported earnings per share of $1.95. However, the diluted share earnings were only 48 cents. Regular earnings per share is the net income of the company divided by the number of outstanding shares. Diluted earnings per share is what the earnings would be if all of the company’s bonds that can be turned into shares are converted.

    This potential share dilution is very concerning. Therefore, I don’t want to buy Cronos Group stock because it exposes me to two risks.

    First, CRON stock trades in a volatile market. Second, management can potentially dilute shares at any time, presenting a hidden but serious threat to my portfolio.

    Wall Street Is Falling Out of Love with Cronos Stock

    At this time last year, it seemed like every analyst was extremely bullish on the cannabis industry. But as the sector consolidates, it seems to be losing its luster.

    For instances, analysts have issued some downgrades. Further, I noticed a rise in bearish sentiment seems. And on top of it all, The Street seems to favor CRON stock the least out of the large growers.

    The average rating for Cronos stock is a hold. In contrast, the other four — Tilray, Canopy, Aurora and Aphria — have average ratings of overweight.

    Finally, you don’t need to be a market guru to see that the $14 level is important support for CRON stock. This level is support because it was resistance in September and December of last year.

    Resistance levels become support levels because the investors who sold or shorted Cronos Group stock at $14 profited from the decline. But then when Cronos stock rallied above $14, the shorts lost money, creating a panic.

    As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities.



    Source link

    On this page you can manage StartUp Bonus size for your clients. StartUp Bonus is a company’s promotion aimed to help you gain more potential clients by offering them through different media (offline and online) opportunity to join InstaForex and receive StartUp Bonus (No Deposit Bonus) for trading without any risks. As a partner you will receive commissions from trading of each referred client both before and after first deposit. Your clients can receive StartUp Bonus from InstaForex via this page:
    Bonus Startup $1000
    Trade 100 Bonus

    0

    Amazon Stock: Is AMZN Worth the Hype After Prime Day Buzz?

    Hits: 7


    Hardly any online shopper could have missed the barrage of specials on Amazon’s (NASDAQ:AMZN) “Prime Day”. And hardly and Amazon stock investors could have missed it either.

    Amazon Stock: Is AMZN Worth the Hype After Prime Day Buzz?

    This is a specially invented holiday first started in 2015 — Amazon’s 20th anniversary — to compete with the traditional “Black Friday” shopping hysteria following the day after Thanksgiving.

    Ending last Tuesday, Prime Day was extended to a 48-hour event that listed over 1 million items at prices marked down from Amazon’s already rock-bottom prices. While many items on sale are likely loss leaders, meaning they are sold at below cost simply to attract web traffic, the ultimate goal is to grow the number of paying Amazon Prime subscribers.

    Membership to Amazon Prime, which offers free delivery on most items and a list of other perks, such as a variety of free online streaming videos, costs $119 a year or $59 a year for students. Analysts estimate that while regular Amazon customers spend an average $600 per year, Amazon Prime members spend an average of $1,400 a year.

    Getting listed as an Amazon Prime Day special can be an outright windfall for vendors. According to Amazon on Tuesday afternoon, with just hours to go before the close of Prime Day, “Worldwide sellers — predominantly small and medium-sized businesses — saw the biggest 24-hour sales day in Amazon history.”

    Preliminary estimates suggest that the second Prime Day even generated $5.8 billion in sales.

    With Amazon stock now trading near an all-time high of $2,010, giving it a market capitalization of nearly $1 trillion, the company is more valuable than the economies of many African nations. Can there be any upside left for AMZN shares?

    The Future of Amazon Stock

    The answer could be in how successful Amazon is in leveraging a few high-growth product categories. Top-line revenues will most likely continue to see double-digit growth. But, that alone may not lead to AMZN stock being able to meet and beat highly optimistic analyst earnings forecasts.

    Almost all of Wall Street is cheering Amazon stock on with consensus estimates and if all goes according to plan, they expect earnings to also grow by double digits. In fact, Jeff Bezos, Amazon founder and the world’s wealthiest person even after he made the largest divorce settlement in history, has often commented that for AMZN to grow past the $250 billion annual revenue target, it will need to rely heavily on expanding sales of low-margin, generic items. These include t-shirts, tube socks and groceries.

    In short, Amazon’s core top-line revenue driver will continue to be competing in the retail consumer market as an online Walmart (NYSE:WMT). However, low priced t-shirts and tube socks do not exactly deliver the juicy profit margins of Apple’s I-Phone X. And they aren’t necessarily the primary driver of AMZN stock in the bigger picture.

