Cash and Margin Rates and GIC rates - RBC Dominion Securities
Cash and Margin Rates and GIC rates - RBC Dominion Securities
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RBC Direct Investing Stock Trading Review (Canada) (2020)
RBC | Net Profit Margin - tradingeconomics.com
How the TFSA works
(Updated August 9th, 2020)
You may have heard about off-shore tax havens of questionable legality where wealthy people invest their money in legal "grey zones" and don't pay any tax, as featured for example, in Netflix's drama, The Laundromat. The reality is that the Government of Canada offers 100% tax-free investing throughout your life, with unlimited withdrawals of your contributions and profits, and no limits on how much you can make tax-free. There is also nothing to report to the Canada Revenue Agency. Although Britain has a comparable program, Canada is the only country in the world that offers tax-free investing with this level of power and flexibility. Thank you fellow Redditors for the wonderful Gold Award and Today I Learned Award! (Unrelated but Important Note: I put a link at the bottom for my margin account explainer. Many people are interested in margin trading but don't understand the math behind margin accounts and cannot find an explanation. If you want to do margin, but don't know how, click on the link.) As a Gen-Xer, I wrote this post with Millennials in mind, many of whom are getting interested in investing in ETFs, individual stocks, and also my personal favourite, options. Your generation is uniquely positioned to take advantage of this extremely powerful program at a relatively young age. But whether you're in your 20's or your 90's, read on! Are TFSAs important? In 2020 Canadians have almost 1 trillion dollars saved up in their TFSAs, so if that doesn't prove that pennies add up to dollars, I don't know what does. The TFSA truly is the Great Canadian Tax Shelter. I will periodically be checking this and adding issues as they arise, to this post. I really appreciate that people are finding this useful. As this post is now fairly complete from a basic mechanics point of view, and some questions are already answered in this post, please be advised that at this stage I cannot respond to questions that are already covered here. If I do not respond to your post, check this post as I may have added the answer to the FAQs at the bottom.
How to Invest in Stocks
A lot of people get really excited - for good reason - when they discover that the TFSA allows you to invest in stocks, tax free. I get questions about which stocks to buy. I have made some comments about that throughout this post, however; I can't comprehensively answer that question. Having said that, though, if you're interested in picking your own stocks and want to learn how, I recommmend starting with the following videos: The first is by Peter Lynch, a famous American investor in the 80's who wrote some well-respected books for the general public, like "One Up on Wall Street." The advice he gives is always valid, always works, and that never changes, even with 2020's technology, companies and AI: https://www.youtube.com/watch?v=cRMpgaBv-U4&t=2256s The second is a recording of a university lecture given by investment legend Warren Buffett, who expounds on the same principles: https://www.youtube.com/watch?v=2MHIcabnjrA Please note that I have no connection to whomever posted the videos.
TFSAs were introduced in 2009 by Stephen Harper's government, to encourage Canadians to save. The effect of the TFSA is that ordinary Canadians don't pay any income or capital gains tax on their securities investments. Initial uptake was slow as the contribution rules take some getting used to, but over time the program became a smash hit with Canadians. There are about 20 million Canadians with TFSAs, so the uptake is about 70%- 80% (as you have to be the age of majority in your province/territory to open a TFSA).
Eligibility to Open a TFSA
You must be a Canadian resident with a valid Social Insurance Number to open a TFSA. You must be at the voting age in the province in which you reside in order to open a TFSA, however contribution room begins to accumulate from the year in which you turned 18. You do not have to file a tax return to open a TFSA. You do not need to be a Canadian citizen to open and contribute to a TFSA. No minimum balance is required to open a TFSA.
Where you Can Open a TFSA
There are hundreds of financial institutions in Canada that offer the TFSA. There is only one kind of TFSA; however, different institutions offer a different range of financial products. Here are some examples:
The Canadian big 5 bank branches and most other financial institutions offer a TFSA that allows you to buy mutual funds, hold cash, GICs, term deposits, and possibly ETFs. This is a good choice if you want guaranteed returns or diversified investing.
There are a number of on-line banks such as Tangerine, Simplii Financial, Oaken Financial, and many more that offer the TFSA.
The discount DIY brokerage arms of the big 5 banks give you more choices, including stocks, warrants, bonds and options. There are also standalone brokers like IBKR Canada, Questrade, Qtrade, and Virtual Brokers, among others, that offer this.
Some brokerages and financial advisors also offer TFSAs that give you these investment choices, in different formats such as:
Traditional brokerage, where a stockbroker invests your money (BMO Nesbitt Burns, RBC Dominion Securities and others)
Financial advisor who will invest your money according to a plan you put together with the advisor (TSI Network and many others)
"Robo" advisors such as Wealthsimple, RBC InvestEase, BMO SmartFolio, or Wealthbar
BMO's AdviceDirect, which is a semi-directed hybrid between standalone DIY investing and fully-advised investing, where you operate on a DIY basis but have access to a registered investment advisor (a live person) who can give you suggetions and advice.
Your TFSA may be covered by either CIFP or CDIC insuranceor both. Ask your bank or broker for details.
What You Can Trade and Invest In
You can trade the following:
GICS, mutual funds, term deposits
individual common and preferred stocks listed on an "approved exchange" which is the TSX, TSX-V, NASDAQ, NYSE, and about 20 other exchanges worldwide, but not the US OTC pink sheets. Many examples, such as Suncor, Linamar, Apple, any of the big banks, and many thousands of others, when you want to buy into an individual company
stock-like securities like REITS, ETFs and ETNs, including 2x and 3x leveraged
gold and silver certificates
cash of many countries (CAD/USD/EUGBP/AUD/NZD/JPY/CHF and many others)
government bills and bonds of most countries, subsovereigns like Canadian provincial bills and bonds, and most corporations
options that trade on the Montreal Exchange or various options exchanges in the USA and the rest of the word (see FAQ for details)
gold, silver bullion certificates
shares in certain private companies -- but consult your tax advisor on this
What You Cannot Trade
You cannot trade:
commodity futures contracts
option spread positions (see FAQ for details)
anything that requires a margin account, meaning, a special kind of account that allows you to borrow money directly from the broker against the assets you have in your account and the assets you intend to buy.
crypto (although there exist crypto ETNs that you can buy)
Again, if it requires a margin account, it's out. You cannot buy on margin in a TFSA. Nothing stopping you from borrowing money from other sources as long as you stay within your contribution limits, but you can't trade on margin in a TFSA. You can of course trade long puts and calls which give you leverage.
Rules for Contribution Room
Starting at 18 you get a certain amount of contribution room. According to the CRA: You will accumulate TFSA contribution room for each year even if you do not file an Income Tax and Benefit Return or open a TFSA. The annual TFSA dollar limit for the years 2009 to2012 was $5,000. The annual TFSA dollar limit for the years 2013 and 2014 was $5,500. The annual TFSA dollar limit for the year 2015 was $10,000. The annual TFSA dollar limit for the years 2016 to 2018 was $5,500. The annual TFSA dollar limit for the year 2019 is $6,000. The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500. Investment income earned by, and changes in the value of TFSA investments will not affect your TFSA contribution room for the current or future years. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/contributions.html If you don't use the room, it accumulates indefinitely. Trades you make in a TFSA are truly tax free. But you cannot claim the dividend tax credit and you cannot claim losses in a TFSA against capital gains whether inside or outside of the TFSA. So do make money and don't lose money in a TFSA. You are stuck with the 15% withholding tax on U.S. dividend distributions unlike the RRSP, due to U.S. tax rules, but you do not pay any capital gains on sale of U.S. shares. You can withdraw *both* contributions *and* capital gains, no matter how much, at any time, without penalty. The amount of the withdrawal (contributions+gains) converts into contribution room in the *next* calendar year. So if you put the withdrawn funds back in the same calendar year you take them out, that burns up your total accumulated contribution room to the extent of the amount that you re-contribute in the same calendar year.
E.g. Say you turned 18 in 2016 in Alberta where the age of majority is 18. It is now sometime in 2020. You have never contributed to a TFSA. You now have $5,500+$5,500+$5,500+$6,000+$6,000 = $28,500 of room in 2020. In 2020 you manage to put $20,000 in to your TFSA and you buy Canadian Megacorp common shares. You now have $8,500 of room remaining in 2020. Sometime in 2021 - it doesn't matter when in 2021 - your shares go to $100K due to the success of the Canadian Megacorp. You also have $6,000 worth of room for 2021 as set by the government. You therefore have $8,500 carried over from 2020+$6,000 = $14,500 of room in 2021. In 2021 you sell the shares and pull out the $100K. This amount is tax-free and does not even have to be reported. You can do whatever you want with it. But: if you put it back in 2021 you will over-contribute by $100,000 - $14,500 = $85,500 and incur a penalty. But if you wait until 2022 you will have $14,500 unused contribution room carried forward from 2021, another $6,000 for 2022, and $100,000 carried forward from the withdrawal 2021, so in 2022 you will have $14,500+$6,000+$100,000 = $120,500 of contribution room. This means that if you choose, you can put the $100,000 back in in 2022 tax-free and still have $20,500 left over. If you do not put the money back in 2021, then in 2022 you will have $120,500+$6,000 = $126,500 of contribution room. There is no age limit on how old you can be to contribute, no limit on how much money you can make in the TFSA, and if you do not use the room it keeps carrying forward forever. Just remember the following formula: This year's contribution room = (A) unused contribution room carried forward from last year + (B) contribution room provided by the government for this year + (C) total withdrawals from last year. EXAMPLE 1: Say in 2020 you never contributed to a TFSA but you were 18 in 2009. You have $69,500 of unused room (see above) in 2020 which accumulated from 2009-2020. In 2020 you contribute $50,000, leaving $19,500 contribution room unused for 2020. You buy $50,000 worth of stock. The next day, also in 2020, the stock doubles and it's worth $100,000. Also in 2020 you sell the stock and withdraw $100,000, tax-free. You continue to trade stocks within your TFSA, and hopefully grow your TFSA in 2020, but you make no further contributions or withdrawals in 2020. The question is, How much room will you have in 2021? Answer: In the year 2021, the following applies: (A) Unused contribution room carried forward from last year, 2020: $19,500 (B) Contribution room provided by government for this year, 2021: $6,000 (C) Total withdrawals from last year, 2020: $100,000 Total contribution room for 2021 = $19,500+6,000+100,000 = $125,500. EXAMPLE 2: Say between 2020 and 2021 you decided to buy a tax-free car (well you're still stuck with the GST/PST/HST/QST but you get the picture) so you went to the dealer and spent $25,000 of the $100,000 you withdrew in 2020. You now have a car and $75,000 still burning a hole in your pocket. Say in early 2021 you re-contribute the $75,000 you still have left over, to your TFSA. However, in mid-2021 you suddenly need $75,000 because of an emergency so you pull the $75,000 back out. But then a few weeks later, it turns out that for whatever reason you don't need it after all so you decide to put the $75,000 back into the TFSA, also in 2021. You continue to trade inside your TFSA but make no further withdrawals or contributions. How much room will you have in 2022? Answer: In the year 2022, the following applies: (A) Unused contribution room carried forward from last year, 2021: $125,500 - $75,000 - $75,000 = -$24,500. Already you have a problem. You have over-contributed in 2021. You will be assessed a penalty on the over-contribution! (penalty = 1% a month). But if you waited until 2022 to re-contribute the $75,000 you pulled out for the emergency..... In the year 2022, the following would apply: (A) Unused contribution room carried forward from last year, 2021: $125,500 -$75,000 =$50,500. (B) Contribution room provided by government for this year, 2022: $6,000 (C) Total withdrawals from last year, 2020: $75,000 Total contribution room for 2022 = $50,500 + $6,000 + $75,000 = $131,500. ...And...re-contributing that $75,000 that was left over from your 2021 emergency that didn't materialize, you still have $131,500-$75,000 = $56,500 of contribution room left in 2022. For a more comprehensive discussion, please see the CRA info link below.
FAQs That Have Arisen in the Discussion and Other Potential Questions:
Equity and ETF/ETN Options in a TFSA: can I get leverage? Yes. You can buy puts and calls in your TFSA and you only need to have the cash to pay the premium and broker commissions. Example: if XYZ is trading at $70, and you want to buy the $90 call with 6 months to expiration, and the call is trading at $2.50, you only need to have $250 in your account, per option contract, and if you are dealing with BMO IL for example you need $9.95 + $1.25/contract which is what they charge in commission. Of course, any profits on closing your position are tax-free. You only need the full value of the strike in your account if you want to exercise your option instead of selling it. Please note: this is not meant to be an options tutorial; see the Montreal Exchange's Equity Options Reference Manual if you have questions on how options work.
Equity and ETF/ETN Options in a TFSA: what is ok and not ok? Long puts and calls are allowed. Covered calls are allowed, but cash-secured puts are not allowed. All other option trades are also not allowed. Basically the rule is, if the trade is not a covered call and it either requires being short an option or short the stock, you can't do it in a TFSA.
Live in a province where the voting age is 19 so I can't open a TFSA until I'm 19, when does my contribution room begin? Your contribution room begins to accumulate at 18, so if you live in province where the age of majority is 19, you'll get the room carried forward from the year you turned 18.
If I turn 18 on December 31, do I get the contribution room just for that day or for the whole year? The whole year.
Do commissions paid on share transactions count as withdrawals? Unfortunately, no. If you contribute $2,000 cash and you buy $1,975 worth of stock and pay $25 in commission, the $25 does not count as a withdrawal. It is the same as if you lost money in the TFSA.
How much room do I have? If your broker records are complete, you can do a spreadsheet. The other thing you can do is call the CRA and they will tell you.
TFSATFSA direct transfer from one institution to another: this has no impact on your contributions or withdrawals as it counts as neither.
More than 1 TFSA: you can have as many as you want but your total contribution room does not increase or decrease depending on how many accounts you have.
Withdrawals that convert into contribution room in the next year. Do they carry forward indefinitely if not used in the next year? Answer :yes.
