*The Cost of Shipping Gasoline Is Soaring After Russia Sanctions*
The cost of moving gasoline and other fuels on ocean-going tankers is soaring days after sanctions targeting Russia’s petroleum sales.
Daily earnings for relatively tiny tankers delivering refined fuels in the Atlantic ocean have surged about 280% this week, reaching $41,968, according to the latest data from the Baltic Exchange in London. *_They surged by 58% on Thursday alone, the largest one-day gain since late 2021._*
The surge has been spurred in part by a bifurcation of the fleet with some tankers serving Moscow’s interests and others the international market. It highlights a possible flipside of aggressive measures aimed at limiting Russia’s petroleum revenues.
“Russian volumes continue to flow at more or less the same rate and that takes up a lot of ships,” said Lars Bastian Ostereng, an analyst at Arctic Securities. “Ultimately the spike shows demand is pretty good, and the fundamentals are strong.”
As many as 600 vessels have joined a ‘shadow fleet’ of ships helping Russia to keep its petroleum flowing. That in turn is leaving fewer vessels serving other oil exporters and is boosting the cost of freight.
The surge isn’t purely about tankers switching to Russian trade.
The European Union banned Russian fuel imports from Feb. 5. Prior to that, the bloc lifted its purchasing of refined products from elsewhere to ensure plentiful supply, something that displaced some vessels in an already-thinly stretched fleet.
Now as buying picks up elsewhere, rates are spiking. Ships sailing from Europe to West Africa posted their biggest daily gain since figures began being published last year on Thursday.
A switch of some tankers to Russia may be contributing though.
“What we hear is that many vessels suddenly were removed from tonnage lists and drawn towards Russia,” said Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo. “So suddenly vessel supply was almost gone yesterday.”
The cost of moving gasoline and other fuels on ocean-going tankers is soaring days after sanctions targeting Russia’s petroleum sales.
Daily earnings for relatively tiny tankers delivering refined fuels in the Atlantic ocean have surged about 280% this week, reaching $41,968, according to the latest data from the Baltic Exchange in London. *_They surged by 58% on Thursday alone, the largest one-day gain since late 2021._*
The surge has been spurred in part by a bifurcation of the fleet with some tankers serving Moscow’s interests and others the international market. It highlights a possible flipside of aggressive measures aimed at limiting Russia’s petroleum revenues.
“Russian volumes continue to flow at more or less the same rate and that takes up a lot of ships,” said Lars Bastian Ostereng, an analyst at Arctic Securities. “Ultimately the spike shows demand is pretty good, and the fundamentals are strong.”
As many as 600 vessels have joined a ‘shadow fleet’ of ships helping Russia to keep its petroleum flowing. That in turn is leaving fewer vessels serving other oil exporters and is boosting the cost of freight.
The surge isn’t purely about tankers switching to Russian trade.
The European Union banned Russian fuel imports from Feb. 5. Prior to that, the bloc lifted its purchasing of refined products from elsewhere to ensure plentiful supply, something that displaced some vessels in an already-thinly stretched fleet.
Now as buying picks up elsewhere, rates are spiking. Ships sailing from Europe to West Africa posted their biggest daily gain since figures began being published last year on Thursday.
A switch of some tankers to Russia may be contributing though.
“What we hear is that many vessels suddenly were removed from tonnage lists and drawn towards Russia,” said Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo. “So suddenly vessel supply was almost gone yesterday.”
👍1
*Never Ever Bet Against India: Anand Mahindra blasts 'Global Media' for 'betting against India'*
https://www.businessworld.in/article/Never-Bet-Against-India-Anand-Mahindra-Amid-Adani-Row-/04-02-2023-464395/
*Anand Mahindra slammed the international media for speculating about current challenges in the Indian business sector*
*America is not made by their government, it is made by companies like Apple, Microsoft, Google, Amazon, Tesla, Facebook.*
*◆ Amazon* dropped 40% and laid off 10% employees.
*◆ Google* dropped 50% and laid off 15% employees.
*◆ Facebook* dropped 60% and laid off 20% employees.
*◆ Adani Enterprises* dropped 70% and not a single employee lost job.
*We are taught in India to abuse Adani/Ambani, uproot Jio's tower, protest every other day and do job only in government, even if you become a peon.*
*"Global media is speculating whether current challenges in the business sector will trip India’s ambitions to be a global economic force. I’ve lived long enough to see us face earthquakes, droughts, recessions, wars and terror attacks. All I will say is: never, ever bet against India."*
■ This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.
