As Hurricane Marco and Tropical Storm Laura move through the Caribbean and the Gulf of Mexico, oil is edging up. Energy companies are yanking employees out of the area with 58% of natural gas output from the Gulf already shut down.
At the moment, 114 platforms out of 643 have been evacuated as crude prices are nudging upwards 0.2%. Don’t expect these oil gains to last long as uncertainty in the COVID-19 economy is still a thing. Sure, oil prices have recovered from April’s showers (went into negative territory for the first time ever), but U.S. oil inventories declined by 10.6 million barrels during the last week in July and then 7.4, 4.5 and just 1.6 in the subsequent weeks that followed, respectively. Geopolitical factors make these numbers more worrisome as OPEC+ has eased its production cuts and uneven recovery is likely on the horizon.
Moving on, fundamentals continue to cause concern — at least when you use basic math. The S&P 500 is now trading at 38x forecasted 2020 earnings, which is more than double the usual long-term historical valuation. Of course, if the economy strengthens from a vaccine or cases miraculously dwindle (lol), this gap could get filled…But, if the recovery becomes more distant, you could see some gash-like selloffs. With a spooked American market, I have recently been looking at companies in Germany and South Korea, where virus management has been largely successful without shutdowns.
Besides, South Korea’s economic forecast is flat, which is basically cause for celebration after COVID-19 when most countries are seeing contractions in the double-digits. South Korea’s stock market is also trading at a discounted price-to-earnings ratio.
A little bit more on South Korea. The country’s equity markets were once dominated by conglomerates like Samsung and LG, but they have recently diversified to include healthcare and basic materials companies. New companies like Kakao and Celltrion are notable risers.
Ok, things to look out for this week:
- Today: Postmaster General Louis DeJoy testifies before the House
- Tuesday: Salesforce, Best Buy, and Medtronic all release earnings, while we also get to see new home sales
- Wednesday: Earnings from Dick’s Sporting Goods and RBC
- Thursday: The Fed’s Jackson Hole symposium kicks off plus earnings from TD Bank and Dollar General
- Friday: Personal income and spending data numbers
At the time of writing, benchmarks in London, Frankfurt, Shanghai and Tokyo are following Wall Street as U.S. futures jumped 250 points.
Below you can find some of the most notable stocks to watch today.
The company’s lead product is called PT101 and it has potential in the auto-immune and inflammatory disease markets. Morgan Stanley has a price target of $25 on this biotech, which leaves plenty of room to run.
Make sure you type that ticker in correctly…This London biotech recently won U.S. patent approval for a COVID-19 treatment. The stock is trading up 5% before the bell and we would keep an eye on it.
We love this stock and you can’t tell us otherwise. A monster accounting SaaS company that has risen more than $20 YTD. Its earnings in Q2 were up 100%…If you don’t know this one yet, we recommend putting it on your watchlist.