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Bitcoin Futures May Be Overbought

Oct.23 -- In this edition of "Futures in Focus," Bloomberg's Alix Steel and Guy Johnson take a look at the surge in Bitcoin futures. They speak on "Bloomberg Markets."

Latest Stories

  • Some wealthy Americans are already prepping their finances for a Joe Biden presidency — here’s how

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  • 4 Oil Stocks To Buy as the Price of Crude Stabilizes

    As U.S. equity markets trade near all-time highs, coming back from their March lows, several sectors have been left behind, notably banking and energy. I believe that oil stocks are poised for a rally in the coming quarters. Last month, Fitch Ratings forecast that global GDP will fall by 4.4% in FY 2020, which implied a “modest upward revision from the 4.6% decline expected in the June.” Deutsche Bank also believes that the global GDP will “return to pre-virus levels by mid-2021.” In another forecast, the Organisation for Economic Co-operation and Development expects 5% GDP growth in the coming year.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The point I am trying to make here is that the worst is possibly over for the global economy. It also implies that demand for oil will increase in the coming quarters. Crude oil prices have also stabilized, as evidenced by recent price action in commodity-based exchange-traded fund United States Oil Fund, LP (NYSEARCA:USO), and is likely to trend higher with demand growth. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes Considering this macro outlook, it’s a good time a consider exposure to some fundamentally strong oil stocks, specifically four oil stocks with a healthy dividend pay-out. Even if the stock price is sideways, investors can benefit from dividend cash inflow. Let’s take a deeper look into the following stocks. CNOOC Limited (NYSE:CEO) Chevron Corporation (NYSE:CVX) Equinor (NYSE:EQNR) Marathon Oil (NYSE:MRO) 4 Oil Stocks to Buy as the Price of Crude Stabilizes: CNOOC Limited (CEO) Source: Shutterstock I like CEO stock for two primary reasons. CNOOC currently pays an annual dividend of $8.37 and at current levels, has an attractive yield of 8.9%. Further, the stock trades at a price-to-earnings-ratio of just 8.3. Therefore, in addition to dividends, the stock is likely to trend higher in the coming quarters as oil prices recover. Amidst a downturn in the industry, another positive fundamental factor is that CNOOC has a gearing ratio of 25%. With low leverage, the company has ample financial flexibility. Since the company has an annual dividend pay-out of $8.37, it’s also important to talk about the sustainability of dividends. I want to mention the fact that for the first half of FY2020, the company reported free cash flow of 6.4 billion CNY ($957.4 million). Even in the most challenging times, the Chinese oil company has managed to deliver positive FCF. I expect FCF to increase in the coming years. Dividends are therefore safe. Given the strong fundamentals, CNOOC is also on track for a capital expenditure of 80 billion yuan (mid-range of guidance) for the current year. Investments are likely to be higher for the coming year. This will translate into production growth and cash flow upside. CEO stock has declined by 38% in the last 12 months, pretty much in lockstep with oil’s gyrations. I believe that the worst is over for the sector and for the stock. Exposure can be considered at current levels of $93.70. Chevron Corporation (CVX) Source: tishomir / Shutterstock.com Chevron is another oil stock that has strong fundamentals, attractive valuations and an attractive dividend yield. CVX stock has also declined by 38% in the last year and stock upside is likely in addition to dividends. Currently, the stock pays an annual dividend of $5.16, which translates into a dividend yield of 7.28%. Chevron also has a strong balance sheet with a net debt ratio of 17%. In addition, the company has $30 billion in cash and equivalents. The liquidity buffer should help the company to ramp-up investments once oil trends higher and sustains at higher levels. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes The company’s Permian asset is likely to deliver production growth and strong cash flows in the coming years. Even for FY2020, the company expects positive FCF from Permian assets. Therefore, once oil trends higher, the returns from Permian assets will be attractive. With strong fundamentals, quality assets and robust dividends, I expect CVX stock to be a value creator in the coming years. Equinor (EQNR) Source: II.studio / Shutterstock.com I believe that Norway’s Equinor is among the top oil stocks. In the last one year, EQNR stock has declined by 20.8%, outperforming CVX stock and CEO stock and even ETF USO. The stock also has a healthy 2.55% dividend yield. In terms of growth, I believe that the Johan Sverdrup asset is likely to be a game changer for the company. The asset is the third-largest in the Norwegian continental shelf with expected resources of 2.7 billion barrels of oil equivalent. Once phase two production commences in FY2022, daily production from the asset will be 690,000 BOE/day. The company has a 42.6% stake in the asset. The asset will therefore deliver production growth and cash flow upside in the coming years. FCF is likely to be robust considering the point that the company expects full field break-even as $20 per barrel. Of course, Johan is not the only asset. The company has 6 billion barrels of proved oil and gas reserves. With a robust credit rating, the company has financial flexibility for growth. Overall, EQNR stock is worth considering at current levels. In the next 12-24 months, the company can deliver robust returns through stock upside and dividends. Marathon Oil (MRO) Source: IgorGolovniov / Shutterstock.com Among the relatively smaller names in the industry, I like Marathon Oil. MRO stock has slumped by 63% in the last year, but has been sideways for the past six months. I believe that the worst is over and upside is likely in the coming quarters. It’s worth noting that the company recently reinstated dividends with a quarterly pay-out of 3 cents per share. An annual dividend of 12 cents implies a yield of 2.89%. From a fundamental perspective, Marathon reported total liquidity of $3.5 billion as of Q2 2020. In addition, the balance sheet remains strong with an investment grade credit rating. Low break-even assets are another reason to be bullish on the company. In the second half of the year, the company expects positive FCF even if WTI oil is around $30 per barrel. For the next year, free cash flow break-even is expected at $35 per barrel. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes WTI oil currently trades at $40 per barrel and with likelihood of oil trending higher, the company’s dividends are safe. In addition, as FCF swells, fundamentals will further improve. Overall, MRO stock can be a potential doubler in the next 12-24 months. On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector. As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post 4 Oil Stocks To Buy as the Price of Crude Stabilizes appeared first on InvestorPlace.