Do I have to declare my profits, withdrawals and contributions? No. Your bank or broker interfaces directly with the CRA on this. There are no declarations to make.
Risky investments - smart? In a TFSA you want always to make money, because you pay no tax, and you want never to lose money, because you cannot claim the loss against your income from your job. If in year X you have $5,000 of contribution room and put it into a TFSA and buy Canadian Speculative Corp. and due to the failure of the Canadian Speculative Corp. it goes to zero, two things happen. One, you burn up that contribution room and you have to wait until next year for the government to give you more room. Two, you can't claim the $5,000 loss against your employment income or investment income or capital gains like you could in a non-registered account. So remember Buffett's rule #1: Do not lose money. Rule #2 being don't forget the first rule. TFSA's are absolutely tailor-made for Graham-Buffett value investing or for diversified ETF or mutual fund investing, but you don't want to buy a lot of small specs because you don't get the tax loss.
Moving to/from Canada/residency. You must be a resident of Canada and 18 years old with a valid SIN to open a TFSA. Consult your tax advisor on whether your circumstances make you a resident for tax purposes. Since 2009, your TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older and a resident of Canada. Note: If you move to another country, you can STILL trade your TFSA online from your other country and keep making money within the account tax-free. You can withdraw money and Canada will not tax you. But you have to get tax advice in your country as to what they do. There restrictions on contributions for non-residents. See "non residents of Canada:" https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
The U.S. withholding tax. Dividends paid by U.S.-domiciled companies are subject to a 15% U.S. withholding tax. Your broker does this automatically at the time of the dividend payment. So if your stock pays a $100 USD dividend, you only get $85 USD in your broker account and in your statement the broker will have a note saying 15% U.S. withholding tax. I do not know under what circumstances if any it is possible to get the withheld amount. Normally it is not, but consult a tax professional.
The U.S. withholding tax does not apply to capital gains. So if you buy $5,000 USD worth of Apple and sell it for $7,000 USD, you get the full $2,000 USD gain automatically.
Tax-Free Leverage. Leverage in the TFSA is effectively equal to your tax rate * the capital gains inclusion rate because you're not paying tax. So if you're paying 25% on average in income tax, and the capital gains contribution rate is 50%, the TFSA is like having 12.5%, no margin call leverage costing you 0% and that also doesn't magnify your losses.
Margin accounts. These accounts allow you to borrow money from your broker to buy stocks. TFSAs are not margin accounts. Nothing stopping you from borrowing from other sources (such as borrowing cash against your stocks in an actual margin account, or borrowing cash against your house in a HELOC or borrowing cash against your promise to pay it back as in a personal LOC) to fund a TFSA if that is your decision, bearing in mind the risks, but a TFSA is not a margin account. Consider options if you want leverage that you can use in a TFSA, without borrowing money.
Dividend Tax Credit on Canadian Companies. Remember, dividends paid into the TFSA are not eligible to be claimed for the credit, on the rationale that you already got a tax break.
FX risk. The CRA allows you to contribute and withdraw foreign currency from the TFSA but the contribution/withdrawal accounting is done in CAD. So if you contribute $10,000 USD into your TFSA and withdraw $15,000 USD, and the CAD is trading at 70 cents USD when you contribute and $80 cents USD when you withdraw, the CRA will treat it as if you contributed $14,285.71 CAD and withdrew $18,75.00 CAD.
OTC (over-the-counter stocks). You can only buy stocks if they are listed on an approved exchange ("approved exchange" = TSX, TSX-V, NYSE, NASDAQ and about 25 or so others). The U.S. pink sheets "over-the-counter" market is an example of a place where you can buy stocks, that is not an approved exchange, therefore you can't buy these penny stocks. I have however read that the CRA make an exception for a stock traded over the counter if it has a dual listing on an approved exchange. You should check that with a tax lawyer or accountant though.
The RRSP. This is another great tax shelter. Tax shelters in Canada are either deferrals or in a few cases - such as the TFSA - outright tax breaks, The RRSP is an example of a deferral. The RRSP allows you to deduct your contributions from your income, which the TFSA does not allow. This deduction is a huge advantage if you earn a lot of money. The RRSP has tax consequences for withdrawing money whereas the TFSA does not. Withdrawals from the RRSP are taxable whereas they are obviously not in a TFSA. You probably want to start out with a TFSA and maintain and grow that all your life. It is a good idea to start contributing to an RRSP when you start working because you get the tax deduction, and then you can use the amount of the deduction to contribute to your TFSA. There are certain rules that claw back your annual contribution room into an RRSP if you contribute to a pension. See your tax advisor.
Pensions. If I contribute to a pension does that claw back my TFSA contribution room or otherwise affect my TFSA in any way? Answer: No.
The $10K contribution limit for 2015. This was PM Harper's pledge. In 2015 the Conservative government changed the rules to make the annual government allowance $10,000 per year forever. Note: withdrawals still converted into contribution room in the following year - that did not change. When the Liberals came into power they switched the program back for 2016 to the original Harper rules and have kept the original Harper rules since then. That is why there is the $10,000 anomaly of 2015. The original Harper rules (which, again, are in effect now) called for $500 increments to the annual government allowance as and when required to keep up with inflation, based on the BofC's Consumer Price Index (CPI). Under the new Harper rules, it would have been $10,000 flat forever. Which you prefer depends on your politics but the TFSA program is massively popular with Canadians. Assuming 1.6% annual CPI inflation then the annual contribution room will hit $10,000 in 2052 under the present rules. Note: the Bank of Canada does an excellent and informative job of explaining inflation and the CPI at their website.
Losses in a TFSA - you cannot claim a loss in a TFSA against income. So in a TFSA you always want to make money and never want to lose money. A few ppl here have asked if you are losing money on your position in a TFSA can you transfer it in-kind to a cash account and claim the loss. I would expect no as I cannot see how in view of the fact that TFSA losses can't be claimed, that the adjusted cost base would somehow be the cost paid in the TFSA. But I'm not a tax lawyeaccountant. You should consult a tax professional.
Transfers in-kind to the TFSA and the the superficial loss rule. You can transfer securities (shares etc.) "in-kind," meaning, directly, from an unregistered account to the TFSA. If you do that, the CRA considers that you "disposed" of, meaning, equivalent to having sold, the shares in the unregistered account and then re-purchased them at the same price in the TFSA. The CRA considers that you did this even though the broker transfers the shares directly in the the TFSA. The superficial loss rule, which means that you cannot claim a loss for a security re-purchased within 30 days of sale, applies. So if you buy something for $20 in your unregistered account, and it's trading for $25 when you transfer it in-kind into the TFSA, then you have a deemed disposition with a capital gain of $5. But it doesn't work the other way around due to the superficial loss rule. If you buy it for $20 in the unregistered account, and it's trading at $15 when you transfer it in-kind into the TFSA, the superficial loss rule prevents you from claiming the loss because it is treated as having been sold in the unregistered account and immediately bought back in the TFSA.
Day trading/swing trading. It is possible for the CRA to try to tax your TFSA on the basis of "advantage." The one reported decision I'm aware of (emphasis on I'm aware of) is from B.C. where a woman was doing "swap transactions" in her TFSA which were not explicitly disallowed but the court rules that they were an "advantage" in certain years and liable to taxation. Swaps were subsequently banned. I'm not sure what a swap is exactly but it's not that someone who is simply making contributions according to the above rules would run afoul of. The CRA from what I understand doesn't care how much money you make in the TFSA, they care how you made it. So if you're logged on to your broker 40 hours a week and trading all day every day they might take the position that you found a way to work a job 40 hours a week and not pay any tax on the money you make, which they would argue is an "advantage," although there are arguments against that. This is not legal advice, just information.
The U.S. Roth IRA. This is a U.S. retirement savings tax shelter that is superficially similar to the TFSA but it has a number of limitations, including lack of cumulative contribution room, no ability for withdrawals to convert into contribution room in the following year, complex rules on who is eligible to contribute, limits on how much you can invest based on your income, income cutoffs on whether you can even use the Roth IRA at all, age limits that govern when and to what extent you can use it, and strict restrictions on reasons to withdraw funds prior to retirement (withdrawals prior to retirement can only be used to pay for private medical insurance, unpaid medical bills, adoption/childbirth expenses, certain educational expenses). The TFSA is totally unlike the Roth IRA in that it has none of these restrictions, therefore, the Roth IRA is not in any reasonable sense a valid comparison. The TFSA was modeled after the U.K. Investment Savings Account, which is the only comparable program to the TFSA.
The UK Investment Savings Account. This is what the TFSA was based off of. Main difference is that the UK uses a 20,000 pound annual contribution allowance, use-it-or-lose-it. There are several different flavours of ISA, and some do have a limited recontribution feature but not to the extent of the TFSA.
Is it smart to overcontribute to buy a really hot stock and just pay the 1% a month overcontribution penalty? If the CRA believes you made the overcontribution deliberately the penalty is 100% of the gains on the overcontribution, meaning, you can keep the overcontribution, or the loss, but the CRA takes the profit.
Speculative stocks-- are they ok? There is no such thing as a "speculative stock." That term is not used by the CRA. Either the stock trades on an approved exchange or it doesn't. So if a really blue chip stock, the most stable company in the world, trades on an exchange that is not approved, you can't buy it in a TFSA. If a really speculative gold mining stock in Busang, Indonesia that has gone through the roof due to reports of enormous amounts of gold, but their geologist somehow just mysteriously fell out of a helicopter into the jungle and maybe there's no gold there at all, but it trades on an approved exchange, it is fine to buy it in a TFSA. Of course the risk of whether it turns out to be a good investment or not, is on you.
Remember, you're working for your money anyway, so if you can get free money from the government -- you should take it! Follow the rules because Canadians have ended up with a tax bill for not understanding the TFSA rules. Appreciate the feedback everyone. Glad this basic post has been useful for many. The CRA does a good job of explaining TFSAs in detail at https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4466/rc4466-19e.pdf
Unrelated but of Interest: The Margin Account
Note: if you are interested in how margin accounts work, I refer you to my post on margin accounts, where I use a straightforward explanation of the math behind margin accounts to try and give readers the confidence that they understand this powerful leveraging tool.
I'm looking at opening a TFSA account with CIBC Investors Edge. I already trade with Wealthsimple Trade, but I find it lacking in stocks to choose from. My question: In the fees description, under Cash and Margin rates, it lists a fee of 4.5% on all debit balances. What is this applied to? Is it applied to your general TFSA trading account balance? I just don't know if/how it will affect me of I open a TFSA trading account. Any advice or insight would be great.
Hi CanadianInvestor Wondering if anyone has experience with margin trading here. I'm trying to find a source to weigh the different options available from Canadian financial institutions and I'm struggling to find a comparison. Any experience here? Thanks!