■ Mahindra Group Chairman Anand Mahindra has ripped "Global Media" for "betting against India" amid Adani row.
■ Talking about the Hinderburg report, the America-based company raised concerns about shares of Adani group firms having a possibility of declining from their current levels, owing to high valuations.
■ In response, Adani Group said that Hindenburg's report was not an attack on any specific company but a "calculated attack" on India, its growth story, and ambitions. It added the report was "nothing but a lie".
*The Industrialist in a hard-hitting tweet said that nothing can stop India from becoming an economic super power and that the country's economy has braved several odds in the past but kept growing.*
https://www.businessworld.in/article/Never-Bet-Against-India-Anand-Mahindra-Amid-Adani-Row-/04-02-2023-464395/
*Anand Mahindra slammed the international media for speculating about current challenges in the Indian business sector*
*America is not made by their government, it is made by companies like Apple, Microsoft, Google, Amazon, Tesla, Facebook.*
*◆ Amazon* dropped 40% and laid off 10% employees.
*◆ Google* dropped 50% and laid off 15% employees.
*◆ Facebook* dropped 60% and laid off 20% employees.
*◆ Adani Enterprises* dropped 70% and not a single employee lost job.
*We are taught in India to abuse Adani/Ambani, uproot Jio's tower, protest every other day and do job only in government, even if you become a peon.*
*"Global media is speculating whether current challenges in the business sector will trip India’s ambitions to be a global economic force. I’ve lived long enough to see us face earthquakes, droughts, recessions, wars and terror attacks. All I will say is: never, ever bet against India."*
■ This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.
■ Mahindra Group Chairman Anand Mahindra has ripped "Global Media" for "betting against India" amid Adani row.
■ Talking about the Hinderburg report, the America-based company raised concerns about shares of Adani group firms having a possibility of declining from their current levels, owing to high valuations.
■ In response, Adani Group said that Hindenburg's report was not an attack on any specific company but a "calculated attack" on India, its growth story, and ambitions. It added the report was "nothing but a lie".
*The Industrialist in a hard-hitting tweet said that nothing can stop India from becoming an economic super power and that the country's economy has braved several odds in the past but kept growing.*
BW Businessworld
Never Bet Against India: Anand Mahindra Amid Adani Row
Anand Mahindra slammed the international media for speculating about current challenges in the Indian business sector , , anand mahindra
*DCM Nouvelle Ltd.* | *CMP* Rs. 147 | *M Cap* Rs. 275 Cr | *52 W H/L* 314/135
(Nirmal Bang Retail Research)
*Result declined*