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  • Exercise Patience and Wait to Buy Workhorse Group Stock If Shares Dip

    In the last month, Workhorse Group (NASDAQ:WKHS) had trouble breaking out to new highs. Markets are waiting for the company to finalize a deal with US Postal Service by the end of the year. If it happens, it may win more customers for its electric delivery vehicles. WKHS stock is a high risk, high reward investment. Source: Photo from WorkHorse.com The electric vehicle sector is still very hot. Tesla (NASDAQ:TSLA) led it higher and increased investor interest after its battery day. So, what will it take for Workhorse to keep rising? Workhorse needs to win a lucrative contract to build mail trucks for the USPS. If it happens, the deal would bring the company up to $6.3 billion in revenue. Conversely, short-sellers are betting that the deal will not pan out.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The bearish bet on Workhorse stock is a massive 23.76%. So, if the company comes up empty-handed, it will not generate the expected revenue. That would put plenty of selling pressure next. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes Presently, Workhorse is benefiting from strong investor interest in the EV sector. Tesla is worth over $400 billion in market capitalization while Nio (NYSE:NIO) is up around 20 times from its 52-week low. A similar return on Workhorse is already underway but may potentially reward shareholders more. WKHS Stock and the Future of Delivery Workhorse has two-step van models: the C650 and C1000. The vehicles are 100% electric that is powered by a modular battery pack system. When the vehicle has two battery packs, it will give 35-kilowatt hours. A four-pack configuration will provide 70 kWh. When WKHS gets the USPS contract later this year, it will validate the year-long speculation in shares. Getting $6 billion in revenue would value the stock at around 0.33 times sales, assuming a market capitalization of around $2 billion. Investors will need to exercise patience as they wait for the necessary contract approvals. Governments typically take their time for signing off on contracts, regardless of the size. The impatient investor selling WKHS shares will create a better entry point. If the stock falls again, the total return increases, assuming that it rebounds. Still, investors are justifiably nervous about Workhorse winning a contract of that size. The company expects only 300 to 400 vehicles produced by the end of the fourth quarter this year. Furthermore, WKHS posted revenue of just $92,000 in Q2. The cost of goods topped $1.5 million. This resulted in an 11 cent earnings per share loss in the period. Opportunity for WKHS Stock Workhorse’s 1,200-unit backlog forecast demonstrates the strong demand for its fleet. It has two orders with Ryder but expects all of its channel partners to help it increase its backlog quantity. The company has ample cash on hand, too. It has $105 million in cash after tapping its credit line. So, as the cost of capital falls, Workhorse is in a good position to operate without issuing warrants and options until 2022. Investors should recognize the production ramp from here through to Q4 and beyond. On the conference call, Chief Operating Officer Rob Willison said, “the ramp starts from here and goes up.” He went on to say in Q4, it expects to produce 100 units a month.  Next year, producing 150 – 200 monthly is possible, if the market can absorb that volume. In 2021, Workhorse will have a higher capacity in place to mass-produce vehicles. Gross margins may turn positive, too. That will require research and development plus general and administrative costs falling. Your Takeaway Only four analysts have an opinion on Workhorse. The average price target is $23.33 (per Tipranks). If analysts are cautious about the stock, it will not attract as many institutional investors. It is also worth mentioning that insiders sold shares regularly in the last three months. The automated selling may not signal much but it does not give a bullish indicator, either. Keep Workhorse stock on the watch list. If the stock dips sharply, consider starting a position. Disclosure: On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post Exercise Patience and Wait to Buy Workhorse Group Stock If Shares Dip appeared first on InvestorPlace.

