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Mexico scores $2.5 billion windfall from oil hedges, report says

Oil jack rigs california
The collapse of oil markets threatens to upend small to midsize private equity firms that helped the US rise to energy dominance.
  • Mexico is set to receive a $2.5 billion payout from its annual oil price insurance policy, according to a report from Bloomberg.
  • The $2.5 billion windfall would represent just the fourth time in the last two decades the country has benefited from its oil price hedges, according to Bloomberg.
  • The windfall comes as infighting among OPEC members threatens a production cut deal.
  • Visit Business Insider's homepage for more stories.

Mexico is set to receive a $2.5 billion windfall from its annual oil price hedges, according to a report from Bloomberg, which cited people familiar with the transaction.

The country, which itself is a sizable oil producing nation, has been utilizing an annual oil price hedge for decades as it looks to protect itself from volatile swings in the price of oil.

The $2.5 billion payment will mark Mexico's fourth oil hedge payment in two decades, Bloomberg said.

The hedging profit comes at a time when infighting among OPEC members threatens a production cut deal designed to help shore up oil prices.

Every year, Mexico secures its oil revenue through options contracts it buys from a group of investment banks and oil companies. The oil price insurance policy runs annually from December 1 to November 30, according to Bloomberg, and often represents Wall Street's largest annual oil deal.

The hedge has consistently protected Mexico from steep oil price declines in 2009, 2015, and 2016. Those hedges led to windfalls of $5.1 billion, $6.4 billion, and $2.7 billion, respectively, according to Bloomberg.

Read More: Shelby Osborne achieved financial freedom using a unique twist on a classic real-estate investment strategy. Here's how she built a portfolio of 53 units, starting in her early 20s.

The oil contract gave Mexico leverage to walk away from an OPEC+ production cut agreement earlier this year, and the $2.5 billion payout comes at a time when Mexico's government is strapped for cash as it deals with a deep economic recession caused by the COVID-19 pandemic, Bloomberg reported.

While the Mexican government has yet to disclose the official amount it received from the options contract, it did release some financial data earlier this year that allows analysts to estimate the windfall.

"Assuming that Mexico hedged around $45-$47 a barrel, and that it secured a similar volume as in previous years, it stands to receive a payout in excess of $2 billion," Bloomberg explained.

Both WTI and Brent crude oil traded up a half percent in Wednesday trades.

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US stocks fall as November ADP jobs report misses expectations

trader nyse worried chart
  • US stocks declined on Wednesday after the ADP employment report said 307,000 new jobs were added in November, coming in below expectations.
  • US investors could point to good news across the pond, as the UK became the first country to grant emergency use authorization for Pfizer and BioNTech's COVID-19 vaccine.
  • Watch major indexes update live here.

US stocks declined on Wednesday, even as the UK became the first country to grant emergency use authorization for Pfizer and BioNTech's COVID-19 vaccine.

The UK is expected to receive nearly 1 million vaccine doses by next week, with a total of 40 million doses on the way in 2020 and 2021.

Investors may have been disappointed by ADP's jobs report, which said companies added 307,000 new jobs in November, well below economists' expectations of 440,000 jobs and below October's revised figure of 404,000 jobs.

Here's where US indexes stood shortly after the 9:30 a.m. ET open on Wednesday:

Read more: The creator of a new volatility index for the Nasdaq 100 shares how investors can protect portfolios loaded with tech names — and explains why he thinks it's superior to the VIX

The US Food and Drug Administration is expected to grant emergency authorization for Pfizer's COVID-19 vaccine next week. Goldman Sachs released an estimate of when the vaccine could be rolled out to advanced economies.

Investors will likely have their eyes on Slack and Salesforce on Wednesday. On Tuesday, Salesforce announced a $27.7 billion acquisition of Slack as it looks to better compete against collaborative enterprise-software providers like Microsoft.

