Flux News

Group Head of Research Harry Tchilinguirian sits down with Research Analyst Harry Nedeljkovic to discuss the latest macroeconomic news, risks, and trends.

 They analyse recent Chinese industrial production and retail sales data, which shows China's industrial production printing below expectations in May, at 5.6% year-on-year, while at 3.7%, retail sales beat expectations. They also discuss US industrial output, which rose 0.9% in May, and take a deep dive into recent US housing and building permit statistics. The UK is also considered, with CPI, retail sales, and PMI data for June all examined.

 They have an update on various central bank policy rate decisions, the Euro area’s struggles and on NVIDIA's relentless rise, given it briefly became the world’s largest company by market cap last week.

Harry Nedeljkovic weighs in for an update on Europe’s underperforming but potentially hopeful tech sector, the upcoming French legislative election, and finally South Korea’s worsening demographic emergency. Harry Tchilinguirian then explains a potential commodity-related trade idea.

If you would like to connect with our hosts on LinkedIn, you can do so by clicking on the link below: 

Harry Tchilinguirian; https://www.linkedin.com/in/tchiling/

Harry Nedeljkovic; https://www.linkedin.com/in/harrynedeljkovic/

For a special episode of World of Oil Derivatives, Group Chief Executive Greg Newman is joined by Managing Director of Benchmarking, Jorge Montepeque and Group Head of Research, Harry Tchilinguirian for a detailed discussion regarding global oil demand.

Greg, Jorge, and Harry delve into the differing perspectives on oil demand from two major agencies, the IEA and OPEC, focusing on their projections for both short and long-term global oil demand growth.

 The discussion highlights the growing contentiousness between the IEA and OPEC,highlighted by recent comments from OPEC's Secretary General Haitham Al Ghais. He criticized the IEA, claiming that the “IEA’s narratives for oil are dangerous, especially for consumers, and could lead to unprecedented volatility.”

Central to the controversy is over when oil demand will peak, plateau, and eventually decline, and at what rate? The debate has significant implications for future investments in the oil sector to meet increasing demand. The debate is highly charged, taking place amidst the broader context of energy transition and the goal of achieving net-zero emission target.

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:

Greg Newman: https://www.linkedin.com/in/oilderivatives/

Jorge Montepeque: https://www.linkedin.com/in/jorge-montepeque-38410bb6/

Harry Tchilinguirian; https://www.linkedin.com/in/tchiling/

We saw a very strong performance in crudethis week, with Brent futures already up to $84/bbl. The team discuss market dynamics, emphasizing the shift from deep contango to backwardation in crude structure. After a recent positional reset, the market appears more balanced, with summer demand looking healthy.

The team go on to discuss the history of repricing in the oil markets, with Greg noting that big market moves often come from unexpected events. For example: recession expectations in the past were priced in, which actually ended up preventing their occurrence. Similar dynamics apply to oil markets, with Q3 summer bullish expectations unfulfilled due to extreme positioning, highlighting that major moves only happen with significant shifts in market sentiment and the largest profits often come from low-volatility markets with high prices.

Looking to the refinery margin, the crude flat price has increased, supporting the products outright but European gasoline remains a cause for concern. Cracks and spreads have had a massive sell-off over the past two weeks after loads of stop-outs in the European gasoline market. It has created a snowball effect, as players have become quite hands-off in Europe, in particular. The unexpected sell-offs are moving the market in an unexpected (by some) way into summer driving season.

Macro specialist James Brodie says this week the market is reacting to lower CPI, PPI and a very weak consumer sentiment reading. However the U.S. Federal Reserve surprised the market with a hawkish statement, but the bond market disagrees, and is pricing in more aggressive rate cuts by the central bank.

Chapters for this episode are: 
0:00 Welcome
0:40 Brent Futures
11:38 Macro market news
16:38 Refinery margins & market psychology
44:14 Petrodollar
46:00 Trade idea of the week
49:44 Poll results and outro

Today, Macro specialist James Brodie discusses last week's weaker than expected US economic data, as well as the more hawkish Federal Reserve, the U.S. central bank. Research Analyst, Harry Nedeljkovic weighs in on the up-coming French election, in addition to Argentina and especially their economic situation. Group Head of Research, Harry Tchilinguirian joins Macro Mondays for the first time to talk through how the recent data out of China may come to impact oil demand.
 
CPI & PPI both came in lower than expected and US consumer sentiment fell sharply to a 7-month low. Yet the Fed see the Unemployment rate remaining at 4.0% until year end.
 