Revenue from Operations came at Rs. 209.5 Cr (29.1% QoQ, -9.4% YoY) vs QoQ Rs. 162.2 Cr, YoY Rs. 231.3 Cr
EBIDTA came at Rs. -1.6 Cr (-84.2% QoQ, -103.8% YoY) vs QoQ Rs. -10.3 Cr, YoY Rs. 42.8 Cr
EBITDA Margin came at -0.8% vs QoQ -6.3%, YoY 18.5%
Adj. PAT came at Rs. -2.5 Cr vs QoQ Rs. -9.3 Cr, YoY Rs. 30.8 Cr
Quarter EPS is Rs. -1.4
Stock is trading at P/E of 8.2x TTM EPS
(Nirmal Bang Retail Research)
*Result declined*
Revenue from Operations came at Rs. 209.5 Cr (29.1% QoQ, -9.4% YoY) vs QoQ Rs. 162.2 Cr, YoY Rs. 231.3 Cr
EBIDTA came at Rs. -1.6 Cr (-84.2% QoQ, -103.8% YoY) vs QoQ Rs. -10.3 Cr, YoY Rs. 42.8 Cr
EBITDA Margin came at -0.8% vs QoQ -6.3%, YoY 18.5%
Adj. PAT came at Rs. -2.5 Cr vs QoQ Rs. -9.3 Cr, YoY Rs. 30.8 Cr
Quarter EPS is Rs. -1.4
Stock is trading at P/E of 8.2x TTM EPS
*PB Fintech Ltd.* | *CMP* Rs. 524 | *M Cap* Rs. 23586 Cr | *52 W H/L* 972/356
(Nirmal Bang Retail Research)
*Result ahead of Expectation*
Revenue from Operations came at Rs. 610.1 Cr (6.4% QoQ, 66.1% YoY) vs expectation of Rs. 591.9 Cr, QoQ Rs. 573.5 Cr, YoY Rs. 367.3 Cr
EBIDTA came at Rs. -133.2 Cr (-41.1% QoQ, -58% YoY) vs expectation of Rs. -163.3 Cr, QoQ Rs. -226.1 Cr, YoY Rs. -317.3 Cr
EBITDA Margin came at -21.8% vs expectation of -27.6%, QoQ -39.4%, YoY -86.4%
Adj. PAT came at Rs. -87.3 Cr vs expectation of Rs. -120.8 Cr, QoQ Rs. -186.6 Cr, YoY Rs. -298 Cr
Quarter EPS is Rs. -1.9
Stock is trading at P/E of -147.6x FY24E EPS
(Nirmal Bang Retail Research)
*Result ahead of Expectation*
Revenue from Operations came at Rs. 610.1 Cr (6.4% QoQ, 66.1% YoY) vs expectation of Rs. 591.9 Cr, QoQ Rs. 573.5 Cr, YoY Rs. 367.3 Cr
EBIDTA came at Rs. -133.2 Cr (-41.1% QoQ, -58% YoY) vs expectation of Rs. -163.3 Cr, QoQ Rs. -226.1 Cr, YoY Rs. -317.3 Cr
EBITDA Margin came at -21.8% vs expectation of -27.6%, QoQ -39.4%, YoY -86.4%
Adj. PAT came at Rs. -87.3 Cr vs expectation of Rs. -120.8 Cr, QoQ Rs. -186.6 Cr, YoY Rs. -298 Cr
Quarter EPS is Rs. -1.9
Stock is trading at P/E of -147.6x FY24E EPS
*Oil India Ltd.* | *CMP* Rs. 224 | *M Cap* Rs. 24236 Cr | *52 W H/L* 306/168
(Nirmal Bang Retail Research)
*Result ahead of Expectation*
Revenue from Operations came at Rs. 5879.4 Cr (26.6% QoQ, 57.3% YoY) vs expectation of Rs. 5612.4 Cr, QoQ Rs. 4643.4 Cr, YoY Rs. 3736.7 Cr
EBIDTA came at Rs. 2855.3 Cr (54.5% QoQ, 125.3% YoY) vs expectation of Rs. 2130.2 Cr, QoQ Rs. 1848.2 Cr, YoY Rs. 1267.2 Cr
EBITDA Margin came at 48.6% vs expectation of 38%, QoQ 39.8%, YoY 33.9%
Adj. PAT came at Rs. 1746.1 Cr vs expectation of Rs. 1531.2 Cr, QoQ Rs. 1720.5 Cr, YoY Rs. 1244.9 Cr
Quarter EPS is Rs. 16.1
Stock is trading at P/E of 3.4x FY24E EPS
(Nirmal Bang Retail Research)
*Result ahead of Expectation*
Revenue from Operations came at Rs. 5879.4 Cr (26.6% QoQ, 57.3% YoY) vs expectation of Rs. 5612.4 Cr, QoQ Rs. 4643.4 Cr, YoY Rs. 3736.7 Cr
EBIDTA came at Rs. 2855.3 Cr (54.5% QoQ, 125.3% YoY) vs expectation of Rs. 2130.2 Cr, QoQ Rs. 1848.2 Cr, YoY Rs. 1267.2 Cr