Occasionally people ask how these loans work. With that in mind: from the Canadian prairie on a beautiful day in July, to you: First, if you're from the U.S.: I'm doing this from a Canadian perspective which means I'm ignoring the Regulation T, special memorandum account, overnight maintenance requirement, and initial margin, because all of those are concepts that have no equivalent or application in Canada. But the basics are the same. You can ignore all of those concepts because they have no bearing on how margin actually works. Those concepts are simply restrictions in how you can use margin and as a practical matter they're not onorous restrictions. I'm also ignoring U.S. risk-based "portfolio margin" because that's a specialized, alternative margin system some brokers offer in the U.S., that we don't have in Canada. We have traditional, rules-based margin that hasn't changed in Canada in 100+ years. Note: If you are a Canadian resident buying U.S. stock in Canada you still fall under the Canadian rules for margin. Margin in Canada hasn't really changed since the 1900's, except you have to put up at least 30% nowadays instead of 10% as it was back before the crash of 1929. Basically that's the only thing that's changed. In Canada you can borrow up to 70% of a position at once for most stocks. This means that if you want to buy $10,000 worth of RBC or Apple, you only have to put up $3,000 and your broker lends you the rest. Margin was first developed in the Netherlands which basically invented the modern financial system we have today in the West, back in the 1600s. The Dutch East India corporation (ticker VOC) was at one point 20% of the world's total commerce. That would be like a company in 2020 grossing about 16 trillion US a year. By comparison Apple brings in about one half of one percent of that. The Amsterdam stock market developed just to trade VOC and other shares and related securities. Seein the success of their Continental rivals, the British copied the Dutch and for a long time, until after the Battle of Waterloo, the western world had two rival financial capitals, London, and Amsterdam. For various historical reasons, Amsterdam got pushed out of the picture and for about 100 years the City of London (which is what the financial district in London is called) was the financial capital of the west. They of course now share that crown with New York City. But it's really the Dutch who started it all, around the time of Vermeer. *** The concept is that the bank (or broker) will lend against some of your stock, but not all of it. They want a "haircut." The haircut is the amount they won't lend against. In Canada the haircut is usually 30% but can be 50% and there are some stocks the banks won't lend against at all, like most of the stuff on the TSX-V or on the U.S. pink sheets. Every bank is different, so BMO InvestorLine might want 50% on one company and Interactive Brokers Canada might want 30% or vice versa for another. But most things are 30%, some are 50% and some are 100% (meaning no loan). The maximum available leverage is 1/haircut. If the haircut is 30% as is typical in Canada, the bank will let you buy up to 1/0.3 = 3 1/3 as much as your cash, meaning, you can borrow up to 2 1/3 dollars for every dollar you put up. That's the limit. But: So say you have $3,000 and you want to buy on margin. As the bank haircut (margin rate) is 30%, you can buy $3,000/0.3 = $10,000 worth of stock. Obviously you then have a loan of $7,000. You now have $10,000 worth of stock, but remember, the bank won't let you borrow against 30%*$10,000 = $3,000. So your collateral is only $7,000. So you now have a $7,000 loan collateralized by $7,000 worth of stock. In the above example, you put up 30% margin, the same as the haircut. It's easy to see that if your total position slides so much as a dollar, you will have less collateral than $7,000 and therefore get what's called a "margin call" where they will tell you that you have to put up more money in a few hours or sell stock (which automatically pays down the loan to the extent of the sale) so that you have enough collateral to cover your loan, otherwise they will automatically sell a stock of their choosing at an amount of their choosing. They are also allowed to sell whichever stock they choose automatically without calling you first, in the event of a margin call. That is explicitly set out in your margin agreement. There have been at least two challenges to that in the Ontario courts in the last 20 years or so, where the former client argued that the bank sold their shares out without first advising them, or, in one of the court cases, after promising to hold off so that the client could put up money, and then reneging on that and selling the client's stock anyway. The court in both cases sided with the bank. The margin is for real, not negotiable, it is there to protect the bank and the other client's capital, and the words "the bank can sell at any time and without prior notice" mean what they say they mean. If you get sold out at a loss, don't expect the courts to give you redress. So obviously you need some "buffer" because of volatility, but how much do you borrow? Now you have to understand some more math. target margin = 1-(1-x)*(1-haircut) x is the price drawdown target margin is how much margin you have to put up. Say Apple is marginable at 30% (the haircut) by your bank. You decide you want to borrow on margin. But you decide, "I will allow Apple to slide 40% from what I buy it at before I get a margin call." So how much margin should you put up? target margin = 1-(1-0.4)*(1-0.3) = 1-0.6*0.7 = 1-0.42 = 0.58. So you have to put up 58% margin. That means if you have $3,000 to invest, you would buy $3,000/0.58 = $5,172 worth of Apple. If Apple is trading at $350 that means it can slide to $210 before you get a margin call. At which point you will have lost 0.4/0.58 = 68.9% of your money. (Remember, leverage is simply 1/margin.) You can convince yourself by working through it as a check. In the example, as you had $3,000 and you margined that at 58%, you bought $3,000/0.58 = $,5172 worth of stock. Obviously your equity at the time of purchase was be $3,000 because you owned $5,172 worth of stock and owed the bank $2,172. Because of the haircut, 0.3*$5,172 = $1,551 could not be used as collateral. Then the stock slid 40%, from $350 to $210, so your total stock position was then (1-0.4)*$5,172 = $3,103. Of course, you still owed the bank $2,172. But remember, not all of the $3,103 was available be used as collateral, only 70% (meaning, 1-haircut) of that. So at $210 your collateral was (1-0.3)*$3,103 = $2,172, exactly the same as the loan amount. $210 was, therefore, the lowest price at which you still have sufficient collateral. Anything less and you would have received a margin call or the bank would simply have automatically sold stock, depending on how they saw the risk. Key takeaway here is that the haircut is 30%, meaning that 30% of your stock cannot be used as collateral, which mathematically also means that your account equity/total amount of stock = (total amount of stock-loan)/(total amount of stock) has to stay at or above 30%. You're putting up 58%, meaning you're borrowing 1/0.58 - 1 = 72 cents from the bank for every dollar of your own money that you put up. The formula above is simply a rearrangement using basic algebra, of the basic margin equation which is: price at margin call = initial price of stock*(1-target margin)/(1-haircut) Whatever you do, make sure you are maxing out your TFSA or possibly RRSP or possibly both before you use margin, or only contribute a small amount of capital to a margin account and make sure your TFSA or RRSP is your main stock investment vehicle. Do not put up your TFSA as collateral on a margin account. You could end up getting a margin call, then the broker transfers the TFSA over to the margin account, but then the stock market slides again and now your TFSA is wiped out along with your margin account. Questrade offers this and I think it's an absolutely terrible idea. Frankly I think the CRA should disallow it. Notice how none of the banks offer this. Also have a plan for a margin call. You will get a margin call at some point. One good plan is simply to sell enough stock to pay off the margin loan and then re-enter margin when conditions warrant. It makes absolutely no sense to have cash lying around to meet a margin call. Why not just invest the cash and not use margin. The old adage is, "Never meet a margin call" and I think that's good advice. If the bank gives you to choice of either putting in more money in or selling, then sell. To me there are only 3 reasons you would use a margin account:
You have a large account in a diversified stock portfolio and you want to borrow against say 5% of that to go and buy a car, renovate your house, pursue an investment other than securities;
You are consistently good at beating the stock market by a significant amount, and you have maxed out or at least significantly contributed to a TFSA or RRSP or have other wealth-generating property, you have a well-thought out plan that you commit to, that governs your trading decisions, how much you will borrow, and what you will do in the event of a margin call;
You are executing certain trades that require a margin account; for example, options spreads, short selling stocks or commodity futures trades.
To me the following are bad reasons to trade on margin:
It looks like a way to make even more money in stocks, even though you don't know how to make money in stocks;
You are a diversified "Canadian Couch Potato" -style investor getting more or less average returns and you realize that you can buy stock get a 5% dividend yield and pay 4% pre-tax on margin money, so you decide to be a margined "couch potato."
Margined investing = active investing = checking your positions at least daily and following a trading plan. Finally, the average investor working with average capital should always, always, make the TFSA their #1 priority. The TFSA is truly a gem. When I was in my 20's back in the 90's, the only tax shelters for the average Canadian were the sale of their primary residence and the RRSP, the latter which is a deferral and a deduction but not an outright break the way the TFSA is. The TFSA offers leverage effectively equal to the capital gains inclusion rate * your average taxation rate, and yet without a margin call and at zero percent and it doesn't even magnify your losses. No margin account can match that. Some investors don't believe in margin at all. Like Warren Buffett, who said in a 2018 CNBC interview, "It's crazy to borrow against securities." (Note he said borrowing against stocks, not borrowing to buy stocks.) But he is right in saying that the bad thing about margin is that it gives you limited additional potential upside but at the cost of great potential downside. Understand the risks. Read your margin agreement. Consider even meeting with a securities lawyer who can explain the agreement to you. Consider this statement from an article posted on a popular stock investing website (Fair dealing exception), posted March 15th, 2020: " https://www.fool.com/investing/2020/03/15/5-ugly-lessons-from-a-nasty-margin-call.aspx From its close on Feb. 19 to its close on March 12, theS&P 500fell more than 26%, a huge decline in less than a month. Like many investors who had been using options in a margin account, I faced a margin call during that precipitous decline and was forced to liquidate positions to satisfy that call. Note that despite facing that margin call, I never actually borrowed money from my broker. I just had margin available and usable from a purchasing power perspective in the event some of my options got exercised against me. It didn't matter to my broker, though, who only saw the margin math, rather than the cash and investment-grade bonds that were also in that account and hadn't seen their values evaporate. Unfortunately, my experience during that margin call revealed some very ugly realities about how Wall Street really works, particularly when it comes to retail investors. " He goes on set out "lessons learned." None of those lessons learned is "read your margin agreement before you trade." So he didn't really learn his lesson. Anyway, it's up to each person to do what is right for them, bearing in mind the risks. But know the risks. Trading with margin doesn't mean you'll be wiped out, but if you trade anything you need to know what you're doing and that is even more important if you've agreed to borrow money. The post here was to explain how to do the calculations for this popular and important financial tool as there is a lot of misinformation out there on the subject, make some suggestions on how you can use it as a part of your overall portfolio, and give my opinions on how one might do that. Whichever road or roads you take, good investing. For more details on the TFSA and its contribution rules, see https://www.reddit.com/CanadianInvestocomments/hcy9r9/how_the_tfsa_works/
The PDT rule comes up a lot in the context of Canada. There is no such thing as pattern day trading in Canada, hence there is no PDT rule. This is so regardless of country of citizenship. If you are a United States citizen and you reside in Canada, PDT does not apply to you. We have no equivalent of the SEC as the federal constitution here says securities regulation is a provincial matter, and each province therefore has its own securities regulator; furthermore, margin loans and trading are regulated by the private sector, not by the government. In Canada the brokers are regulated under both the provincial securities commissions AND the private industry self-regulator, the Investment Industry Regulatory Organization of Canada, (IIROC). IIROC deals with margin and day trading. IIROC is the Canadian version of FINRA and IIROC's rules apply, not FINRA's. Your province's securities commission's rules, and IIROC's rules jointly apply if you trade in Canada, regardless of whether you trade Canadian or U.S. stocks, NOT FINRA's or the SEC's. And IIROC has no PDT rule. Furthermore, none of the provincial securities regulators have an equivalent of Regulation T. So whether you are with a Canadian bank broker like RBC, TD, or BMO, or you're with the Canadian office of a U.S. broker like Interactive Brokers Canada:
PDT does not apply to you because FINRA does not exist here, and IIROC does not care about day trading one way or the other
Reg T does not apply to you because the SEC does not exist here and no provincial securities regulator enforces initial margins or SMA and to my knowledge never has, as margin has never been regulated by the government. It's up to the broker, following IIROC's rules, what they lend.
Note: I use bank here instead of broker because most Canadian brokers are owned by the banks. Now: margin is incredibly simple in Canada. All you have to remember is that you can generally borrow up to 50% against your stock unless the stock is trading under $2, also, if IIROC says it's eligible for reduced margin, you can borrow up to 70% against your stock. For your stock to be eligible for reduced margin it has to be on IIROC's reduced margin list for Canadian stocks, which is a very long list consisting of almost anything you'd want to trade, or in the case of a U.S. stock, a stock that has options that trade on the CBOE/BOX/PHLX or other major options exchange, which again is almost anything you'd want to trade or own. If it's an overseas stock IIROC lets you borrow up to 50% as long as it's on a major index like the UK FTSE 100 or the French CAC 40 otherwise you have to put up 100%. So if you want to buy $10,000 worth of Apple (because it's an optionable U.S. stock) or Shopify (because it's on IIROC's reduced margin list) you have to put up $3,000. Of course, you have to also maintain 30% or 50% margin as applicable, otherwise it's a margin call or autoliquidation at your bank's sole discretion. The bank's right to sell your shares out without notice has been challenged twice in the Ontario courts and both times, the plaintiff client lost. Margin rules are meant to protect the bank/broker's capital and those of other clients and they get enforced, no exceptions. Also the broker can make you put up more than 30% or 50%, if they think conditions warrant, and change that without notice. Et voila. That is all there is to margin in Canada.
Monday’s TSX breakouts: A newly listed growth stock trading at a record high with further upside potential
https://www.theglobeandmail.com/investing/markets/inside-the-market/article-mondays-tsx-breakouts-a-newly-listed-growth-stock-trading-at-a/ On today’s TSX Breakouts report, there are 38 stocks on the positive breakouts list (stocks with positive price momentum), and nine stocks are on the negative breakouts list (stocks with negative price momentum). Discussed today is a stock that surfaced on the positive breakouts list. The company recently announced a large, attractive pending acquisition that would rapidly expand the company’s presence in the U.S. market. If approved, the acquisition is expected to be completed in the third-quarter. This could be a near-term catalyst for the stock with analysts’ potentially revaluing their target prices using a higher multiple. Featured today is GFL Environmental Inc. (GFL-T). A brief outline is provided below that may serve as a springboard for further fundamental research when conducting your own due diligence. THE COMPANY Ontario-based GFL has three main sources of revenue: solid waste (e.g. residential and commercial garbage collections and landfills), infrastructure and soil remediation, and liquid waste (e.g. liquid waste from industrial and commercial customers such as used motor oil). In 2019, solid waste represents the bulk of the company’s revenue, 74 per cent of revenue, infrastructure and soil remediation accounted for 16 per cent of revenue, and liquid waste represented 10 per cent of revenue. Last quarter, residential collection represented 26 per cent of total revenue, and commercial collection represented 33 per cent of total revenue. The company has a diversified customer base with the top 10 customers representing roughly 10 per cent of 2019 revenue. No individual customer accounted for more than approximately 3 per cent of 2019 revenue. HIGHLIGHTED BELOW ARE SEVERAL KEY ATTRIBUTES: * Industry leader: GFL is North America’s fourth largest diversified environmental services company. In terms of geographical revenue mix, in 2019, 53 per cent of revenue was from Canada, with the remainder, 47 per cent, from the U.S.
Growth: GFL has an impressive growth track record, comprised of both organic (internal) and acquisition growth. Between 2017 and 2019, the company’s revenue grew at a compound annual growth rate (CAGR) of 58 per cent, while adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) grew by a CAGR of 64 per cent during this period. Revenue is anticipated to jump 25 per cent in 2020 to $4.2-billion, up from $3.3-billion reported in 2019. In 2018 and 2017, revenue came in at $1.85-billion and $1.33-billion, respectively. EBITDA is expected to break above the $1-billion level in 2020. The 2020 consensus estimate is $1.05-billion, up from $826-million reported in 2019. In 2018 and 2017, adjusted EBITDA stood at $409-million and $307-million, respectively.
Pending acquisition: Fueling this year’s growth is a large pending acquisition opportunity that surfaced when Waste Management Inc. (WM-N) announced its plans to acquire Advanced Disposal Services Inc. (ADSW-N). In order for the WM/ADSW acquisition to be approved by the U.S. Department of Justice, assets are being divested - assets that GFL hopes to acquire. On June 24, management at GFL announced a US$835-million transformation and opportunistic acquisition that will add annualized revenue of approximately US$345-million. On a conference call held on June 25, founder, president and chief executive officer Patrick Dovigi remarked, “Without the Advanced Disposal and Waste Management merger, these types of assets would never come available. We’re acquiring 36 transfer stations, 18 landfills and almost 300 collection vehicles and approximately 900 employees through 10 states in the U.S.” The assets are mainly landfills, which are highly profitable but do require more capital spending. Of the 18 landfills being purchased, 15 have long life expectancies, while three have limited lifespans of between two and five years. Mr. Dovigi emphasized on the call that an equity financing was not being contemplated in order to finance this purchase. Instead, leverage will temporarily increase to the mid-to-upper end of four times. The acquisition is anticipated to be completed in the third-quarter, subject to the closing of Waste Management acquisition of Advanced Disposal and approval by the U.S. Department of Justice. If approved, the purchase of these assets will create a monumental opportunity for GFL to rapidly expand its U.S. footprint.