China data was interesting this week; Industrial production (5.6%) came in lower than expected (YoY growth decelerated) but retail sales beat expectations at +3.7%. However, the property price fall was the largest monthly fall in over 13 years.
 
 
The key data to look out for this week is;
 
Tuesday – US retail sales & Industrial production, plus RBA.
 
Wednesday – U.S. markets closed, UK inflation
 
Thursday – BOE & SNB
 
Friday – U.S. PMI data, UK & Canada retail sales.

If you would like to connect with our hosts on LinkedIn, you can do so by clicking on the link below:
James Brodie; https://www.linkedin.com/in/jamesbrodiecmt/
Harry Nedeljkovic; https://www.linkedin.com/in/harrynedeljkovic
Harry Tchilinguirian; https://www.linkedin.com/in/tchiling/ 

Brent is back in the $80’s this week after a huge rebound and initial sell-off post-OPEC meeting. Crude flat prices are back to where we were pre-OPEC meeting, as the August contract fell to lows of $77/bbl before climbing all the way back up to $82/bbl this morning.

The M1 refinery margins in Europe continue to weaken this week by nearly $0.35/bbl; however, the same in Asia climbed by $0.55/bbl this week. Asian margins appear to be picking up compared to how low they were at the end of May. The market still looks less confident about gasoline, though.

The summer demand looks like it's manifesting in jet fuel in Asia, due to strong aviation demand - which is soaring as travel returns back to pre-Covid levels.

Looking to the macro market, James and Greg discuss why unemployment has ticked up 4.4%. As demand is falling, people aren't spending as much, and lower-income households are hurting. Full-time work is declining, and people with multiple part time jobs are on the rise. This isn't a great sign for the economy. 

The trade idea for this week is long US propane. 

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:
Greg Newman: https://www.linkedin.com/in/oilderivatives/
James Brodie: https://www.linkedin.com/in/jamesbrodiecmt/
Vincent Wu: https://www.linkedin.com/in/vincent-wu-099816125/
Mita Chaturvedi: https://www.linkedin.com/in/mita-chaturvedi/

Chapters for this episode are: 
0:00 Welcome 
1:25 Brent Futures
6:44 Refinery margins 
14:39 Macro market news 
23:42 "Googling oil:" world oil news 
31:52 Trade idea of the week
37:58 Poll results and outro

Macro-Economic Specialist James Brodie is joined by Onyx Research Analyst Harry Nedeljkovic to discuss what's been happening in the markets, including Friday's US pay roll data, 

The European elections over the weekend and the big moves in gold. James and Harry will also discuss the Trade of the week, EURUSD and GameStop. 

 Friday's US payroll data saw 272,000 jobs created last month, much higher than expect the expected 180,000 jobs, which took the market by surprise, resulting in yields being ramped much higher and the US dollar strengthening aggressively. The European elections took place this weekend, with Identity & Democracy winning 58 seats,( with a gain of 9 seats) and the EPP with 186 seats, (gaining 10 seats). Whilst the Socialists and Democrats have reduced their vote share along with the Greens, the centre right has managed to maintain a decent amount. With immigration sky-rocketing since Brexit, Harry and James answer the question; is this discontent with immigration or government? 

 Roaring Kitty is also back in the news this week after resurfacing on a live stream watched by hundreds of thousands on Friday, and James and Harry discuss his influence on the market. 

 On to the chart of the week, the EURUSD broker lower again. The market reacted strongly to the dollar after strong US payrolls, with the biggest two day move lower since September. 

 If you would like to connect with our hosts on LinkedIn, you can do so by clicking on the link below: 

 James Brodie

https://www.linkedin.com/in/jamesbrodiecmt/

 Harry Nedeljkovic

https://www.linkedin.com/in/harrynedeljkovic/

Brent Futures have been extremely bearish following US markets open, dropping to $77/bbl Monday morning. It’s all about OPEC, as the meeting over the weekend saw existing voluntary cuts extended into September 2024. This move hinted at OPEC's willingness to bring back barrels to the market. However, doubts remain about compliance from certain members and future global demand growth.

Refinery margins are overall weak, with low US gasoline demand and overall US weakness permeating the European market. However, the market has seen decent buying in Q3 at these lower levels. CFTC data for the week to May 21 showed money managers removed around 5.8mbbls of length (-7.4%) and added over 5.5mbbls (+23%) to their short positions in gasoil futures.