    Growing top-line revenues by offering rock-bottom prices is simple enough. But will that top-line growth actually trickle down to earnings?

    Bottom Line on AMZN

    Some areas that investors will focus on are a few select high margin businesses, such as Amazon Web Services. Already, their fastest-growing business unit, AWS provides cloud computing processing power and data storage on a pay-as-you-go basis, much like an electric utility. Initially offered in 2002, AWS sales for the first quarter of this year reached $7.7 billion. This was a 41% increase from the $5.44 billion a year earlier, and it slightly beat the $7.69 billion average analyst estimate. This massive growth in AWS makes it the dominant source of earnings growth for all of Amazon. That will be a tough number to beat.

    Amazon has also launched its in-house fashion line which, according to Cosmopolitan, is “pretty damn cool.” Along with serving as an official retail outlet for pricey luxury items from designers such as Calvin Klein and Michael Kors, AMZN is clearly investing heavily in a number of high-margin businesses far removed from tube socks and t-shirts.

    The next quarterly earnings announcement for Amazon will be July 25. Over the last few years, Amazon stock has racked up an impressive record of surprising the market by announcing numbers exceeding estimates. Enthusiasm about the next earnings release is at a dizzying peak to the point that the market expects little short of Amazon announcing that it discovered a cure for cancer and found a solution to end global warming.

    However, many skeptics are starting to bail on AMZN stock and taking profits now. The slightest hiccup in the frothy Amazon story with earnings-per-share numbers actually falling a few pennies below analysts’ forecast, and an utterly unthinkable scenario, could lead to a rapid de-frothing of Amazon stock’s sky-high share price.

    As of this writing, Theodore Kim did not hold a position in any of the aforementioned securities.

    Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.
    On this page you can manage StartUp Bonus size for your clients. StartUp Bonus is a company’s promotion aimed to help you gain more potential clients by offering them through different media (offline and online) opportunity to join InstaForex and receive StartUp Bonus (No Deposit Bonus) for trading without any risks. As a partner you will receive commissions from trading of each referred client both before and after first deposit. Your clients can receive StartUp Bonus from InstaForex via this page:
    Bonus Startup $1000
    Trade 100 Bonus
    Can you get gilded from fx trading? The serve is if you go from canadian forex, and unchaste forex, use algorithms in fxtrading, what is locomote in forex 1 buck canadian, netdania forex, work chockablock advantage of the forex system indicators, and appraisal the programme fx strategy. We testament succeed win all.

    0

    Forex Trading: Special Training Edition

    Hits: 8




    Join the Syndicate: http://tradeempowered.com/syndicate/
    Visit the new Live Show Youtube: https://www.youtube.com/channel/UC7A4PnuRpNzJr8UMcZ1UBZA

    source

    On this page you can manage StartUp Bonus size for your clients. StartUp Bonus is a company’s promotion aimed to help you gain more potential clients by offering them through different media (offline and online) opportunity to join InstaForex and receive StartUp Bonus (No Deposit Bonus) for trading without any risks. As a partner you will receive commissions from trading of each referred client both before and after first deposit. Your clients can receive StartUp Bonus from InstaForex via this page:
    Bonus Startup $1000
    Trade 100 Bonus

    0

    XOM Stock:Stable Dividend, Minimal Growth Makes Exxon Mobil a Hold

    Hits: 14


    Exxon Mobil (NYSE: XOM) stock is treading water. After rallying from roughly $69 in January up to over $83 in April, shares in the oil and gas giant have dipped below the $75 level.

    XOM stock has an equal bull and bear case, making it a hold

    Source: Shutterstock

    While offering a solid dividend yield, a lack of catalysts means the XOM stock price will likely stay within the $70 to $80 trading range. Read on to see why Exxon Mobil stock continues to be a hold.

    Downstream Business Facing Challenges

    For the first quarter of 2019, the big oil firm saw quarterly earnings fall from $6 billion to $2.35 billion. Downstream (refining) was the biggest cause of the earnings decline.

    One-time events such as asset sales in Q4 can explain some of the downstream earnings decline. But the lion’s share was due to lower refining margins. The downstream segment went from a $2.7 billion profit in Q4 2018 to a $256 million loss in Q1 2019.

    Scheduled maintenance was another factor in the downstream unit’s weak performance. Moreover, the company expects to spend similar amounts on maintenance in Q2.