Since 2007, the company has completed over 100 acquisitions. The industry is highly fragmented with many regional and independent operators providing GFL with opportunistic tuck-in (smaller) acquisitions to fuel the company’s continued growth.
Room for multiple expansion: Right now, the stock trades at a significant discount relative to its industry peers on an EV/EBITDA (enterprise value/EBTIDA) basis. However, as the company’s profitability continues to improve (adjusted EBITDA margin expansion), the multiple may expand and analysts’ target prices may rise.
The company will be reporting its second-quarter financial results after the market closes on Wednesday Aug. 5. Management will be hosting an earnings call the following day at 8 a.m. (ET). The Street is anticipating the company to report revenue of $994-million and EBITDA of $246-million. The stock has a dual-class share structure with subordinated voting shares and multiple voting shares. The stock is dual-listed, trading on the Toronto Stock Exchange as well as the New York Stock Exchange under the ticker GFL. Dividend policy GFL pays its shareholders a quarterly dividend of 1 US cent per share, or 4 US cents per share yearly, equating to a current annualized yield of 0.2 per cent. Analysts’ recommendations The company is actively covered by 12 analysts, of which nine have buy-equivalent recommendations and three analysts have neutral recommendations. The firms providing research coverage on the company are: Barclays, BMO Nesbitt Burns, CIBC World Markets, Goldman Sachs, Jefferies, J.P. Morgan, National Bank Financial, Raymond James, RBC Dominion Securities, Scotiabank, Stifel and TD Securities. Revised recommendations Earlier this month, two analysts revised their expectations higher. CIBC’s Kevin Chiang upgraded his recommendation to an “outperform” from a “neutral” but maintained his target price at $29.50. Mark Neville, an analyst at Scotiabank, lifted his target price to US$25 from US$23. Financial forecasts The Street is forecasting EBITDA of $1.05-billion in 2020, rising 25 per cent to $1.31-billion in 2021. Earnings expectations have increased in recent months. For instance, three months ago, the consensus EBITDA estimates were $1.03-billion for 2020 and $1.19-billion for 2021. Valuation According to Bloomberg, the stock is trading at an EV/EBITDA multiple of 10.4 times the 2021 consensus estimate. In comparison, industry peer Waste Connections Inc. (WCN-T) is trading at an EV/EBITDA multiple of 17.2 times. The average 12-month target price is $29.85, implying the share price has nearly 8-per-cent upside potential. Insider transactions Year-to-date, there have not been any trades in the public market reported by insiders. Interestingly, according to Bloomberg, Ontario Teachers’ Pension Plan Board owns 16 per cent of the shares outstanding. Chart watch The stock just began trading on the Toronto Stock Exchange and New York Stock Exchange on March 3, 2020. As a result, technical analysis is limited. The initial public offering price was US$19. One month later, the share price nose-dived to around US$12 (closed at CDN$16.84 on April 3) as COVID-19 concerns permeated equity markets. Since then, the share price has staged a strong recovery, closing at US$20.54 or CDN$27.76 on Friday – a record closing high. In terms of key resistance and support levels, the next major ceiling of resistance is around CDN$30. Looking at the downside, there is initial support around $26, near its 50-day moving average (at $25.61). After that, there is strong support around $24.
$SHOP - analysts mostly bullish into Q2 results on Wednesday
Oppenheimer (July 27, 2020): " we are positive into the print, as we believe Shopify will post results that will beat Street estimates. As such, we are raising our revenue and profitability forecast for SHOP today. Our positive tactical stance is supported by our proprietary tracker data, correlation analysis, and scenario analysis, which suggest there is good upside (i.e., ~7%) in our "Mid" scenario to the 2Q consensus total revenue estimate. Bottom line: We carry a positive tactical view into SHOP's 2Q results. However, we maintain our 12- to 18-month Perform rating on SHOP, as its premium valuation compared its Tier-1 SaaS peers (i.e., ~50x vs. ~29x EV/2020 revenue) keeps us on the sidelines for now." RBC (July 24, 2020): " Based on intra-quarter data points and our model sensitivity work, we view Street estimates for the June quarter and balance of 2020 as likely conservative. Third-party data, industry checks, and our proprietary data suggest that e-commerce sales have accelerated in Q2 from March levels and we believe SHOP will fully participate." Credit Suisse (July 23, 2020): "We anticipate another quarter of strong results from Shopify as the company continues to benefit from an acceleration in the secular migration toward e-commerce. We see upside to ouconsensus estimates though believe much if not all of the anticipated outperformance is priced into the share price with SHOP +40% since the last earnings call (+141% YTD) vs. the IGV Software Index +21% and 26%, respectively. We increase our TP to $850 as our DCF now assumes more sustainable GMV growth. We maintain our Neutral rating due to valuation." Piper Sandler (July 23, 2020): "We are raising estimates and our PT to $1,015 (from $843) based on new data-driven inputs using digital downloads of the Shopify eCommerce application as a proxy for near-term digital adoption. While download activity doesn't directly correlate with revenue growth, we view it as a directional input. Shopify downloads rose 78% y/y and 72% q/q during Q2 suggesting a strong recovery after an initial COVID related slowdown in March. As the global retail operating system for 1M+ merchants today with an expanding product offering, SHOP remains one of the best positioned digital beneficiaries for the next decade." DA Davidson (July 22, 2020): "We project 31.8% sales growth to $477.1M, which is below the consensus figure of $504.9M. Note, in April, the company withdrew its full-year guidance and did not provide any outlook for 2Q20 (see Figure 1 on page 2 for our operating forecasts). Shopify’s sales have topped the consensus forecast in all 20 quarters since its IPO; with this being the first quarter the company has not given guidance. On profitability, we look for $11.1M of adj. EBITDA (a 2.3% margin); our estimate is above the Street projection of $8.9M. Lastly, we forecast adj. EPS of a loss of $0.07, compared to the consensus estimate of $0.01. " Roth Capital Partners (July 20, 2020): "Our 2Q checks suggest strong underlying growth from our surveyed customers of ~50%. As such, we have raised 2Q, as well as FY2020/2021 estimates. While our outlook improves, and SHOP and its stock should continue to benefit from e-commerce tailwinds from Covid-19, valuation remains very stretched at ~53x/40x EV/20E/21E sales, respectively. We reiterate our Neutral, as our PT improves to $800. " Barclays (July 16, 2020): " SHOP’s 2Q results are likely to reflect healthy demand for its ecommerce offerings over the past few months. Intra-quarter data-points on ecommerce activity indicate that volume growth on online channels has remained strong despite many markets reopening over the last few weeks. SHOP is likely to be one of the primary beneficiaries of this trend and the company’s 2Q revenues and GMV growth should come with a nice acceleration. We forecast total revenues of $573m, or 58% y/y growth (vs. 47% in 1Q). Shares of SHOP have traded up +34% since 1Q print (vs. Nasdaq +17%), and investor sentiment is largely bullish. While this positioning doesn’t leave a lot of upside opportunity on the print, we don’t expect material downside given the potential for a nice beat on consensus and an upbeat commentary on the call. However, we remain Equal Weight as we struggle to justify $115B market cap using traditional frameworks."
Greetings from MCS, the derivatives trading platform where traders ALWAYS come first. https://preview.redd.it/uaryqg421cf51.png?width=1302&format=png&auto=webp&s=049a3413ff1392c1f579e84e9a14cac76959e12c For the first time in history, the world gold price has topped $2,000 an ounce. Quantitative easing in major countries has brought astronomical amounts into the financial markets. In addition, Nasdaq is also setting a new high in anticipation of further economic stimulus agreements in the US this week. Financial experts cite the followings for the main causes of the recent gold rally. 👉 First, experts analyze this intensification of the gold rally was caused by the stuttered US dollar rebound and the lowered US Treasury yield. In particular, as the US government's discussion on further economic stimulus measures to alleviate the global economic damage caused by COVID-19 from Wuhan, China is expected to come to an agreement this week, many speculate that this will lead to a drop in dollar value. Although the White House, Republicans, and Democrats have yet to narrow their views on additional stimulus measures prolonging the negotiation, it is very likely that the release of more dollars in the market, in the sense that everyone agrees on the need for additional stimulus, will relatively increase the value of gold. 👉 Second, some say that “the central banks in many countries will continue to buy gold to promote gold prices” referring to cases where central banks' buying of gold increased their gold prices during the 2009 global financial crisis.
"How high will the gold price go❓ "
Most experts believe that the gold price is still far from its limit. Especially, the Goldman Sachs Group is looking at $2,300 an ounce, Bank of America from $2,500 an ounce to up to $3,000 an ounce, and RBC Capital Market $3,000 an ounce. https://preview.redd.it/vdk9z7251cf51.png?width=1308&format=png&auto=webp&s=057fc3749ebb69d881d5c0f1dbb35e8d075c7b89 The price of Bitcoin, also known as a safe digital asset, also remains in the $11,100 to $11,300 range ever since it recently broke the highest point of $12,000. https://preview.redd.it/98v29w551cf51.png?width=2272&format=png&auto=webp&s=50b3957a0cffaa121d49c38e083223780841a3a9 Bitcoin, the No. 1 market capitalization among cryptocurrencies, has a market capitalization of approximately 200 billion USD as of August 5, 2020. This is more than the global stock valuations of Intel and Coca-Cola. https://preview.redd.it/z6cxe1y51cf51.png?width=2560&format=png&auto=webp&s=6e74da23155fd6a4b9fe2521c61cbf4bd8bd9b94 A cryptocurrency media outlet, CoinDesk recently said that "Bitcoin recently hit a market high of $11,480, but there was a sign of buyer (buying force) fatigue in the technology chart. If the price falls below $11,000, it could retreat back to, before resistance now support, $10,500 (the highest point in February). However, if Bitcoin continues to settle above $11,400 on the time chart, it is highly likely that the rally will go above the latest high beyond $12,000". I believe now that the value of gold, a famous safe asset, is the highest ever as the U.S. government has tentatively agreed to invest an additional $1 trillion in economic stimulus, the Bitcoin is also preparing to its rally again. I also think that since it is the post-halving period with the good news waiting in line including the Ethereum 2.0, we have enough momentum to rally more than $20,000 by the end of the year.