Oil prices edged higher. West Texas Intermediate crude rose as much as 0.5%, to $44.76 per barrel. Brent crude, oil's international benchmark, increased 0.5%, to $47.67 per barrel, at intraday highs.

Gold gained as much as 1%, to $1,832.56 per ounce.

Read more: Shelby Osborne achieved financial freedom using a unique twist on a classic real-estate investment strategy. Here's how she built a portfolio of 53 units, starting in her early 20s.

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Pfizer surges 5% on emergency UK approval for COVID-19 vaccine

Pfizer
Oil markets surged in the hours after Pfizer announced positive results from its coronavirus vaccine study.
  • Pfizer surged as much as 5% on Wednesday after the UK became the first country in the world to grant emergency use authorization for its COVID-19 vaccine.
  • BioNTech, who in partnership with Pfizer developed the vaccine, surged as much as 7% in Tuesday trades.
  • Nearly 1 million vaccine doses will be made available at hospitals and vaccination centers across the UK next week, with 40 million more doses expected to be shipped to the country.
  • Visit Business Insider's homepage for more stories.

The UK became the first country in the world on Wednesday to grant emergency use authorization to Pfizer and BioNTech's COVID-19 vaccine.

The vaccine, which demonstrated an efficacy rate of 95% in preventing COVID-19 among patients, will be made available to the country next week for a rollout to hospitals and vaccination centers across the country.

Pfizer surged as much as 5% in Wednesday trades, while BioNTech, which partnered with Pfizer to develop the vaccine, surged as much as 8%.

The first 800,000 vaccine doses will be made available next week, with 40 million total doses to be delivered to the country throughout 2020 and 2021.

Read More: Shelby Osborne achieved financial freedom using a unique twist on a classic real-estate investment strategy. Here's how she built a portfolio of 53 units, starting in her early 20s.

The vaccine will be given in two doses, administered 3 weeks apart. Access to the vaccine will first be granted to frontline healthcare workers and nursing home residents, followed by older adults.

Pfizer CEO Albert Bourla called the UK decision "a historic moment" and said it's "focused on moving with the same level of urgency to safely supply a high-quality vaccine around the world."

The US FDA should not be too far behind the UK in granting emergency use authorization for Pfizer's vaccine, with a decision expected by the FDA late next week.

Read the original article on Business Insider

Tesla gains 5% as S&P 500 committee says its stock will be added to the index in one single step

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  • Tesla gained 5% on Tuesday as the S&P 500 Index Committee decided to add Tesla stock to the index all at once on December 21.
  • Due to Tesla's large market valuation of more than $500 billion, the committee had considered either adding Tesla stock to the index in stages, or doing it all at once.
  • The committee's decision to add Tesla stock to its index in one fell swoop will create unprecedented demand for Tesla stock as trillions of dollars in funds tied to the S&P 500 are forced to buy the electric vehicle company.
  • Visit Business Insider's homepage for more stories.

Tesla is joining the S&P 500, but how it would be added to the index had been up in the air until yesterday.

With a market capitalization of more than $500 billion, Tesla is the largest company ever to be added to the S&P 500, creating an unprecedented decision for the S&P 500 Index Committee.

The committee weighed whether to add Tesla to the index all at once, or to piece meal the addition over a period of time. The committee even sought feedback from market participants on how to best add Tesla to the index.

On Monday, the committee decided that it would add Tesla to the S&P 500 Index at its full float-adjusted market capitalization weight in one fell swoop prior to the open on December 21.

Shares of Tesla jumped as much as 5% in Tuesday trades.

Read More: Buy these 10 stocks set to soar and smash Wall Street's expectations in the recovery from COVID-19, RBC says

If Tesla manages to hold on to its current market valuation until the index addition, the EV manufacturer would be a top 10 holding in the index with a weighting of more than 1%.

With nearly $5 trillion in funds indexed to the S&P 500, more than ten million shares of Tesla stock will be in demand as passive S&P 500 ETFs and mutual funds are forced to follow the index and buy Tesla.