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  • Occidental Petroleum Stock Investors See Things Go From Bad to Worse

    Occidental Petroleum (NYSE:OXY) stock is in freefall. A year ago, shares traded for as much as $50. After the March crash, OXY stock enjoyed a considerable bounce back up to the $25 level. Since then, there’s been hardly any signs of life. Shares have lost the majority of their remaining value and now trade for less than $10 a pop. Source: Pavel Kapysh / Shutterstock.com With oil firming up a bit recently, it appeared that Occidental might finally be able to turn the corner. In September, Occidental stock rallied for a moment. However, management quickly snuffed that optimism out with another shockingly bad asset sale, as it sold off one of its best oil fields to private equity for an incredibly low price. Given this unexpected and highly unfortunate development, any enthusiasm for OXY stock has disappeared in the short-term. What had been trend lines in sync, specifically the United States Oil Fund, LP (NYSEARCA:USO), shifted around Oct. 14. Oil started a slow ascent while OXY stock went the other way.InvestorPlace - Stock Market News, Stock Advice & Trading Tips That day, CEO Vicki Hollub told an industry conference that “America’s oil production will never again reach the record 13 million barrels a day set earlier this year, just before the pandemic devastated global demand,” Bloomberg reported. As they say, Occidental is burning the furniture to stay warm. And until that stops, OXY stock could keep dropping even lower. OXY Stock Investors Hit With Another Blow Throughout 2020, I’ve urged readers to avoid OXY stock. The company’s problems are numerous and its management team fails to inspire any confidence that they can fix the mess that it’s in. There are much better quality energy companies out there to buy for a sustained recovery in oil and gas. However, in September, I gave Occidental a chance. With shares down to $10, I argued that they finally looked cheap enough to be worth the risk. Shares initially popped nicely and it looked like OXY stock’s long-running nightmare was ending. But then, CEO Hollub shocked shareholders with another inexplicable decision. Earlier this month, Occidental announced that it is selling off its Colombian assets for just $700 million. Occidental had been involved in Colombia since the 1980s and has been a key partner with state oil company Ecopetrol (NYSE:EC) for ages. Colombia’s oil assets are highly attractive long-life assets with costs far below what Occidental sees on its U.S.-produced oil. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes As a result, according to Credit Suisse estimates, these Colombian fields were generating $250 million a year in cash flow for Occidental, even at current low oil prices. Think about that. Occidental dumped one of its best assets for less than three times their trough cash flow. Given the overall valuation of OXY stock (far higher than 3x cash flow) this actually made the remaining Occidental company less attractive as an asset. Crippling Debtload Forces Brutal Decisions From the regrettable Anadarko merger on, Occidental’s CEO has proven to be a poor decision-maker. The decision to give away Colombia’s crown jewels to private equity at a knockdown price is another such error. Still, given Occidental’s massive debtload, there admittedly are not a lot of good choices here. Leadership promised at least $2 billion in asset sales in 2020 to help make a dent in the company’s liabilities. Since Occidental’s higher-cost Permian assets aren’t meaningfully profitable or cash flow positive at the moment, the assets that can be easily sold are the best ones, such as the Colombian production. Unfortunately, Occidental will be left with increasingly high-cost, marginal production as it sells off Colombia, Wyoming, and other basins in the current liquidation spree. This means that the upside for OXY stock is fading by the month. Oil will eventually recover, but what will Occidental have left by the time the slump is over? OXY Stock Verdict Occidental’s decision to abandon Colombia and receive only pocket change in return is a devastating development. Every time you think Occidental might finally have reached rock bottom, it finds some way to dig even deeper. It’s especially disappointing because in September, it seemed like OXY stock might finally be ready to make a comeback. It had already sold off enough assets that its financial situation appeared alright for the foreseeable future. Perhaps management could get back to improving efficiency on its existing operations. But no, by dumping its decades-long position in Colombia, Occidental signaled to the market that there’s no end in sight to the company’s downward spiral. If you think oil is going back to $60 a barrel in the near future, you might be able to justify owning OXY stock here for its higher leverage to the price of oil. Otherwise, stay far away. The most recent asset sale made it clear that Occidental’s management team still hasn’t learned from its previous mistakes. On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post Occidental Petroleum Stock Investors See Things Go From Bad to Worse appeared first on InvestorPlace.