💡 "Nothing is permanent in this wicked world - not even our troubles." - Charlie Chaplin
All financial assets, including Bitcoin, the cryptocurrency leader, cannot be bullish forever. In the long run, they can gradually rise by stepping up the lowest price point, but there are a lot of ups and downs along the way. MCS traders can enjoy a bull market while preparing for a bear market on the one hand. https://preview.redd.it/864543571cf51.png?width=2560&format=png&auto=webp&s=5cc17316075758ca10523a6124204ca57351d737 On UPbit and Bithumb, the major cryptocurrency exchanges in Korea, one can profit in a bull market, but it is very difficult to realize profits in a bear market, nless you are a master of flipping,. As a result, many cryptocurrency traders will turn their attention to cryptocurrency derivatives exchanges in bear markets. After a successful launch of the Bitcoin perpetual contract product, the trading market on MCS is vigorously moving. The perpetual contract, one of Bitcoin derivatives, can short sell (betting on price drop) in the bear market, making it easy to profit even if the full-fledged bear market starts. In addition, even in today's bull market, you can take long positions (betting on rising prices), and you can use leverage to amplify your investment beyond the assets managed you own, enabling very effective Bitcoin trading. *If you use leverage, the risk is significantly higher, so please be cautious of the risk and trade safely. I hope this post helped you to understand the pros and cons of Bitcoin perpetual contract better, and I really wish that you realize your financial freedom on MCS, a cryptocurrency derivatives trading platform!! I am a Bitcoin margin trader, Hedgehog. Thank you for reading this post. Traders ALWAYS come first on MCS. Thank you. MCS Website:https://mycoinstory.com/ MCS Official Twitter (EN):https://twitter.com/mycoinstory_mcs MCS Official Facebook:https://www.facebook.com/MyCoinStory.official MCS Telegram Chat (EN):https://t.me/mycoinstory_EN
Wall Street Breakfast: The Week Ahead. I read this and thought it interesting. Enjoy from SeekingAlpha
Nike (NYSE:NKE) will headline a light roster of earnings reports in the week ahead, while Apple's (NASDAQ:AAPL) WWDC event sets the stage for the company's launch of the first 5G iPhones later this year. On the economic front, reports on existing home sales, jobless claims, consumer spending and a Q1 GDP revision will be the headliners. Fed heads are out in force next week, with virtual speeches on the docket for Raphael Bostic, James Bullard and Charles Evans. In a sign of normalcy, Ford (NYSE:F) and Fiat Chrysler Automobiles (NYSE:FCAU) are expected to return to pre-pandemic production levels at U.S. plants, while results of Fed stress tests on major banks will be announced on June 25. Earnings spotlight: IHS Market (NYSE:INFO) on June 23; BlackBerry (NYSE:BB), KB Home (NYSE:KBH) and National Beverage (NASDAQ:FIZZ) on June 24; Nike (NKE), Darden Restaurants (NYSE:DRI), Accenture (NYSE:ACN) and Rite Aid (NYSE:RAD) on June 25. IPO watch: U.S. grocery store operator Albertsons (ACI) is expected to price its IPO next week and begin to trade. The company could have a valuation of over $10B if the IPO prices at the midpoint of the expected range of $18 to $20 range. Albertsons, which is looking to raise as much as $2B, is one of the grocery chains seeing a sales boom in business during the coronavirus pandemic. Stakeholders Kimco Realty (NYSE:KIM) and Cerberus Capital are both selling off shares in the offering. No other IPOs are due to price during the week. M&A tidbits: The walk date for the Caesars Entertainment (NASDAQ:CZR)-Eldorado Resorts (NASDAQ:ERI) merger arrives on June 24, although no surprises are anticipated. Shareholders vote on the Provident Financial (NYSE:PFS)-SB One Bancorp (NASDAQ:SBBX) deal on June 25. On the same date, Delphi Technologies (NYSE:DLPH) shareholders vote on the merger with BorgWarner (NYSE:BWA). It is almost a lock that there will be some more drama in the Taubman Centers (NYSE:TCO)-Simon Property (NYSE:SPG) duel. Projected dividend changes (quarterly): Kroger (NYSE:KR) to $0.17 from $0.16, John Wiley (NYSE:JW.A) to $0.35 from $0.34, Saul Centers (NYSE:BFS) to $0.27 from $0.53. Spotlight on Nike: Nike will post its FQ4 report with more uncertainty in the air than almost any time before due to the lack of formal guidance from the company. The two biggest pullouts from the report are likely to be the pace of recovery in China and the momentum of the e-commerce business. Nike is one of the companies seen by Wall Street as in a strong position on the other side of the pandemic. "We see Nike as favorably positioned for both secular fitness/casualization trends and industry structural changes that benefit those with strong direct engagement with consumers," notes bullish-leaning Wells Fargo ahead of the print. Stocks that quite often move right along with Nike on earnings day include Foot Locker (NYSE:FL), adidas (OTCQX:ADDYY), Under Armour (NYSE:UAA) and Dick's Sporting Goods (NYSE:DKS). WWDC: Apple will hold its annual developers conference on June 22-26 in a virtual format this year. Apple is expected to announce its ARM-based Macs as the company advances its control of chips and architecture away from Intel (NASDAQ:INTC). Enhancements with iOS14, tvOS 14 and watchOS 7 are also anticipated, along with new products/R&D initiatives on the AR headset and wearables/AirPods front. Tim Cook will give the keynote presentation on June 22 at 10:00 Pacific time in what is likely to be his last presentation before the annual September iPhone reveal event. Healthcare watch: Bristol-Myers Squibb (NYSE:BMY) has an investor series presentation next week covering its early pipeline/immuno-oncology on June 22 and hematology on June 25. PDUFA dates arrive for Karyopharm Therapeutics' (NASDAQ:KPTI) Xpovio on June 23, Zogenix's (NASDAQ:ZGNX) Fintepla on June 25 and Heron Therapeutics' (NASDAQ:HRTX) HTX-011 on June 26. The big event of the week in the sector is the American Association for Cancer Research (AACR) Virtual Annual Meeting II running from June 22-24. A large number of potentially market-moving posters and abstracts are due to be released, as well as special sessions on COVID-19 and cancer research. Some of the notable companies due to present include Gilead Sciences (NASDAQ:GILD), AstraZeneca (NYSE:AZN), Phio Pharmaceuticals (NASDAQ:PHIO), Exicure (NASDAQ:OTC:XCUR), Xencor (NASDAQ:XNCR), ESSA Pharma (NASDAQ:EPIX), ImmunoGen (NASDAQ:IMGN), Molecular Templates (NASDAQ:MTEM), Guardant Health (NASDAQ:GH), CRISPR Therapeutics (NASDAQ:CRSP), Jounce Therapeutics (NASDAQ:JNCE), GlycoMimetics (NASDAQ:GLYC), Seattle Genetics (NASDAQ:SGEN), Provectus Therapeutics (OTC:PVCT), ORIC Pharmaceuticals (NASDAQ:ORIC), Sanofi (NASDAQ:SNY), aTyr Pharma (NASDAQ:LIFE), TG Therapeutics (NASDAQ:TGTX) and Neoleukin Therapeutics (NASDAQ:NLTX). Bank tests: The Federal Reserve will release results of the annual bank stress tests on June 25. Fed Vice Chair Randal Quarles noted that the test this year includes running banks up against three possible economic trajectories of varying severity to see how they perform due to the unprecedented uncertainty about the pandemic. The test will see how banks perform against a rapid V-shaped recovery, a slower U-shaped recovery and a rough W-shaped recovery. The test results could factor in to dividend decisions down the road for Bank of America (NYSE:BAC), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM), while Capital One (NYSE:COF) and Morgan Stanley (NYSE:MS) are seen being pushed under the scenarios. Traders are making plays based on the results, with a notable amount of bullish options bets being placed on Wells Fargo (NYSE:WFC). Some other bank names to watch when the results roll out are PNC Financial (NYSE:PNC), Truist (NYSE:TFC), Regions Financial (NYSE:RF), Ally Financial (NYSE:ALLY), HSBC North America (NYSE:HSBC), UBS (NYSE:UBS), Credit Suisse (NYSE:CS), Barclays (NYSE:BCS), Bank of New York Mellon (NYSE:BK) and Huntington Bancshares (NASDAQ:HBAN). Analyst meetings and business updates: Electronic Arts (NASDAQ:EA) will host a fireside chat for the investor community with members of its management team on June 22. The impact of some of the games introduced at EA Play Live 2020 will be discussed. Hewlett Packard Enterprises (NYSE:HPE) is launching the first-ever HPE Discover Virtual Experience on June 23 to showcase the company's pivot to an edge-to-cloud platform-as-a-service company. In the transportation sector, Kansas City Southern (NYSE:KSU) is participating in a Q&A webcast with Cowen on June 23. Also on June 23, Dell Technologies (NYSE:DELL) has an investor call with Morgan Stanley scheduled. Meanwhile, Sanofi is holding a virtual R&D day event on June 23. Bristol-Myers Squibb has an investor event covering immunology and cardiovascular on June 26. Conferences rundown: The timing looks spot on for the Jefferies Virtual Consumer Conference on June 23-24 with the pandemic shifting shopping habits in the U.S. Companies due to present include Hasbro (NASDAQ:HAS), Planet Fitness (NYSE:PLNT), Nu Skin (NYSE:NUS), Freshpet (NYSE:FPT), Murphy USA (NYSE:MUSA), Sysco (NYSE:SYY), Hostess Brands (NASDAQ:TWNK), Shack Shack (NYSE:SHAK) and Jack in the Box (NASDAQ:JACK). In the healthcare sector, the BMO 2020 Prescriptions for Success Healthcare Conference features virtual presentations by Humana (NYSE:HUM), Halozyme (NASDAQ:HALO), Horizon Therapeutics (NASDAQ:HZNP), Apellis Pharmaceuticals (NASDAQ:APLS), Amgen (NASDAQ:AMGN) and Replimune (NASDAQ:REPL) on June 23. Other conferences of note include the SVB Leerink CybeRx Series CNS Forum, BMO Chemicals & Packaging Conference, Wells Fargo Bricks to Clicks Digital Conference, Goldman Sachs Leveraged Finance Conference and the Morgan Stanley Zero Trust Architectures Virtual Thematic Conference. On the smaller side of the conference schedule, the mining and metals sectors will be in focus, with John Tumazos Very Independent Research virtual meetings set for June 23-24 on Wheaton Precious Metals (NYSE:WPM), Western Copper and Gold (NYSEMKT:WRN), KORE Mining (OTCQB:KOREF), Amarillo Gold (OTCQB:AGCBF), Sierra Metals (NYSEMKT:SMTS), Foran Mining (OTC:FMCXF), Wolfden Resources (OTC:WLFFF), Trilogy Metals (NYSEMKT:TMQ) and Adventus Mining (OTCQX:ADVZF). Ford F-150: Ford has a digital reveal event for the all-new F-150 set for June 25. The Ford team is expected to describe innovative features of the all-new F-150, including the new electrical architecture, a flat-lying passenger sleeper seat and over-the-air updates to key modules controlling vehicle performance and user experiences. The new truck is seen as a critical part of Ford's plan to slash $5B in warranty costs and push the automaker's vehicle connectivity platform. As a profit generator, the F-150 launch later this year will also help restore the company's balance sheet. The all-new Ford F-150 will be discussed by execs in detail during a June 26 conference call with Citi Research. Deurbanization trade: Expect more talk from analysts next week about which sectors and stocks could benefit if the mega-trend of people and businesses moving out of downtowns of major cities becomes a reality. Jefferies got the ball rolling last week by singling out Home Depot (NYSE:HD), Lowe's (NYSE:LOW), Best Buy (NYSE:BBY), Floor & Decor (NYSE:FND), At Home (NYSE:HOME), Williams-Sonoma (NYSE:WSM) and Wayfair (NYSE:W) as retailers that could gain from an uptick in suburban living and more spending on houses than metropolitan apartments. One of the bigger pure plays is Tractor Supply (NASDAQ:TSCO), which has racked up a 64% gain over the last 90 days. RVs: Keep an eye on the RV sector with May shipment numbers due out from the RV Industry Association. Demand is expected to be on the rebound after RV shipments fell 82% in April. Looking ahead, there is a difference in opinion on Wall Street on the outlook for Winnebago (NYSE:WGO), Thor Industries (NYSE:THO), Patrick Industries (NASDAQ:PATK), LCI Industries (NYSE:LCII) and Camping World Holdings (NYSE:CWH). Some firms like SunTrust Robinson Humphrey expect a RV boom as consumers gravitate toward safer vacations, while Bank of America has warned that the high rate of unemployment and salary cuts could keep discretionary spending in check. Sports betting: Time is running out for the California Assembly to pass legislation on sports betting to move the issue to the November ballot. The bill has to pass through the legislature before June 25 to become an election issue. Why is it a big deal? California is forecast to have the potential for a +$30B sports betting market through sports books placed at tribal casinos, horse racing tracks and satellite wagering facilities. "California could easily become one of the most productive sports-betting markets in the world," observes gaming analyst Chris Grove. Tax revenue from sports betting would also help the Golden State with its budget issues amid the pandemic and economic downturn. Stocks of interest in relations to how sports betting in California plays out include DraftKings (NASDAQ:DKNG), William Hill (OTCPK:WIMHF), MGM Resorts (NYSE:MGM), Caesars Entertainment, Fanduel (DUEL), Red Rock Resorts (NASDAQ:RRR), Boyd Gaming (NYSE:BYD) and Wynn Resorts (NASDAQ:WYNN). Casinos: The Nevada Gaming Commission is meeting on June 25 to likely approve amendments to state regulations that would streamline the process for moving to modern payment methods. The casino industry in general wants to quickly adopt cashless payment transactions on the casino floor due to the risk of handling cash during the coronavirus outbreak. The casino reset could have implications for Visa (NYSE:V), Mastercard (NYSE:MA) and American Express (NYSE:AXP), as well as financial apps from Apple (AAPL), Google (NASDAQ:GOOGL) (NASDAQ:GOOG) and PayPal (NASDAQ:PYPL). Casino operators like MGM Resorts, Wynn Resorts, Caesars Entertainment and Penn National Gaming (NASDAQ:PENN) would also welcome the change. What's not playing: Warner Bros.'s (NYSE:T) feature animated film Scoob! will stream on HBO Max on June 26 after running in a premium video on-demand window. The children's picture was first scheduled for theaters on May 15 before opting for a 48-hour rental PVOD period price of U.S. $19.99. While Scoob! didn't make quite the splash that Trolls World Tour did in the spring when it nabbed $100M in digital sales over three weeks, it's another incremental step away from the traditional studio release format for major studios like Sony (NYSE:SNE), Universal Pictures (NASDAQ:CMCSA) and Disney (NYSE:DIS). As for theater chains, auditoriums are likely to operate at 25% to 50% capacity as AMC Entertainment (NYSE:AMC), Cinemark (NYSE:CNK), IMAX (NASDAQ:IMAC), Marcus Entertainment (NYSE:MCS) and Reading International (NASDAQ:RDI) open back up this summer. Notable annual meetings: Companies with virtual annual meetings set next week include Ollie's Bargain Outlet Holdings (NASDAQ:OLLI) on June 22, Dave & Buster's Entertainment (NASDAQ:PLAY) on June 23, Keurig Dr Pepper (NYSE:KDP) on June 24, At Home Group and Tailored Brands (NYSE:TLRD) on June 25. Barron's mentions: The publication digs out four industrial companies whose stocks are called compelling. Midsize manufacturers RBC Bearings (NASDAQ:ROLL) and Wabtec (NYSE:WAB) join large-caps Emerson Electric (NYSE:EMR) and Ametek (NYSE:AME) on the short list of economy recovery picks. Of the four, Wabtec trades with the lowest forward PE ratio at 14.2. Brunswick (NYSE:BC) is also singled out this week as an advantageous product-mix shift and rising boat demand are seen helping to drive shares higher. Most of Brunswick's profit is derived from the high-margin Mercury engine business. The rally in tech names hasn't encapsulated the entire sector. Attractive names still trading at less than 4X sales include Western Digital (NASDAQ:WDC), CACI International (NYSE:CACI), Leidos Holdings (NYSE:LDOS), Seagate Technology (NASDAQ:STX), Amdocs (NASDAQ:DOX), Ciena (NYSE:CIEN), Accenture, MKS Instruments (NASDAQ:MKSI), Intel and F5 Networks (NASDAQ:FFIV). The cover story this week hits on the rising inequality issue in the U.S., noting that it can be a breeding ground for all kinds of concerning things for the market like secular stagnation.
Futures were pointing to a lower open on Wall Street, pushing the Dow and S&P 500 further into negative territory for the week and making it all but certain that the Nasdaq would lose what’s left of its small weekly gain. The moves would be their first weekly losses in an otherwise stronger February. (CNBC)
Dow component Coca-Cola (KO) said Friday that negative impact from the coronavirus will shave 1 to 2 cents off first-quarter per-share earnings. Meanwhile, There are more than 76,000 cases worldwide and 2,249 deaths. The vast majority of cases and deaths are in China. (CNBC)
St. Louis Fed President James Bullard told CNBC on Friday that he expects the coronavirus to be a short-term problem and likely won’t cause central bankers to want to cut interest rates. “There’s a high probability that the coronavirus will blow over as other viruses have, be a temporary shock and everything will come back,” Bullard said.