This doesn't include the nearly $7 trillion that is benchmarked to the S&P 500 by active managers, who may or may not decide to add Tesla to their portfolio.

Goldman Sachs estimated that the index inclusion of Tesla will spur an $8 billion buying frenzy in Tesla stock.

The S&P 500 Index Committee factored into its decision the expected liquidity of Tesla and the market's ability to accommodate significant trading volumes on this date, according to the release. 

Now the big question is what company will Tesla replace in the S&P 500. That answer will be revealed on December 11, the committee said. 

Read More: A top equity portfolio strategist at Goldman Sachs shares his four essential ESG trends that you need to be thinking about

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Dow posts best monthly gain since 1987 on continued vaccine optimism

trader, NYSE
  • US stocks declined on Monday. But the Dow Jones industrial average's 11.8% rise in November represented its best monthly gain since January 1987.
  • Investor optimism about a COVID-19 vaccine continued on Monday after Moderna said it would file for emergency use authorization from the Food and Drug Administration for its vaccine.
  • In November, Pfizer, Moderna, and AstraZeneca reported vaccine efficacy data well above the 50% threshold set by the FDA.
  • Watch major indexes update live here.

The Dow Jones industrial average finished November on a down note on Monday, but the index still managed to notch its best monthly gain in nearly 34 years.

The Dow finished the month having climbed by 11.8%, ahead of April's strong 11.1% gain but below the 13.8% monthly gain in January 1987.

November's strong rally was mostly driven by continued optimism about a COVID-19 vaccine, as Moderna, Pfizer, and AstraZeneca reported efficacy rates that surpassed the Food and Drug Administration's threshold of 50%.

On Monday, Moderna said it would submit data from its phase-three trial to the FDA to be considered for an emergency use authorization. Investors remain optimistic that a successful COVID-19 vaccine will help jump-start a swift economic reopening in 2021.

Here's where US indexes stood at the 4 p.m. ET close on Monday:

Read more: Buy these 10 stocks set to soar and smash Wall Street's expectations in the recovery from COVID-19, RBC says

Nikola plunged as much as 28% after it announced a revised deal with General Motors that failed to include an equity investment from GM and a commitment to develop and manufacture Nikola's Badger pickup truck. But JPMorgan defended Nikola and called the decline a good buying opportunity.

S&P Global said it would acquire IHS Markit in an all-stock deal worth $44 billion. IHS Markit traded up as much as 7% as investors cheered a merger of two data providers.

DoorDash and Airbnb remain on the path to go public by the end of this year, as they both seek increased valuation debuts in a surging stock market. A filing on Monday said DoorDash was aiming for a valuation of up to $27 billion, with proceeds of roughly $2.8 billion.

Read more: Cheap stocks just had their best month ever. A Wall Street expert breaks down why their outperformance is bound to continue over the next 4 to 5 years — and listed 2 bargain stocks to buy to capitalize on the trend.

Pending home sales fell in the US for the second straight month as a continued surge in home prices dented housing markets' rally.

Oil prices fell. West Texas Intermediate crude dropped as much as 2.4%, to $44.42 per barrel. Brent crude, oil's international benchmark, declined 2.8%, to $46.85 per barrel, at intraday lows.

Gold declined as much as 1.3%, to $1,764.80 per ounce.

Read more: GOLDMAN SACHS: Buy these 16 stocks that are underestimated for now, but should crush expectations in 2021-22 on the way to at least 20% upside

Read the original article on Business Insider

Nikola slips 25% after striking long-awaited deal with General Motors that doesn’t include crucial equity stake

Nikola Two
  • Nikola Corp. slipped 25% on Monday after it announced a long awaited deal with General Motors.
  • The pair signed a memorandum of understanding that General Motors will provide Nikola with its Hydrotec fuel-cell system for use in Nikola's commercial semi-trucks.
  • The deal does not include General Motors taking an equity stake in Nikola or an OEM partnership to build Nikola's Badger pickup truck.
  • Visit Business Insider's homepage for more stories.