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  • Apollo Investor Revolt Swells Over Black’s Epstein Ties

    (Bloomberg) -- It keeps getting worse for Leon Black.Over the past week, Black’s giant investment firm, Apollo Global Management Inc., has confronted one question after another about his decades-long relationship with convicted sex offender Jeffrey Epstein.First, his own board ordered an external review prompted by Black himself. Then a Pennsylvania pension fund paused new investments -- and the state of Connecticut has done the same. One major consultant -- a gatekeeper to $160 billion of investor commitments -- has urged clients to hold off, and another is considering taking similar action.Clients who for years enjoyed some of the best returns on Wall Street are reconsidering their ties to Apollo amid renewed scrutiny over Epstein, spurred by a New York Times report earlier this month and given fresh attention from an unsealed deposition of Epstein associate Ghislaine Maxwell.Investors distancing themselves from the firm show how serious the issue has become for Black and his general partners. Some clients aren’t convinced that the review, which will be handled by law firm Dechert LLP, will be enough to clear Black’s name, according to people familiar with the matter.A freeze in new money could hurt Apollo at a time when it’s trying to raise $20 billion for several new funds. The pandemic-spurred turmoil in the credit markets is a prime investing opportunity for the firm, which is known for buying struggling businesses. Apollo is seeking to take advantage of market dislocations as well as invest in private debt, people with knowledge of the matter said in April.Black’s growing troubles reflect the changing politics of the investing world, where major funds have become more sensitive to environmental, social and governance matters. The new focus means that even the prospect of lucrative returns may not be enough of a lure in the midst of a scandal.“While performance is always going to be an important factor, increasingly it’s not the only factor,” said Gerald O’Hara, an analyst at Jefferies Financial Group Inc. “In some respects, there’s some willingness to sacrifice performance for a company that’s run with good governance, good ethics.”Investment adviser Aksia told clients not to give new money to Apollo, Bloomberg reported Friday, while Connecticut said it is halting new investments with the firm. Earlier in the week, the Pennsylvania Public School Employees’ Retirement System said it would stop making additional investments in Apollo for now, and consultant Cambridge Associates is considering not recommending the firm to its pension and endowment clients.While Black faced pressure in the immediate aftermath of Epstein’s arrest last year, investor angst was rekindled by a New York Times report that he had wired at least $50 million to Epstein after his 2008 conviction for soliciting prostitution from a teenage girl. The article didn’t accuse Black of breaking the law. Apollo shares have fallen about 12% since the story was published on Oct. 12.“We are firmly committed to transparency,” Apollo said Friday in a statement, noting that Black has been communicating regularly with investors. “Although Apollo never did business with Jeffrey Epstein, Leon has requested an independent, outside review regarding his previous professional relationship with Mr. Epstein.”In a letter to Apollo’s limited partners this month, Black said he deeply regretted having had any involvement with Epstein. Black said he had turned to him for matters such as taxes, estate planning and philanthropy, and that nothing in the Times’ report was inconsistent with an earlier description of their ties.Read more: Leon Black’s Epstein Links Threaten Apollo’s FundraisingIt will be tough for investors to cut ties completely with Apollo as private equity funds typically lock up capital for years -- a trade-off many are willing to make with the promise of high-flying returns. And unless the inquiry unearths something more damning, clients may ultimately decide to look the other way, said three investors who asked not to be identified.It’s particularly unappealing for clients to pull away given the firm’s stellar returns. Apollo’s flagship private equity fund, which opened to investors in 2001, has delivered annual gains of 44%, Bloomberg reported in January.But even yield-starved investors looking to pump more money into private equity may choose to go elsewhere in future, as rivals flood the market with new offerings.“It’s a very competitive race for capital and one thing that we continue to see in fundraising is it is in many ways more similar to a political process than a capital-raising process,” said Sarah Sandstrom, partner at Campbell Lutyens, which helps private equity firms raise money. “You are telling your story, creating relationships with investors.”(Adds previous comment from Black in 12th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Ant Group IPO pricing "history's largest", says Alibaba's Jack Ma