On the economy and earnings, the National Association of Realtors issues January existing home sales. Deere & Co. (DE) leads this morning’s profit reports. Warren Buffett’s Berkshire Hathaway (BRK.A) is set for a weekend release of its latest quarterly results. (CNBC)
Buffett also releases his annual letter to Berkshire shareholders on Saturday. As CNBC’s Tom Franck reports, the Buffett faithful are especially interested this year to know whether Berkshire finally found the elusive “elephant-sized” acquisition. Buffett joins “Squawk Box” on Monday for three hours, starting at 6 a.m. ET.
Shares of Dropbox (DBX) were gaining about 11% in the premarket after the online storage company beat estimates with quarterly earnings and revenue. Dropbox also raised its profit margin outlook and announced a $600 million share buyback program. (CNBC)
One day after Mike Bloomberg’s debacle at the Democratic presidential debate in Las Vegas and one day before Saturday’s Nevada caucuses, a New York Times analysis shows the former New York City mayor spent nearly double than fellow self-funding billionaire Tom Steyer and more than Bernie Sanders, Elizabeth Warren, Pete Buttigieg and Joe Biden combined.
Warren reverses her position on super PAC support as she seeks comeback (CNBC)
President Donald Trump pushed aside his acting director of national intelligence, Joseph Maguire, because he was angry that lawmakers were briefed about Russia’s plan to interfere in the 2020 election to help Trump, a former intelligence official briefed on the matter told NBC News.
Trump bashes Brad Pitt, Joe Biden and polls during Colorado rally, goes to Vegas today (USA Today)
Wells Fargo (WFC) is nearing a settlement with the U.S. Securities and Exchange Commission and the Justice Department (DOJ) over previously disclosed probes into its sales practices, the New York Times reported.
Alphabet’s (GOOGL) Google is resisting efforts to surrender emails, text messages and other documents sought by state investigators probing possible anticompetitive practices, according to records and interviews reported on by The Wall Street Journal.
Sears has reportedly reached a deal for a fresh financial lifeline totaling roughly $100 million from hedge fund Brigade Capital Management, as it tries to stabilize after bankruptcy. (Reuters)
T-Mobile US (TMUS) and Sprint (S) announced amended terms of their merger which will reduce the stake of Sprint shareholder SoftBank, while T-> * Mobile parent Deutsche Telekom will have a slightly higher stake. (CNBC)
Tesla (TSLA), whose shares have been surging lately, has been given the go-ahead from a German court to cut down trees for its new European factory. However, the electric auto maker doesn’t yet have planning permission to build the so-called Gigafactory in Brandenburg. (CNBC)
HP (HPQ) adopted a “poison pill” to help fend off Xerox’s (XRX) attempt to buy the computer and printer maker. The poison pill gives shareholders the right to buy more shares at a discount if any one entity acquires 20% of outstanding shares, diluting the group’s stake. (Reuters)
Plans by the U.S. to create a 5G rival to Huawei could be a “challenge,” one of the Chinese firm’s top executives told CNBC, as calls grow from American lawmakers to find alternatives for its next-generation networks. (CNBC)
Deere (DE) – The heavy equipment maker reported quarterly earnings of $1.63 per share, beating the consensus estimate of $1.25 a share. Revenue also exceeded forecasts. Deere said it sees signs of stabilization in the U.S. farm sector, and that the relaxation of trade tensions is improving farmer confidence.
Coca-Cola (KO) – The beverage giant said the coronavirus outbreak would cut its current-quarter earnings by a penny to 2 cents per share, but adds that it still expects to achieve its prior full-year earnings targets.
T-Mobile US (TMUS), Sprint (S) – The mobile operators announced amended terms of their merger which will reduce the stake of Sprint shareholder SoftBank, while T-Mobile parent Deutsche Telekom will have a slightly higher stake.
Chewy (CHWY) – The pet products seller was upgraded to “outperform” from “sector perform” at RBC Capital, on what the firm calls a “highly favorable” risk-reward outlook. RBC said Chewy has strong sustainable fundamentals, including upbeat revenue growth and expanding profit margins.
Dropbox (DBX) – Dropbox reported quarterly earnings of 16 cents per share, beating consensus by 2 cents a share. The online file storage company beat revenue estimates as well. Dropbox also raised its profit margin outlook and announced a $600 million share buyback program.
First Solar (FSLR) – First Solar earned an adjusted $2.02 per share for the fourth quarter, short of the $2.72 per share profit that Wall Street analysts had anticipated. The solar power company’s revenue also came in below estimates and First Solar gave weaker-than-expected revenue guidance.
Wells Fargo (WFC) – The bank is close to settlements with the Securities and Exchange Commission and the Department of Justice over probes into its sales practices, according to The New York Times. The paper said the settlements could be announced as soon as today.
HP Inc. (HPQ) – HP adopted a so-called “poison pill” to help fend off Xerox’s (XRX) attempt to buy the computer and printer maker. The poison pill gives shareholders the right to buy more shares at a discount if any one entity acquires 20% of outstanding shares, diluting the group’s stake.
Fitbit (FIT) – Fitbit posted an unexpected loss of an adjusted 12 cents per share, compared to predictions of a 3 cents per share profit. The maker of wearable fitness devices also saw its revenue come in below forecasts, as it sold more devices but at lower prices.
Texas Roadhouse (TXRH) – Texas Roadhouse beat estimates by 9 cents a share, with quarterly earnings of 61 cents per share. The restaurant chain’s revenue beat forecasts as well with same-restaurant sales up 4.4%. Texas Roadhouse also announced a 20% dividend increase.
Sprouts Farmers Market (SFM) – Sprouts earned 27 cents per share for the fourth quarter, nearly doubling the 14 cents a share consensus estimates. The organic grocery chain’s revenue was slightly above forecasts, and the company gave a better-than-expected full-year earnings outlook.
Pilgrim’s Pride (PPC) – Pilgrim’s Pride fell 10 cents a share short of estimates, with quarterly profit of 14 cents a share. The poultry producer’s revenue came in above Wall Street forecasts. Pilgrim’s Pride said it saw difficult market conditions in some key markets, most notably Mexico.
$SHOP - analysts mostly bullish into Q2 results on Wednesday
Oppenheimer (July 27, 2020): " we are positive into the print, as we believe Shopify will post results that will beat Street estimates. As such, we are raising our revenue and profitability forecast for SHOP today. Our positive tactical stance is supported by our proprietary tracker data, correlation analysis, and scenario analysis, which suggest there is good upside (i.e., ~7%) in our "Mid" scenario to the 2Q consensus total revenue estimate. Bottom line: We carry a positive tactical view into SHOP's 2Q results. However, we maintain our 12- to 18-month Perform rating on SHOP, as its premium valuation compared its Tier-1 SaaS peers (i.e., ~50x vs. ~29x EV/2020 revenue) keeps us on the sidelines for now." RBC (July 24, 2020): " Based on intra-quarter data points and our model sensitivity work, we view Street estimates for the June quarter and balance of 2020 as likely conservative. Third-party data, industry checks, and our proprietary data suggest that e-commerce sales have accelerated in Q2 from March levels and we believe SHOP will fully participate." Credit Suisse (July 23, 2020): "We anticipate another quarter of strong results from Shopify as the company continues to benefit from an acceleration in the secular migration toward e-commerce. We see upside to ouconsensus estimates though believe much if not all of the anticipated outperformance is priced into the share price with SHOP +40% since the last earnings call (+141% YTD) vs. the IGV Software Index +21% and 26%, respectively. We increase our TP to $850 as our DCF now assumes more sustainable GMV growth. We maintain our Neutral rating due to valuation." Piper Sandler (July 23, 2020): "We are raising estimates and our PT to $1,015 (from $843) based on new data-driven inputs using digital downloads of the Shopify eCommerce application as a proxy for near-term digital adoption. While download activity doesn't directly correlate with revenue growth, we view it as a directional input. Shopify downloads rose 78% y/y and 72% q/q during Q2 suggesting a strong recovery after an initial COVID related slowdown in March. As the global retail operating system for 1M+ merchants today with an expanding product offering, SHOP remains one of the best positioned digital beneficiaries for the next decade." DA Davidson (July 22, 2020): "We project 31.8% sales growth to $477.1M, which is below the consensus figure of $504.9M. Note, in April, the company withdrew its full-year guidance and did not provide any outlook for 2Q20 (see Figure 1 on page 2 for our operating forecasts). Shopify’s sales have topped the consensus forecast in all 20 quarters since its IPO; with this being the first quarter the company has not given guidance. On profitability, we look for $11.1M of adj. EBITDA (a 2.3% margin); our estimate is above the Street projection of $8.9M. Lastly, we forecast adj. EPS of a loss of $0.07, compared to the consensus estimate of $0.01. " Roth Capital Partners (July 20, 2020): "Our 2Q checks suggest strong underlying growth from our surveyed customers of ~50%. As such, we have raised 2Q, as well as FY2020/2021 estimates. While our outlook improves, and SHOP and its stock should continue to benefit from e-commerce tailwinds from Covid-19, valuation remains very stretched at ~53x/40x EV/20E/21E sales, respectively. We reiterate our Neutral, as our PT improves to $800. " Barclays (July 16, 2020): " SHOP’s 2Q results are likely to reflect healthy demand for its ecommerce offerings over the past few months. Intra-quarter data-points on ecommerce activity indicate that volume growth on online channels has remained strong despite many markets reopening over the last few weeks. SHOP is likely to be one of the primary beneficiaries of this trend and the company’s 2Q revenues and GMV growth should come with a nice acceleration. We forecast total revenues of $573m, or 58% y/y growth (vs. 47% in 1Q). Shares of SHOP have traded up +34% since 1Q print (vs. Nasdaq +17%), and investor sentiment is largely bullish. While this positioning doesn’t leave a lot of upside opportunity on the print, we don’t expect material downside given the potential for a nice beat on consensus and an upbeat commentary on the call. However, we remain Equal Weight as we struggle to justify $115B market cap using traditional frameworks." https://street-guru.com/ https://preview.redd.it/u3l4wbixdmd51.png?width=640&format=png&auto=webp&s=a48c065ae659cd757b5f79fa68770b8ccc5361c4 https://preview.redd.it/fj0esfixdmd51.png?width=743&format=png&auto=webp&s=837f13ff5a403f435151a6a28d618951957d7e87 https://preview.redd.it/1emjcjixdmd51.png?width=715&format=png&auto=webp&s=bdf55a5231ac030cdbd8e7fdcd8073179c8c7ab6 https://preview.redd.it/xbzoyvixdmd51.png?width=650&format=png&auto=webp&s=c97566333544349f552e6c2b1f4d56e0b42ae542 https://preview.redd.it/jh35obixdmd51.png?width=756&format=png&auto=webp&s=b3dea63c0b9bb7aa1563af195a0a93afc57f6639 https://preview.redd.it/lawxmj0zdmd51.png?width=539&format=png&auto=webp&s=5d5cf65ca8ac032daab45e96040c07ce8a8a9e16 https://preview.redd.it/vnlamiixdmd51.png?width=646&format=png&auto=webp&s=beec17908fd25eaf80a08617fed4f24352f177ad
Lessons and Mistakes Learned in My 15-Month Adventure So Far
Like Buffett says: "You don't know who's swimming naked until the tide goes out." Meaning: In a rising market-- everyone looks like a genius and posts monster returns. It's only during a crash do we see what separates the professionals from the amateurs. And full disclosure-- for the past three weeks since Feb 21, I have been positively reamed from every which way in my positions (long AMD & MU). I'd started day-trading Jan 2019 (after being inspired by the show, Billions) and had been doing pretty until Feb 21 but the past three weeks have been totally humbling and has revealed to me that I am a total amateur. If I get out of this alive, I'll know now it was completely luck and that I'm totally not a genius. All that said, I thought I'd take this opportunity to share some hard-learned lessons I've learned these past 15 months. This stuff more applies to active traders (as opposed to investors, which is why I'm not posting this in /investing). Humble Advice from a Beginner re Active Trading
Get proficient on the Quantopian platform.To be clear: I am in no way associated with Quantopian. I just use one of their free accounts for data exploration, pricing info, and analysis. But it's really awesome; I regret not knowing it better before I started. Yes, you will need to know a little Python and Pandas (a programming language and a software library package) but it's incredibly basic and easy to use. Eons ago, I was once a history a major. If I can figure it out, so can you.
Go straight to the source. The next two economic indicators I'm most paying attention to are the US Labor Bureau Stats and ISM numbers on April 1 & 3. (More on that at the bottom.)
Finally: (And again, just my humble 2c.) Get a wife. (Or a husband/life-partner, etc). YMMV on this one, but personally, it's helped me tremendously. When you're parked in front of your computer the entire weekend crunching numbers and scouring news, you need someone to feed you. Also, someone to periodically bug you to leave the apartment to go out for walks for fresh air. Marriage is net good.
Things I did Wrong
Use the candlestick charts; not just the line charts.
Deleveraging spills over, even into safe asset classes, during historic plunges. Three weeks ago, I kept huge positions in memory and semiconductors thinking, "Oh-- if the market melts down from COVID-19, it'll only be travel, movie theaters, dining out, etc. that plunge." I had 100% erroneously thought that in a downturn, asset classes not directly affected would be shielded. I was totally wrong. What I know now, which I wish I knew three weeks ago, is that in a massive downturn, all asset classes will plunge. And here's one major reason why: Investors, big banks are usually highly leveraged. When the pandemic hit, they took huge hits on the "losers" (airlines, oil, etc). In order to smooth out the losses from the losers, folks are forced to sell winners as they dramatically deleverage positions to cover margin calls/retain capital position. Therefore, even "winning" stocks/classes will be affected in a downturn. Maybe, in the long term, data centers/semis/memory/etc, may come out ahead. But none of that matters in the hyper-short term (on the magnitude of weeks). I made this mistake in my mental model. Never again. (If there is a next time.)
Things I did Right
Use a Roth IRA as a "pace account." Put ETFs and some blue chips in here and then just leave it. Having a pace account allows you to easily compare how you're doing with your active trading against your passive strategies at any given point in time.