EBITDA Margin came at 48.6% vs expectation of 38%, QoQ 39.8%, YoY 33.9%
Adj. PAT came at Rs. 1746.1 Cr vs expectation of Rs. 1531.2 Cr, QoQ Rs. 1720.5 Cr, YoY Rs. 1244.9 Cr
Quarter EPS is Rs. 16.1
Stock is trading at P/E of 3.4x FY24E EPS
👍1
*Bharat Heavy Electricals Ltd.* | *CMP* Rs. 75 | *M Cap* Rs. 26237 Cr | *52 W H/L* 92/41
(Nirmal Bang Retail Research)
*Result ahead of Expectation*
Revenue from Operations came at Rs. 5263.4 Cr (1.2% QoQ, 2.5% YoY) vs expectation of Rs. 5724.7 Cr, QoQ Rs. 5202.6 Cr, YoY Rs. 5135.9 Cr
EBIDTA came at Rs. 144.3 Cr (-159.1% QoQ, 61.7% YoY) vs expectation of Rs. 56.2 Cr, QoQ Rs. -243.9 Cr, YoY Rs. 89.2 Cr
EBITDA Margin came at 2.7% vs expectation of 1%, QoQ -4.7%, YoY 1.7%
Adj. PAT came at Rs. 31 Cr vs expectation of Rs. -28.1 Cr, QoQ Rs. 10.3 Cr, YoY Rs. 14.3 Cr
Quarter EPS is Rs. 0.1
Stock is trading at P/E of 34.6x TTM EPS
(Nirmal Bang Retail Research)
*Result ahead of Expectation*
Revenue from Operations came at Rs. 5263.4 Cr (1.2% QoQ, 2.5% YoY) vs expectation of Rs. 5724.7 Cr, QoQ Rs. 5202.6 Cr, YoY Rs. 5135.9 Cr
EBIDTA came at Rs. 144.3 Cr (-159.1% QoQ, 61.7% YoY) vs expectation of Rs. 56.2 Cr, QoQ Rs. -243.9 Cr, YoY Rs. 89.2 Cr
EBITDA Margin came at 2.7% vs expectation of 1%, QoQ -4.7%, YoY 1.7%
Adj. PAT came at Rs. 31 Cr vs expectation of Rs. -28.1 Cr, QoQ Rs. 10.3 Cr, YoY Rs. 14.3 Cr
Quarter EPS is Rs. 0.1
Stock is trading at P/E of 34.6x TTM EPS
*Rail Vikas Nigam Ltd.* | *CMP* Rs. 73 | *M Cap* Rs. 15148 Cr | *52 W H/L* 84/29
(Nirmal Bang Retail Research)
*Result declining*
Revenue from Operations came at Rs. 5012.1 Cr (2.1% QoQ, -0.7% YoY) vs QoQ Rs. 4908.9 Cr, YoY Rs. 5049.2 Cr
EBIDTA came at Rs. 275.7 Cr (-12.8% QoQ, -13.6% YoY) vs QoQ Rs. 316 Cr, YoY Rs. 319.2 Cr
EBITDA Margin came at 5.5% vs QoQ 6.4%, YoY 6.3%
Adj. PAT came at Rs. 382.4 Cr vs QoQ Rs. 381.2 Cr, YoY Rs. 293 Cr
Quarter EPS is Rs. 1.8
Stock is trading at P/E of 10.5x TTM EPS
(Nirmal Bang Retail Research)
*Result declining*
Revenue from Operations came at Rs. 5012.1 Cr (2.1% QoQ, -0.7% YoY) vs QoQ Rs. 4908.9 Cr, YoY Rs. 5049.2 Cr
EBIDTA came at Rs. 275.7 Cr (-12.8% QoQ, -13.6% YoY) vs QoQ Rs. 316 Cr, YoY Rs. 319.2 Cr
EBITDA Margin came at 5.5% vs QoQ 6.4%, YoY 6.3%
Adj. PAT came at Rs. 382.4 Cr vs QoQ Rs. 381.2 Cr, YoY Rs. 293 Cr
Quarter EPS is Rs. 1.8
Stock is trading at P/E of 10.5x TTM EPS
👍1
*Roto Pumps Ltd.* | *CMP* Rs. 570 | *M Cap* Rs. 895 Cr | *52 W H/L* 609/340
(Nirmal Bang Retail Research)
*Result has improved*
Revenue from Operations came at Rs. 57.2 Cr (1.9% QoQ, 21.6% YoY) vs QoQ Rs. 56.1 Cr, YoY Rs. 47.1 Cr
EBIDTA came at Rs. 13.2 Cr (14.5% QoQ, 13.2% YoY) vs QoQ Rs. 11.5 Cr, YoY Rs. 11.6 Cr
EBITDA Margin came at 23% vs QoQ 20.5%, YoY 24.7%
Adj. PAT came at Rs. 9.2 Cr vs QoQ Rs. 7.1 Cr, YoY Rs. 8.2 Cr
Quarter EPS is Rs. 5.9
Stock is trading at P/E of 30.9x TTM EPS
(Nirmal Bang Retail Research)
*Result has improved*