Nikola Corp. briefly surged, and then dipped on Monday after the company said it reached a memorandum of understanding with General Motors to work together on the production of Nikola's commercial semi-trucks.

The MOU replaces a previously announced deal that included General Motors taking a $2 billion equity stake in Nikola and the two companies working together to build the Badger pickup truck.

Shares of Nikola briefly surged as much as 25% in Monday pre-market trades after the deal was announced, but those gains quickly evaporated after it was revealed in the MOU the General Motors would no longer take an equity stake in Nikola, nor would it help the company build its Badger pickup truck.

Nikola traded down as much as 25% to $21.00 in Monday trades. The MOU comes on the same day that Nikola's lockup period for insiders ended, allowing millions of shares to be sold by certain Nikola insiders.

Under the terms of the MOU, Nikola will incorporate General Motors' Hydrotec fuel-cell technology into its Class 7 and Class 8 zero-emission semi-trucks for the medium and long haul trucking sectors, according to the release.

Read More: GOLDMAN SACHS: Buy these 16 stocks that are underestimated for now, but should crush expectations in 2021-22 on the way to at least 20% upside

Nikola expects to begin testing prototypes of its fuel-cell powered trucks by the end of 2021, with testing of beta prototypes scheduled to begin in the first half of 2022. The two companies will also "discuss the potential" for the utilization of General Motors' Ultium battery system in the Class 7 and Class 8 vehicles.

"Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market," Nikola CEO Mark Russell said.

While the MOU doesn't encapsulate all of the terms of the previously announced deal, it is likely better than nothing after Nikola and its founder Trevor Milton were accused of fraud and misleading investors in a short report from Hindenburg Research. 

Following the report, Milton voluntarily stepped down from the company as chairman in late September, even as the company dismissed many of Hindenburg's claims.

Nikola's MOU with General Motors is subject to negotiation. Nikola will refund all previously submitted order deposits for the Badger pickup truck. 

Read More: Jessica Alsford built Morgan Stanley's ESG research unit from the ground up. Here's how she advises clients on using ESG in their portfolios - along with 4 sustainability trends to watch.

Read the original article on Business Insider

Nikola slips 25% after striking long-awaited deal with General Motors that doesn’t include crucial equity stake

Nikola Two
  • Nikola Corp. slipped 25% on Monday after it announced a long awaited deal with General Motors.
  • The pair signed a memorandum of understanding that General Motors will provide Nikola with its Hydrotec fuel-cell system for use in Nikola's commercial semi-trucks.
  • The deal does not include General Motors taking an equity stake in Nikola or an OEM partnership to build Nikola's Badger pickup truck.
  • Visit Business Insider's homepage for more stories.

Nikola Corp. briefly surged, and then dipped on Monday after the company said it reached a memorandum of understanding with General Motors to work together on the production of Nikola's commercial semi-trucks.

The MOU replaces a previously announced deal that included General Motors taking a $2 billion equity stake in Nikola and the two companies working together to build the Badger pickup truck.

Shares of Nikola briefly surged as much as 25% in Monday pre-market trades after the deal was announced, but those gains quickly evaporated after it was revealed in the MOU the General Motors would no longer take an equity stake in Nikola, nor would it help the company build its Badger pickup truck.

Nikola traded down as much as 25% to $21.00 in Monday trades. The MOU comes on the same day that Nikola's lockup period for insiders ended, allowing millions of shares to be sold by certain Nikola insiders.

Under the terms of the MOU, Nikola will incorporate General Motors' Hydrotec fuel-cell technology into its Class 7 and Class 8 zero-emission semi-trucks for the medium and long haul trucking sectors, according to the release.