My Personal Future Outlook (aka, Guess)
Again, I'm not a professional so take this with a grain of salt. But here's where I think things are going: I agree with RBC: SP 2300 is the Maginot-Atlantic-Wall-Mason-Dixon-Rubicon. Either we hold this level (expecting a "garden variety recession") or an utter bloodbath ensues. My personal belief (well, more like hope and prayer) is that we hold the line with intraday bottoms going as low as SPY (~232) which is the bottom we hit on Dec 26, 2018. (For reference, we ended Friday at SPY 269 but did sink as low as 248). We'll find out next week; in particular, on Monday.
Last Wednesday, Trump gave the single most catastrophic Oval Office address I've ever seen. On Thursday morning, markets acted accordingly. Friday's Rose Garden address was better. I am now praying/hoping for sideways action until the ISM report on April 1 and Jobs report on April 3.Everything hinges on these two reports. (Btw, February 2020's job report was absolutely spectacular. In fact, BLS actually revised Dec 2019 and Jan 2020's numbers upwards.) Right now, I feel raw utter panic has gripped the country. People see barren aisles at Whole Foods and Trader Joe's. They see five-hour queues at Walmart and Target. People can't buy toilet paper and water…. etc. Schools are closing, NBA/NHL seasons are canceled. Movie releases are getting postponed. (God, even the mighty Vin Diesel, King of Coronas, couldn't hold out against the Corona virus…) Etc.
My bet (hope and prayer) is the BLS and ISM numbers on April 1 & 3 won't be as bad as people are expecting. If that's the case, the market will absolutely rocket into the stratosphere. (I made this prediction several weeks ago and I'm holding to it.) I am personally guessing that we're about to witness the shortest bear market in the history of bear markets and the fastest recovery man has ever seen. If there is contraction, I believe it'll be very short-lived. (Maybe one quarter at most.) We'll see. (I can elaborate more on my theory if anyone's curious. But since this post is getting really long; I'm just going to omit that theory here.)
My humble opinion is that this panic is 100% overblown and we're in an emotional nosedive right now. People think the sky is falling and there is no guidance of any kind right now to indicate how bad things will be. So everyone's bracing for the worst. I saw some guy on Seeking Alpha yesterday proclaiming Dow ~17,000… (No link for him as I think he's a complete nut. But I guess we'll see who's the fool… him or me…)
Futures open at 6p ET tonight. That'll be the first indication of what next week may look like.
Hey guys, I have my registered accounts with Questrade but recently opened up a margin account with RBC Direct Investing for convenience of fund transfer between bank account and margin account. I'm kind of confused by the platform though, maybe because I'm also new to trading with margin, but:
When I view my account, what do these columns even mean? Why is SHORT separated from my cash and do I need to transfer cash into it somehow to get the balance to 0?
CURRENCY | CASH | INVESTMENTS | SHORT | TOTAL CAD | 24,068.16 | 0.00 | -2,233/77 | 21,834.39 I recently tried my hand at shorting and lost some money, so that's why the short column has a negative value, I think. But I'm not sure what the short column actually means, and what I need to do from here?
Hey all, super amateur here and learning as quick as I can, mostly through watching you guys. I've got a few lumps along the way (hey pennystocks) but I'm still positive and willing to learn. I've jumped onto a lot of bandwagons before doing DD, so I wanted to practice. So, what I did was looked at the energy sector on RH and started from price low to high and filtered 30ish promising stocks that might grow on Sunday (5/17) night and see what moved Monday. I made a paper ledger WITHOUT the DD first - didn't have time. So I spent the last 4 hours working on this during my night time down time. I'm posting this just to learn - I would love any help and criticism anyone has. My process was mostly troll around on the company websites and search headlines and looked at their charts. Every post has their current closing price and the price on Febuary 3rd (first market day in February) mostly to compare today vs. Before COVID-19 to see if I could find any breakouts because the energy sector was one of the hardest hit. Some light commentary at the end. Some have more details, some less, depending on what I found. Enjoy! ----------------------------------------------------------- *SOI - current 6.35, stable AH, 11.83 2/3, recently announced .105 quarterly dividend for 6/16. Makes and rents mobile equipment for oil and gas wells. Has no debt, high EV/EBITDA mutliple discount, slashing operating costs by 50% as of 5/11, Had $17.6 million deferred revenue following contract termination with Kingfisher, recogonizing $38 million in impairment charges related to the write-off. It announced it recouped the entire investment. As of 3/31 it has $96 million liquidity, $46m in cash. Rated bullish at $8.27 pps. MGY - current 6.11, stable AH. $10.30 2/3. Currently rated as a hold. South Texas exploration business. Plenty of inside trading. WPX - current 6.05, 1% increas AH. 11.87 2/3. As of 5/8 bullish $8 target, was previous at $17. Per 5/7 earnings call: 1.5 times leverage, 90% of oil revenue is protected at $57 per barrel, giving $150m in free cash flow this year. SUBCY - $5.45 today closed. 10.49 2/3. Liquidity at $112m. $2.7 billion of executables as of earnings call. An offshore drilling company. listed as a Buy. NOA -5.38 today, 10.63 2/3. Mining and construction services in Wester Canada. Average of a buy rating. Q1 revenue was 12m (199m) up from last year. OGZPY - 5.27 today, 7.11 2/3. https://seekingalpha.com/article/4348428-gazprom-well-positioned-to-weather-storm?mod=mw_quote_news - Author of article finds that Russia being the largest investors is a good sign for long term hold of the company and will authorize natural gas trade with China. Looks like it's in some legal hell, but who knows? *MR - 5.19 today, 3.37 2/3. Exploration company in Appalachian basin, based in Texas. Average rating at overweight. Target price at $8 by RBC Capital. Strong buy value at $6.22 ^FLNG - 4.57 today, 8.38 2/3. Career vessel company based in Bermuda. Estimated value is $14 by some ratings. Had a deep correction recently. EBR - 4.29 today, 9.11 2/3. Largest electricty distributor in Brazil. Was able to dodge brazilian president national privatization program. -SSLX - 4.81 today (movment in AH), 15.69 2/3. Listed as a hold. South African holding company that does mining and chemicals. Seeking to become greener with wind and solar power by 2030. $10B in debt, looking to sell stakes in african gas pipeline and Qatar plant. Seeking investors for a minority stake in Lake Charles chemical complex in US. CVE - 4.44 close, 4.5 AH. 8.63 2/3. Canadian oil and gas company. Had to cut back production and increase storage. *BRY - 4.24 close, peaked 4.34 AH down to 4.24; 6.66 2/3. Dallas based domestic exploration and production company of oil and natural gas. Notable 15%+ rally today. Primarily produced in California. Seaking alternatives to California regulation about fracking and steam (i.e. explosives). Revolving credit matures in July 2022 and senior notes mature in Feb 2026. Has $383mm of its $400mm credit. Potential regulatory risks from California. That said, California expected to be first consumers. Estimated $5 as of 5/10. *OIS - 3.17 today, 11.28 2/3. Houston based drilling company. Laid off ~15% since beginning of year. Expected gross margins to grow due to cost cutting done in company. Has a decline backlog (14% yoy). Company trades at 4x EBITDA. $224m in cash. UGP - 2.67 close, 5.97 2/3. Brazillian energy producer. ^NEX - 2.74 close, 2.83 AH (14.05% gain today); 4.85 2/3. 5/10 estimation of stock is $2 by Credit Suisse. GAAP net loss Q1 was 71.76m versus 2019 GAAP net loss of 21.81m. Weekly resistance seems to be 2.55. ERF - 2.86 close, 2.9 AH. 5.02 2/3. 5/10 Rated hold by multiple companies. Target price estimated $3. Others at 3.5 and 3.7. Strong liquidity @ 142m and 600m credit. 27 uncompleted wells in North Dakota. ^HLX - 2.35 close, after AH action 2.35; 8.42 2/3. Offshore energy company. Falling backlog. Seeking renewables. Lower debt-to-equity ratio compared to others in industry. $332m in liquidity, ~266m debt. Consensus is $3.88. KOS - 1.72 close, 5.09 2/3. Gas and oil exploration company based in Dallas. Recently granted 2 more years to explore Guinea. Threaten to be delisted in April. CIG - 1.57 close, 3.54 2/3. 12% of Brazil energy. 10.56% move today. ^NEXT - 1.38 close, 4.95 2/3. Notable 16.67% growth, probably due to announcement of liquidity through 2021 after job cuts. Plans to FID on proposed Rio Grade natural gas export plant in Texas this year. TELL - 1.01 close, 1.08 AH; 7.49 2/3. Texas natural gas company. Announced 4/28 financing and term loan reduction. Change to Hold. *NOG - .94 close; 1.65 2/3. Oil company based in Minnesota, focuses exploration in North Dakota and Montana. Lots of insider trading reported. This year net loss of 108m vs. last year net profit 218m. Estimated at 1.50. It beat earnings estimates this year, however. Hasn't broke $1 since Marchish. Has strong hedge of $55/$58 per barrel. ^PDS - .54 close, .53 AH; 1.17 2/3. Largest oil rig drilling contractor in Canada. Has cut staff and salaries - CEO salary cut by 20% as of 3/24. Cutting 2020 capex plan by about 50%. Looks rather bearish in movement. ^HPR - .3 close, 1.16 2/3. Colorado based oil and gas company. Reduced bank debt by 32% this quarter (45M). Announced deferring new drilling and completion activity at end of April. Potential Breakouts GEOS - 6.91 close, 13.50 2/3; notable 15.84% jump today. Loss of only .2 million revenue yoy for quarter. Recently won US contracts. Recently acquired Quantum. Director recently increased his share holding by 11.24%. Does seismic data for oil and gas. SPLP - 4.52 close, 11.40 2/3. Salary reductions up 30% as of 4/16 and other cost saving measures. Frose all discretionary spend and managing working captial and non-core assets. Unusual trade activity 5/14 (in my opinion). EGY - .91 close, .93 AH; 2.19 2/3. Possible reverse split downt he road. Debt free and good liquidity (60.97m). June 2019-April 2020 repurchased 2.7 million shares. https://seekingalpha.com/article/4348205-vaalco-energy-oversold-for-reason?mod=mw_quote_news At the end it says it's trading within a symmetrical wedge pattern and resistance is at .86 and support at .8. Consider buying at .62-.65 MIND - .78 close, 2.84 2/3. Marine products company. Not much news but support at .70 weekly and 1.2 resistance daily. ^VTNR - .67 close, .62AH; 1.47 2/3. reported +16% post Q1 resuts. Income from operations cut by half. EBITDA is 1.65M compared to 479.8k loss last year. Free cash flow of 1.16M. 4.2M from SBA PPP. Missed EPS by .17 last call (5/14). Trading on 5/14 was wild according to charts. .45-.5 support weekly and .7 resistance. Recently broke out of .6 resistance and seems to be the new support. --------------------------------------------------------------------------------- So, I marked some symbols with * or ^. * signifying strong candidates and ^ being higher risk. - means stay away. Disclosure: I have no positions with any of these companies and my buying power is rather tied up right now. If I had to place a bet, I would try OIS because I think with the EBITDA value, it's really undervalued and they have a good game plan for the foreseeable future. BRY is my next bet. Of the risky ventures? Maybe FLNG but I'm still figuring that out. Maybe just play around with MIND for a few days - trade at .72ish and trade at .90ish. In any case, like I said, I'm super new to this whole thing and I learn by repetition and heavy research. And trial and error. And as I said, I would like to do deeper DD in some stuff, but I'm only now learning.
Hello everyone, am somewhat new to the options community. I’ve been using RBC direct investing (TFSA) for all my trading, and recently was denied margin on my account, which they said was required to trade options. They said I was denied margin because I didn’t meet the literal first requirement of a 25k net income. I’m a university student and don’t believe i’ll be in that bracket anytime soon, yet I seemingly see plenty of people trading options with less. I originally thought you were allowed to go long on options within a TFSA (which is all i’m planning on doing atm) but they told me it isn’t the case and that I need a margin account. Anyone know of any other brokerages where I can trade options for cheaper possibly ? Currently dead in the water in a sea of opportunity ...