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  • Boeing's 'Pivotal Moment': Analyst Says Company Needs New Airplane

    Boeing Co (NYSE: BA) investors got some good news recently when European regulators cleared the 737 Max for takeoff. However, one analyst says Boeing still has a number of major challenges ahead in the near-term.The Boeing Analyst: Bank of America analyst Ronald Epstein reiterated his Neutral rating and $175 price target for Boeing.The Boeing Thesis: Epstein said the unprecedented downturn in the aviation industry, the 737 Max problems and Boeing's market share loss to Arbus has created a perfect storm for the company and its investors. In addition, Boeing recently terminated a $4.2 billion deal to take a stake in Brazilian aircraft producer Embraer."Given the prolonged grounding of the 737 MAX and the termination of ERJ deal, we view BA's narrowbody portfolio as strategically disadvantaged vs. Airbus over the medium-term," Epstein wrote in a note.In fact, Epstein said Airbus is on track to expand its market share from 51% today to 57% by the mid-2020s.Related Link: Boeing 737 Max Cleared For Takeoff After 19-Month Grounding, European Regulator SaysTo combat all these difficult headwinds, Epstein said Boeing needs to bite the bullet and invest in developing a new Future Single Aisle airplane. Making the decision to invest in a new model today wouldn't have an impact on Boeing's financial situation for years, but Epstein said it could help change the trajectory of Boeing's business in the long-term.For now, the next several quarters will continue to be difficult for the company. In the third quarter, Boeing received 58 net order cancellations and removed another 141 orders from its backlog. Epstein estimates Boeing now has at least 450 737 Max planes and at least 40 787s in excess inventory representing about $20 billion in working capital.Bank of America s projecting Boeing will burn $18.6 billion in free cash flow in 2020 and another $1.1 billion in 2021.Benzinga's Take: Boeing will certainly participate in any broad market recovery rally once the airline industry starts to improve. Unfortunately, the company has plenty of company-specific problems that may weigh on the stock's performance in the long-term relative to other aerospace stocks.Latest Ratings for BA DateFirmActionFromTo Oct 2020Credit SuisseMaintainsNeutral Sep 2020Alembic GlobalUpgradesNeutralOverweight Sep 2020Morgan StanleyInitiates Coverage OnUnderweight View More Analyst Ratings for BA View the Latest Analyst Ratings See more from Benzinga * Options Trades For This Crazy Market: Get Benzinga Options to Follow High-Conviction Trade Ideas * How Large Option Traders Are Playing GE's Stock After Regulators Clear 737 Max * How Large Option Traders Are Playing Boeing As Order Backlog Shrinks Further(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • The Pandemic Turned My Parents Into Day Traders

    Dad was thrifty enough to retire in his 50s. Mom’s nest egg was mostly retirement accounts and index funds. Now they’re buying and selling hot stocks in pursuit of quick profits.