Read More: GOLDMAN SACHS: Buy these 16 stocks that are underestimated for now, but should crush expectations in 2021-22 on the way to at least 20% upside

Nikola expects to begin testing prototypes of its fuel-cell powered trucks by the end of 2021, with testing of beta prototypes scheduled to begin in the first half of 2022. The two companies will also "discuss the potential" for the utilization of General Motors' Ultium battery system in the Class 7 and Class 8 vehicles.

"Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market," Nikola CEO Mark Russell said.

While the MOU doesn't encapsulate all of the terms of the previously announced deal, it is likely better than nothing after Nikola and its founder Trevor Milton were accused of fraud and misleading investors in a short report from Hindenburg Research. 

Following the report, Milton voluntarily stepped down from the company as chairman in late September, even as the company dismissed many of Hindenburg's claims.

Nikola's MOU with General Motors is subject to negotiation. Nikola will refund all previously submitted order deposits for the Badger pickup truck. 

Read More: Jessica Alsford built Morgan Stanley's ESG research unit from the ground up. Here's how she advises clients on using ESG in their portfolios - along with 4 sustainability trends to watch.

Read the original article on Business Insider

Dow dips, but still on track for best month since 1987 amid vaccine progress

Trader NYSE green
  • Stocks traded mostly lower on Monday in light trading.
  • Despite the Dow Jones industrial average's decline, it's still on track for its best monthly gain since 1987.
  • Major US equity indexes have seen strong increases in November amid COVID-19 vaccine progress from Moderna and Pfizer that's boosted hopes of a swift economic reopening.
  • Watch major indexes update live here.

US stocks traded mostly lower on Monday, but the Dow Jones industrial average is still on pace for its best monthly gain since 1987. The index is up more than 12% month-to-date.

The strong move higher comes amid increased optimism that a successful COVID-19 vaccine will help jumpstart a swift reopening of the economy in 2021. 

On Monday, Moderna surged as much as 11% after it said data from its vaccine candidate — which is 94% effective — would be submitted to the FDA later today for emergency use authorization.

Here's where US indexes stood shortly after the 9:30 a.m. ET market open on Monday:

Read more: GOLDMAN SACHS: Buy these 16 stocks that are underestimated for now, but should crush expectations in 2021-22 on the way to at least 20% upside

In corporate news, S&P Global said it would acquire IHS Markit in an all-stock deal worth $44 billion, making it the largest acquisition so far in 2021. IHS Markit traded up as much as 7% as investors cheered the merger of two data providers to Wall Street.

DoorDash and Airbnb remain on the path to go public by the end of this year, as they both seek increased valuation debuts amid a surging stock market. A filing on Monday showed DoorDash is aiming for a valuation of up to $27 billion, with proceeds of roughly $2.8 billion.

Oil prices fell. West Texas Intermediate crude dropped as much as 2.4%, to $44.42 per barrel. Brent crude, oil's international benchmark, declined 2.8%, to $46.85 per barrel, at intraday lows.

Gold declined as much as 1.3%, to $1,764.80 per ounce.

Read More: 'Equity markets have devolved into casinos': A former Wall Street chief strategist unloads on the toxic narratives fueling a speculative bubble — and implores investors to heed the warnings of 1999 and 2007

Read the original article on Business Insider

Dow dips, but still on track for best month since 1987 amid vaccine progress

Trader NYSE green
  • Stocks traded mostly lower on Monday in light trading.
  • Despite the Dow Jones industrial average's decline, it's still on track for its best monthly gain since 1987.
  • Major US equity indexes have seen strong increases in November amid COVID-19 vaccine progress from Moderna and Pfizer that's boosted hopes of a swift economic reopening.
  • Watch major indexes update live here.

US stocks traded mostly lower on Monday, but the Dow Jones industrial average is still on pace for its best monthly gain since 1987. The index is up more than 12% month-to-date.

The strong move higher comes amid increased optimism that a successful COVID-19 vaccine will help jumpstart a swift reopening of the economy in 2021. 