I am not a currently not an IB customer but am curious. What is IB's minimum cash balance to sell naked puts ? I ask because TD is $10,000.00 minumum and RBC is $50,000. Now, I do know the risks of this however I ma looking at IB's fees. I have traded before in selling naked puts. However have also ensured I never used Margin on them. The lower fees woulds make this easier. I googled and cannot find my answer. I have tried calling and am actually again on hold. The hold times are crazy long right now due Covid and market volatility. Just hoping someone here may have the answer. Thanks
Husky Energy's spiral continues as analysts downgrade stock
At least three analysts have downgraded their rating on Husky Energy Inc. this week, sending the shares lower for a third straight day. Canaccord Genuity, Raymond James and Bank of Nova Scotia’s strategists have reduced their recommendation on the Canadian energy company’s stock as concerns surrounding free cash flow weighs on the stock. Husky’s shares have slumped about eight per cent in three trading days, on pace for its longest losing streak in more than a month. Shares of Husky have plunged over 80 per cent since its 2008 peak for myriad reasons: lower oil prices, a dividend suspension, a production cut due to a close call with an iceberg, and a failed $2.75 billion hostile takeover bid for MEG Energy Corp. Last year, RBC Capital Markets analysts led by Greg Pardy contemplated whether the company should consider going private to capture the gap between its market and underlying value, and so it can make the right moves without market scrutiny. Here’s what analysts said this week: Canaccord Genuity (Dennis Fong) “The mandatory curtailments from the Alberta government limit Husky’s ability to grow its Alberta-based production and also squeeze downstream margin,” Fong said in a report published Tuesday. He downgraded the stock to sell from hold and raised the share price target to $10 from $9.50. He expects total spending for Husky’s thermal projects like Spruce Lake, Edam Central and Dee Valley to reach about $1.3 billion this year. “Given the inflexibility in the capital program and the already slowed pace of development of its thermal projects and its Indonesian assets, we believe that free cash flow will be relatively muted in 2020 and to a lesser degree in 2021,” he said. Raymond James (Chris Cox) Cox expects Husky’s fourth-quarter results to be a “negative catalyst,” he said in a report published Monday. “Our revised forecasts point to negative free cash flow for both 2020 and 2021.” He reduced his recommendation to underperform from market perform and maintained a share price target of $11. “We believe it is too much to ask investors to look past at least two years of materially weaker free cash flow profile versus peers, supporting a more pessimistic outlook for the stock,” he said. Scotiabank (Jason Bouvier) “We feel other names within our coverage universe offer more torque to improving oil prices,” Bouvier said in a note Tuesday and cut his rating to sector perform from sector outperform and reduced his share price forecast to $11 from $12. He’s looking for a more consistent operational execution from Husky before getting more bullish on the stock. https://www.bnnbloomberg.ca/husky-energy-s-spiral-continues-as-analysts-downgrade-stock-1.1373774
Opec secures record global oil cuts deal under US pressure
13 Apr 2020 FT Article https://www.ft.com/content/01dd5ae4-16b9-4c20-becc-6a08c6289a67 Saudi Arabia and Russia ended their oil price war on Sunday by finalising a deal to make the biggest oil production cuts in history, following pressure from US President Donald Trump to support an energy sector ravaged by the coronavirus pandemic. Opec said it would cut 9.7m barrels a day in oil production in May and June, equivalent to almost 10 per cent of global supply, and continue with lower reductions until April 2022, in an effort to stabilise global crude markets. The cuts would be more than twice those made by the cartel during the global financial crisis. Opec officials added that the cuts could end up being much greater, at around a fifth of global supply. However, this would include declines forced on producers outside the cartel by the recent oil price collapse, like those in the battered US shale sector. Mr Trump welcomed the announcement, saying it would protect US jobs, and congratulated Saudi Arabia and Russia. Oil prices were volatile in reaction to the deal, with the price of Brent crude, the international benchmark, gaining as much as 8 per cent while West Texas Intermediate, the US benchmark, jumped as much as 8.7 per cent. However, prices swung back on Monday with Brent trading 0.76 lower at $31.24 and WTI up 0.44 per cent at $22.88 a barrel. Traders doubted the cuts would reach the headline figures or compensate for a collapse in demand expected to be at least twice the size of the Opec supply reductions. Under the watchful eye of Donald Trump, Saudi Arabia seemingly had to relax their position that everyone cuts by equal proportion. Trump essentially became the de facto Opec president Helima Croft, RBC Capital Markets Big consumer countries that backed the deal, including the US, China, Japan, India and South Korea, are also understood to be preparing to buy oil to boost their reserves and tighten the market. The agreement by the Opec+ group, an alliance between the cartel and other producers including Russia, was first brokered on Thursday. It was backed by the US and G20 on Friday but had threatened to unravel after Mexico sought an exemption. But under US pressure, Saudi Arabia allowed Mexico to cut by a smaller margin than its Opec+ peers. That resulted in the overall curbs from the group amounting to slightly less than the 10m b/d initially pledged. Saudi Arabia, the United Arab Emirates and Kuwait, the cartel’s big Gulf producers, will deepen their own cuts, adding to the total, said officials. Opec plans to include the declines by non-Opec producers may not be enough to reassure traders that have tried to weigh the loss of up to 30 per cent of global demand as economies have shut down to slow the spread of coronavirus. Analysts said that cuts of less than 7m b/d might be delivered because high baselines had been used to calculate the cuts. The higher 20m b/d figure, including production declines caused by lower prices, was also greeted with scepticism. “There is a large amount of double counting, creative accounting and obfuscation in reaching this 20m b/d figure,” said Amrita Sen at Energy Aspects. The deal marks a pivot for Mr Trump, a frequent critic of Opec, who pushed the cartel to make cuts to support oil prices. The US president has previously blamed Opec for raising fuel prices for the average American consumer. “The big Oil Deal with Opec Plus is done,” Mr Trump said on Twitter on Sunday. “This will save hundreds of thousands of energy jobs in the United States. I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia. I just spoke to them from the Oval Office. Great deal for all!” Mr Trump had pressed Saudi Arabia’s Crown Prince Mohammed bin Salman and President Vladimir Putin of Russia over recent days to secure the deal — and even last week disclosed the size to be agreed. For Mr Putin, it has provided a likely boost to Russia’s economy and a new forum for ties to the US president. “Under the watchful eye of Donald Trump, Saudi Arabia seemingly had to relax their position that everyone cuts by equal proportion,” said Helima Croft at RBC Capital Markets. “Trump essentially became the de facto Opec president.” On Saturday, US senators from oil-producing states held heated calls with Saudi officials including Prince Abdulaziz bin Salman, the energy minister, and threatened to “re-evaluate” Washington’s relationship with the kingdom. “Washington’s centrality to today’s deal closing may mark a de facto Opec+ expansion and a further step in a global shift towards managed markets,” said Kevin Book of Clearview Energy Partners. G20 nations such as the US, Canada and Brazil supported the deal but were not required to make official commitments to cut. But the countries will shed supply in any case, as weak oil prices force oil companies to reduce capital spending. US production could still fall by as much as a quarter, or 3m b/d, if the deal boosts oil prices to $35 a barrel, said Scott Sheffield, head of Pioneer Natural Resources, a large shale producer. The Opec+ deal marks the latest in a series of efforts by governments and international institutions to support the global economy in the face of the Covid-19 crisis, which threatens to drive countries across the world into deep recession. Will G20 support for Opec+ deal be enough to shore up oil market? It is not yet clear whether the deal will be enough to support the oil market. Traders have said co-operation by producers removes the fear of a market in freefall but storage capacity could still become overwhelmed in the coming weeks, depending on how long lockdowns and other measures last. Oil prices remain about half their price in January, but recovered from 18-year lows of about $20 after plans for deep cuts came to light two weeks ago. Saudi Arabia is expected to raise its crude export prices on Monday after dramatically slashing them last month.
With coronavirus concerns still very much in the mix, U.S. stock futures point to more losses for Wall Street following a Friday sell-off. The major averages all had their best weekly gains in months despite that Friday drop, but the trend is clearly negative as we head into the new week. The Nasdaq’s weekly gain last week was its largest since November 2018, even after a 0.5% fall on Friday. Tech has been February’s strongest sector so far, and the Consumer Staples sector finished last week at a record high. (CNBC)
The Trump administration will release its fiscal 2021 budget today, which will show the economy growing at an average rate of 3% for the next 15 years. It’s also proposing to continue tax cuts for individuals through 2035 at a cost of $1.4 trillion, a figure that serves as a rough placeholder for President Donald Trump’s promised “Tax Cuts 2.0.” (CNBC)
Treasury yields move higher ahead of Trump’s 2021 budget (CNBC)
No economic releases are on today’s calendar. Two Fed officials have public speaking engagements today, with Fed Governor Michelle Bowman making a morning appearance in Florida and Philadelphia Fed President Patrick Harker speaking this afternoon in Delaware. (CNBC)
Allergan (AGN), Edgewell Personal Care (EPC), and Restaurant Brands International (QSR) are among the companies set to release quarterly earnings this morning. Callaway Golf (ELY) and XPO Logistics (XPO) issue numbers after the closing bell.
Tesla (TSLA) shares were up 9% in the premarket this morning after a tumultuous week, which saw the stock move more than $100 per share in either direction in three of five sessions. Tesla posted 10 consecutive weekly gains and have risen 127% over that span. (CNBC)
China’s National Health Commission said it confirmed 3,062 new coronavirus cases and 97 additional deaths, mostly in Hubei province. The government said a total of 40,171 cases have been confirmed and 908 people have died in the country. The U.K. has confirmed four further cases of the coronavirus, bringing the total number of cases in the country to eight. (CNBC)
Factories in China remain shuttered as some regions extend shutdowns (CNBC)
As virus deaths top SARS, survivor tells of treatment (WSJ)
Sen. Bernie Sanders remains at the top of the Democratic field in a new NBC News/Marist poll of tomorrow’s New Hampshire primary. Sanders gets 25% of likely Democratic primary voters in the poll, while former Mayor Pete Buttigieg receives support from 21%. Former Vice President Joe Biden, who had a dismal showing in the Iowa caucuses, comes in at 13%. (CNBC)
Biden predicts he will ‘take a hit’ in New Hampshire primary after ‘gut punch’ in Iowa (CNBC)
Mike Bloomberg is the only Democrat to top Trump in Gallup poll of small business owners (CNBC)
The Iowa Democratic Party allocated delegates based on the results of last week’s Iowa caucuses, giving Buttigieg the largest delegate count, followed closely by Sanders, though many news outlets remained unable to declare a winner. Sanders’ campaign plans to ask for a “partial recanvass” of the results of last week’s Iowa caucuses. (NBC News & AP)
Sen. Josh Hawley is proposing putting the Federal Trade Commission, an independent agency, within the Department of Justice, which is part of the executive branch. The proposal is likely to raise alarms about removing the independence of a key regulatory body, especially as Democrats have speculated about Attorney General William Barr’s closeness to Trump. (CNBC)
Annegret Kramp-Karrenbauer, the leader of Germany’s Christian Democratic Union and the expected successor of Angela Merkel, will not run for chancellor. She will also give up the leadership of the CDU in the summer, according to an unnamed source cited by Reuters, setting in motion a party leadership contest. (CNBC)
L Brands (LB) is nearing a deal to sell its Victoria’s Secret brand to private equity firm Sycamore Partners in a deal that could be announced as soon this week. It’s not clear what role L Brands CEO Les Wexner would have in such a deal, as he’s under mounting pressure due to his ties to the late sex criminal Jeffrey Epstein. (CNBC)
The federally appointed oversight board in charge of Puerto Rico’s ongoing record debt restructuring saga announced they have come to terms with bondholders of around $35 billion, which accounts for nearly 50% of the bankrupt island’s total debt load. The deal will cut the Commonwealth’s outstanding bond debt from $35 billion to approximately $11 billion. (CNBC)
Taubman Centers (TCO) – Mall operator Simon Property Group (SPG) will buy rival Taubman for $52.50 per share in cash, or about $3.6 billion. Taubman’s properties will continue to be managed by its existing executive team.
Allergan (AGN) – The drugmaker reported quarterly earnings of $5.22 per share, compared to estimates of $4.57 a share. Revenue also beat Wall Street forecasts, helped by better-than-expected specialized therapeutics and general medicine sales.
Edgewell Personal Care (EPC) – The maker of Schick razors reported quarterly profit of 55 cents per share, well above the consensus estimate of 29 cents a share. Revenue exceeded estimates as well, and its full-year outlook is also mostly above Street forecasts. Separately, Edgewell ended its agreement to buy razor maker Harry’s, after the Federal Trade Commission moved to block the deal.
Restaurant Brands (QSR) – The restaurant operator reported quarterly profit of 75 cents per share, 2 cents a share above estimates. Revenue also came in above forecasts. Comparable sales were shy of expectations at Tim Hortons and Burger King, but well above forecasts at Popeyes. The company said systemwide sales at the Popeyes chain jumped 42%, thanks in large part to its popular spicy chicken sandwich.
L Brands (LB) – L Brands is near a deal to sell its Victoria’s Secret division to private-equity firm Sycamore Partners, according to sources who spoke to CNBC. The price could not be learned, but a deal could be announced as soon as this week.
Tesla (TSLA) – Tesla remains on watch after a tumultuous week which saw in move more than $100 per share in either direction in three of five sessions. Tesla shares have posted 10 consecutive weekly gains and have risen 127% over that span.
Willis Towers Watson (WLTW) – The stock was downgraded to “neutral” from “outperform” at Credit Suisse in a valuation call. The consulting firm had reported better than expected quarterly earnings last week, but the stock tumbled amid a 2020 earnings forecast that fell partially below consensus.
World Wrestling (WWE) – World Wrestling was downgraded to “underweight” from “overweight” at Wells Fargo Securities, with the price target slashed to $36 per share from $80 a share. Wells Fargo said there have been “too many misfires,” and that the company needs a new CFO and to issue long-term guidance.
Nvidia (NVDA) – RBC Capital increased its price target for the graphics chip maker’s stock to $301 per share from $251, saying the quarter ending January 31 is likely to come in above the high end of the company’s guidance due to strong gaming and data center markets.
Visit the Forms & Agreements page and download the Options Trading and Margin Agreement form. You must have an account that is approved for options trading before you can place an option order. RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned Ready to enter the world of stock trading? First you’ll need to decide how you want to finance your purchases. To open your margin account. If you already have an RBC Direct Investing Cash Account and want add margin to the account simply download and fill out a Margin Agreement Form. RBC Direct Investing Inc. and Royal Bank of Canada Royal Bank of Canada's quarterly profit rose 22 percent on a sharp jump in fixed income trading revenue and steady loan growth, suggesting the long-awaited slowdown in Canadian consumer lending has yet to materialize. One of the larger banks in Canada, RBC (Royal Bank of Canada), has an online discount brokerage called RBC Direct Investing. Investors interested in potentially opening up an account with RBC would be wise to read the following review to understand what it is they are getting in the online trading platform. The Trading Economics Application Programming Interface (API) provides direct access to our data. It allows API clients to download millions of rows of historical data, to query our real-time economic calendar, subscribe to updates and receive quotes for currencies, commodities, stocks and bonds.
Find out why this causes big stock market crashes as investors are stopped out who were buying stocks on margin. This is a great explanation of the stock market for beginners, along with the risks ... ABOUT RBC Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our succes... How to transfer cash and securities from another firm into your RBC Direct Investing account. Norbert's Gambit at RBC Direct Investing DIY Investing with Justin Bender - Duration: 3:56. ... What is Margin? What is a Margin Account? What is Margin Trading? - Duration: 10:02. What do you do if you are not concerned with volatility, and are willing to take on even more risk than the stock market has to offer? There are two options:...