Revenue from Operations came at Rs. 57.2 Cr (1.9% QoQ, 21.6% YoY) vs QoQ Rs. 56.1 Cr, YoY Rs. 47.1 Cr
EBIDTA came at Rs. 13.2 Cr (14.5% QoQ, 13.2% YoY) vs QoQ Rs. 11.5 Cr, YoY Rs. 11.6 Cr
EBITDA Margin came at 23% vs QoQ 20.5%, YoY 24.7%
Adj. PAT came at Rs. 9.2 Cr vs QoQ Rs. 7.1 Cr, YoY Rs. 8.2 Cr
Quarter EPS is Rs. 5.9
Stock is trading at P/E of 30.9x TTM EPS
*Inox Green Energy Services Ltd.* | *CMP* Rs. 47 | *M Cap* Rs. 1376 Cr | *52 W H/L* 64/40
(Nirmal Bang Retail Research)
*Result has declined*
Revenue from Operations came at Rs. 71.6 Cr (18.2% QoQ, 56% YoY) vs QoQ Rs. 60.6 Cr, YoY Rs. 45.9 Cr
EBIDTA came at Rs. -2.5 Cr (-117.5% QoQ, -111.3% YoY) vs QoQ Rs. 14.1 Cr, YoY Rs. 21.8 Cr
EBITDA Margin came at -3.4% vs QoQ 23.3%, YoY 47.4%
Adj. PAT came at Rs. -8.3 Cr vs QoQ Rs. -6.9 Cr, YoY Rs. -3.1 Cr
Quarter EPS is Rs. -0.3
Stock is trading at P/E of -49.3x TTM EPS
(Nirmal Bang Retail Research)
*Result has declined*
Revenue from Operations came at Rs. 71.6 Cr (18.2% QoQ, 56% YoY) vs QoQ Rs. 60.6 Cr, YoY Rs. 45.9 Cr
EBIDTA came at Rs. -2.5 Cr (-117.5% QoQ, -111.3% YoY) vs QoQ Rs. 14.1 Cr, YoY Rs. 21.8 Cr
EBITDA Margin came at -3.4% vs QoQ 23.3%, YoY 47.4%
Adj. PAT came at Rs. -8.3 Cr vs QoQ Rs. -6.9 Cr, YoY Rs. -3.1 Cr
Quarter EPS is Rs. -0.3
Stock is trading at P/E of -49.3x TTM EPS
❤1👍1
MARKET WIZARD NEWSLETEER ISSUE 72.pdf
1.2 MB
MARKET WIZARD NEWSLETTER ISSUE 72
🎯FUNDAMENTAL STOCKS
▶️ CASTROL IND LTD
▶️ GRAPHITE LTD
▶️ LOVABLE LINGERIE LTD
▶️ NOCIL LTD
TEAM MARKET WIZARD
Market Wizard & Books Make India Read Whatsapp Group Link -
https://chat.whatsapp.com/FQeyp04UWjlIy2lbL2dFz5
🎯FUNDAMENTAL STOCKS
▶️ CASTROL IND LTD
▶️ GRAPHITE LTD
▶️ LOVABLE LINGERIE LTD
▶️ NOCIL LTD
TEAM MARKET WIZARD
Market Wizard & Books Make India Read Whatsapp Group Link -
https://chat.whatsapp.com/FQeyp04UWjlIy2lbL2dFz5
👍1
*OPEC+ Won’t Boost Oil Supply as Russia Cuts, Delegates Say*
Russia’s partners in the OPEC+ oil coalition signaled they won’t boost production to fill in for cutbacks announced by Moscow.
The OPEC+ group led by Saudi Arabia will maintain output despite plans by the Kremlin to cut 500,000 barrels a day in retaliation for international sanctions, according to delegates who declined to be identified.
Oil jumped after Russia’s announcement, with Brent rising 2.8% to $86.90 a barrel. It later pared gains to 1.4%, or around $85.65.
Riyadh and others in the producers’ alliance have indicated they aim to stick with targets fixed late last year for the rest of 2023. They believe these will keep global oil markets broadly in balance.
“We really believe OPEC+ will hold production flat for the full year,” Amrita Sen, co-founder of consultancy Energy Aspects, said on Friday, after visiting Saudi Arabia. “Having spoken to quite a few officials in Riyadh, the motto was very much to stay put this year — no changes to OPEC+ policy, regardless of the volatility we see in prices.”