On Monday, Moderna surged as much as 11% after it said data from its vaccine candidate — which is 94% effective — would be submitted to the FDA later today for emergency use authorization.

Here's where US indexes stood shortly after the 9:30 a.m. ET market open on Monday:

Read more: GOLDMAN SACHS: Buy these 16 stocks that are underestimated for now, but should crush expectations in 2021-22 on the way to at least 20% upside

In corporate news, S&P Global said it would acquire IHS Markit in an all-stock deal worth $44 billion, making it the largest acquisition so far in 2021. IHS Markit traded up as much as 7% as investors cheered the merger of two data providers to Wall Street.

DoorDash and Airbnb remain on the path to go public by the end of this year, as they both seek increased valuation debuts amid a surging stock market. A filing on Monday showed DoorDash is aiming for a valuation of up to $27 billion, with proceeds of roughly $2.8 billion.

Oil prices fell. West Texas Intermediate crude dropped as much as 2.4%, to $44.42 per barrel. Brent crude, oil's international benchmark, declined 2.8%, to $46.85 per barrel, at intraday lows.

Gold declined as much as 1.3%, to $1,764.80 per ounce.

Read More: 'Equity markets have devolved into casinos': A former Wall Street chief strategist unloads on the toxic narratives fueling a speculative bubble — and implores investors to heed the warnings of 1999 and 2007

Read the original article on Business Insider

Dow climbs 328 points amid reports Janet Yellen will be named treasury secretary

Yellen-2
Janet Yellen.
  • US stocks gained on Monday amid reports that President-elect Joe Biden would select former Federal Reserve Chair Janet Yellen to be his treasury secretary.
  • Earlier, investors cheered results from trials of another COVID-19 vaccine candidate, this time from AstraZeneca.
  • AstraZeneca said its COVID-19 vaccine demonstrated an average efficacy rate of 70%, making it the third company to have announced vaccine data surpassing the Food and Drug Administration's requirement of 50% effectiveness.
  • Watch major indexes update live here.

US stocks jumped on Monday afternoon amid reports that President-elect Joe Biden would select former Federal Reserve Chair Janet Yellen to be his treasury secretary.

The news that a familiar face for investors would run the Treasury Department likely helped to remove some uncertainty from the market as investors weigh who else will fill Biden's Cabinet.

Earlier, investors received news that a third COVID-19 vaccine candidate demonstrated an efficacy rate above the 50% threshold set by the Food and Drug Administration.

AstraZeneca said on Monday that its COVID-19 vaccine, developed in partnership with the University of Oxford, demonstrated an average efficacy rate of 70%. It said that while one dosing regimen was found to have an efficacy rate of 90%, another demonstrated an efficacy rate of 62%.

Here's where US indexes stood at the 4 p.m. ET market close on Monday:

Read more: Goldman Sachs says to buy these 26 stocks poised to deliver the strongest earnings growth in 2021 as the S&P 500 surges another 20%

Americans could begin receiving COVID-19 vaccines as early as December 11, an advisor to the White House's Operation Warp Speed initiative said, adding that about 70% of the population could be immunized by the summer.

On Wall Street, BlackRock upgraded its outlook for US stocks to overweight, saying a COVID-19 vaccine would hasten the economic recovery in 2021.

Oil prices staged a rebound on Monday, hitting their highest levels since early September. The positive vaccine news suggested demand for oil could return sooner rather than later. West Texas Intermediate crude jumped as much as 2.9%, to $43.36 per barrel. Brent crude, oil's international benchmark, gained 2.6%, to $46.12 per barrel, at intraday highs.

Bitcoin's strong rally to above $18,000 helped spur a surge in other cryptocurrency assets like ether and Ripple over the weekend.

Snapchat surged as much as 7% after it launched Spotlight, a new platform to rival TikTok.

Read more: Goldman Sachs analyzed 814 hedge funds. These are 15 stocks portfolio managers love and hate the most right now.

Read the original article on Business Insider