    Upstream Offers Stability in XOM Stock

    While the downstream business faces headwinds, upstream provides some positives for the XOM stock price. The company continues to increase production in the Permian Basin. Exxon Mobil’s exploration off the coast of Guyana has also yielded strong production opportunities.

    In their June 2019 JP Morgan Energy Conference presentation, Guyana and other projects provide a high internal rate of return with a low breakeven rate. The company’s expertise in developing new production partially outweighs the cyclicality of the downstream refining business.

    The relative strength of the exploration and production segment has blunted refining challenges. But additional weakness across Exxon Mobil’s other business lines could hurt Q2 results.

    Q2 Earnings Outlook

    Exxon Mobil is scheduled to release Q2 earnings in early August. While the company expects improved refining margins, this may not be enough to counter additional issues. Analysts project the oil firm’s natural gas and chemical businesses to lower operating earnings.

    A decline in natural gas prices offsets an estimated $400 million to $600 million boost to Exxon Mobil’s profitability from increased crude oil prices. Low margins and continued maintenance negatively impact the chemical unit.

    While earnings growth does not appear to be in the cards, there is a positive takeaway: Exxon Mobil stock continues to pay out a solid dividend, providing income-oriented investors a strong reason to consider a position.

    XOM Remains a Dividend Aristocrat

    Exxon Mobil stock has seen annual dividend increases for 37 consecutive years. The five-year average growth rate of the dividend is 5.6%. With a current dividend yield of 4.6%, XOM stock is a solid opportunity for passive-income investors.

    The XOM stock price receives strong price support from the dividend. This somewhat coerces Exxon Mobil to continue the payouts to keep shareholders happy.

    Without a long-time rise in oil prices, it may be tough for XOM to continue growing the dividend. However, thanks to continued global demand for oil, the company may have the long-term earnings growth necessary to sustain approximately six annual dividend increases.

    But can investors count on the dividend yield alone to deliver value? Is the current valuation sustainable, or could the XOM stock price see additional declines? Let’s see how Exxon Mobil compares to its peers:

    Exxon Mobil Stock Overvalued Relative to Peers

    At the current XOM stock price, the company trades for 20.2-times forward earnings, and an enterprise value (EV)/EBITDA ratio of 9.7. This valuation appears stretched relative to the company’s integrated oil and gas rivals:

    BP (NYSE: BP): 13-times trailing earnings, EV/EBITDA of 6

    Chevron (NYSE: CVX): 16.9-times forward earnings, EV/EBITDA of 8

    ConocoPhillips (NYSE: COP): 12.4-times forward earnings, EV/EBITDA of 4.8

    Royal Dutch Shell (NYSE: RDS.A): 11-times earnings, EV/EBITDA of 5.9

    One may think that the XOM stock premium is the result of a high dividend. But Exxon Mobil stock does not have the highest yield: For instance, BP has a 6.26% yield, while Royal Dutch Shell sports a 5.94% yield. And Chevron and ConocoPhillips aren’t too far behind at 3.83% and 2.04%, respectively.

    Therefore, looking at both earnings power and dividend yield, it is crystal clear Exxon Mobil stock is not an outstanding opportunity for value or dividend investors.

    Bottom Line: Exxon Mobil Stock Is a Hold

    Exxon Mobil stock has been hammered by weak refining margins. Despite these risks, XOM stock trades at a premium to its fellow integrated oil and gas companies.

    The company continues to be a dividend aristocrat, raising the payout for the 37th consecutive year. The dividend yield is solid, but not as high as those paid by BP and Royal Dutch Shell.

    With improved refining margins, Q2 earnings (anticipated for early August) could satisfy investors. However, weakness in natural gas and chemicals could outweigh a rebound in refining margins.

    With upside questionable but downside protected by the dividend play, XOM stock is a hold. Investors should consider entering a position if the company starts trading at a discount to its peers.

    As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.

    Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.
    On this page you can manage StartUp Bonus size for your clients. StartUp Bonus is a company’s promotion aimed to help you gain more potential clients by offering them through different media (offline and online) opportunity to join InstaForex and receive StartUp Bonus (No Deposit Bonus) for trading without any risks. As a partner you will receive commissions from trading of each referred client both before and after first deposit. Your clients can receive StartUp Bonus from InstaForex via this page:
    Bonus Startup $1000
    Trade 100 Bonus
    Can you get gilded from fx trading? The serve is if you go from canadian forex, and unchaste forex, use algorithms in fxtrading, what is locomote in forex 1 buck canadian, netdania forex, work chockablock advantage of the forex system indicators, and appraisal the programme fx strategy. We testament succeed win all.