The team analyses looks at US fundamentals. With factors including potential hurricanes, heatwaves, and exports potentially tightening supply, WTI prices could decline relative to Brent. Martha's trade idea for this week - to short July WTI/Brent swaps - ties in. You can learn more about the trade idea here:  https://youtu.be/S8GcUsnEMpg

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:

Greg Newman: https://www.linkedin.com/in/oilderivatives/
Jorge Montepeque:  https://www.linkedin.com/in/jorge-montepeque-38410bb6/
Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/
Vincent Wu:  https://www.linkedin.com/in/vincent-wu-099816125/

Chapters for this episode are: 
0:00 Welcome
1:30 OPEC meeting recap & global supply
22:36 CFTC data 
25:40 Refinery margins
38:07 Trade idea of the week 
43:12 Poll & outro 

NVIDIA and GameStop are back in the news headlines this week. On Monday morning we saw GameStop up 85% after hours in the overnight trading session. Keith Gill, aka Roaring Kitty, came out on Sunday night on his social media accounts to reveal that he owns $115.7 million of GameStop equity.

NVIDIA is now 40% of the S&P growth this year. The Nasdaq had an interesting price movement on Friday, with key support at 18,4014. The market tried to break below on Friday, but in the last 20 minutes of the day saw aggressive buying.

Last week, the VIX index traded down to four-year lows and interest rate volatility (MOVE Index) traded down to one-year lows. James expects volatility to pick up, which would mean more aggressive moves - meaning Nvidia and Tech stocks in general would be the prime for a sell-off.

Looking at property, in yet another attempt to support the falling house market in China, the Shandong province lowered the minimum down payment ratio for personal housing loans and also removed the lower limit on loan interest rates. Over to Japan, though, it’s a different issue with 9,000000 empty properties.

The key data to look out for this week is US ISM manufacturing PMI on Monday, JOLTS job openings on Tuesday. Then on Wednesday we have the Bank of Canada, US Service PMI and Australian GDP. On Thursday, it's the ECB meeting. And then the big one on Friday is the US payrolls data.

Brent Futures have been volatile and rangebound this week, dropping to around $81/bbl and supported again over $84/bbl. With the OPEC meeting next week (and being held online), there's been conversation that Russia has overproduced oil output, but will be correcting lower after not adhering to the April quota due to over production. This audit will be used to update production baselines.  

Biden announced he was releasing a million barrels of gasoline from the northeast gasoline supply reserve ahead of July 4th. In reality, this has been planned for a long time and isn't reflective of the optics he has been given. Both sides are claiming that he's falsely pushing down the price. While Biden claims it will help with inflation, it was actually a bipartisan bill that was passed years ago, and it was actually Trump who wanted to sell this stockpile originally. The team ask the question: Is this just wasting money?

The team discuss the latest impact of recent world events like the Singapore Airlines turbulence death, the impact on people's psyches, and in turn if that has an impact on the market. They dive into the real estate market, where more houses are being listed for sale in the US - which looks like a result of rising unemployment rates. They explore how different demographics look at property and discuss whether young Brits believe it's even possible to buy a home.

Macro Specialist James Brodie explains the massive complacency in the market this week. We've gone from one extreme to another. He discusses the VIX and volatility. Equity volatility is at four-year lows, interest rate volumes at one-year lows, and all the action is in the commodity markets. With unemployment rising and retail sales falling aggressively, the Fed is unlikely to hike.

The trade idea for this week is to buy the July Gaspnap. 

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:
Greg Newman: https://www.linkedin.com/in/oilderivatives/
James Brodie: https://www.linkedin.com/in/jamesbrodiecmt/
Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/\
Mita Chaturvedi: https://www.linkedin.com/in/mita-chaturvedi/

 Chapters for this episode are:
 0:00 Welcome
1:15 Brent Futures 
6:10 Refinery margins 
15:07 Singapore Airlines & major events affecting the market
20:23 Market volatility & the VIX
25:52 Macro market news & debate
43:16 "Googling oil:" world oil news 
52:55 Trade idea of the week
59:05 Outro

On today's show, James focuses on the stronger-than-expected US economic data, which has pushed yields higher. He also discusses the growing concerns around employment, the booming Indian economy, weakening UKL data, and unfortunate timing with the election looming. 

Some charts and trade ideas that James discusses include NVIDIA, Nasdaq, silver, copper, and USDJPY.

If you would like to connect with any of your host, James Brodie or ask a question, you can follow him X (formally Twitter) @jamesrbrodie 

Or, follow him on LinkedIn by clicking the link below: James Brodie: https://www.linkedin.com/in/jamesbrodiecmt/