While the US and other consumers repeatedly urged the Organization of Petroleum Exporting Countries to fill in any gap left by Russia, the group has been unmoved, remaining concerned that increasing supplies could oversupply the market and endanger oil revenues for its members.
“I doubt Russia’s OPEC+ partners were taken by surprise and do not expect the supply reduction will alter their ‘stay put’ policy stance,” said Bob McNally, president of Rapidan Energy Group and a former White House official.
OPEC officials have indicated they’re still apprehensive that the resurgence in Covid cases in China could derail the country’s economic recovery as it reopens. Secretary-General Haitham Al-Ghais said this week the disease is a “beast” menacing the global economy.
Saudi Energy Minister Prince Abdulaziz bin Salman said last week in Riyadh that the bar for any intervention will be very high. “I will believe it when I see it and then take action,” he said.
Russia’s partners in the OPEC+ oil coalition signaled they won’t boost production to fill in for cutbacks announced by Moscow.
The OPEC+ group led by Saudi Arabia will maintain output despite plans by the Kremlin to cut 500,000 barrels a day in retaliation for international sanctions, according to delegates who declined to be identified.
Oil jumped after Russia’s announcement, with Brent rising 2.8% to $86.90 a barrel. It later pared gains to 1.4%, or around $85.65.
Riyadh and others in the producers’ alliance have indicated they aim to stick with targets fixed late last year for the rest of 2023. They believe these will keep global oil markets broadly in balance.
“We really believe OPEC+ will hold production flat for the full year,” Amrita Sen, co-founder of consultancy Energy Aspects, said on Friday, after visiting Saudi Arabia. “Having spoken to quite a few officials in Riyadh, the motto was very much to stay put this year — no changes to OPEC+ policy, regardless of the volatility we see in prices.”
While the US and other consumers repeatedly urged the Organization of Petroleum Exporting Countries to fill in any gap left by Russia, the group has been unmoved, remaining concerned that increasing supplies could oversupply the market and endanger oil revenues for its members.
“I doubt Russia’s OPEC+ partners were taken by surprise and do not expect the supply reduction will alter their ‘stay put’ policy stance,” said Bob McNally, president of Rapidan Energy Group and a former White House official.
OPEC officials have indicated they’re still apprehensive that the resurgence in Covid cases in China could derail the country’s economic recovery as it reopens. Secretary-General Haitham Al-Ghais said this week the disease is a “beast” menacing the global economy.
Saudi Energy Minister Prince Abdulaziz bin Salman said last week in Riyadh that the bar for any intervention will be very high. “I will believe it when I see it and then take action,” he said.
👍1
*The Cost of Shipping Gasoline Is Soaring After Russia Sanctions*
The cost of moving gasoline and other fuels on ocean-going tankers is soaring days after sanctions targeting Russia’s petroleum sales.
Daily earnings for relatively tiny tankers delivering refined fuels in the Atlantic ocean have surged about 280% this week, reaching $41,968, according to the latest data from the Baltic Exchange in London. *_They surged by 58% on Thursday alone, the largest one-day gain since late 2021._*
The surge has been spurred in part by a bifurcation of the fleet with some tankers serving Moscow’s interests and others the international market. It highlights a possible flipside of aggressive measures aimed at limiting Russia’s petroleum revenues.
“Russian volumes continue to flow at more or less the same rate and that takes up a lot of ships,” said Lars Bastian Ostereng, an analyst at Arctic Securities. “Ultimately the spike shows demand is pretty good, and the fundamentals are strong.”
As many as 600 vessels have joined a ‘shadow fleet’ of ships helping Russia to keep its petroleum flowing. That in turn is leaving fewer vessels serving other oil exporters and is boosting the cost of freight.
The surge isn’t purely about tankers switching to Russian trade.
The European Union banned Russian fuel imports from Feb. 5. Prior to that, the bloc lifted its purchasing of refined products from elsewhere to ensure plentiful supply, something that displaced some vessels in an already-thinly stretched fleet.
Now as buying picks up elsewhere, rates are spiking. Ships sailing from Europe to West Africa posted their biggest daily gain since figures began being published last year on Thursday.
A switch of some tankers to Russia may be contributing though.
“What we hear is that many vessels suddenly were removed from tonnage lists and drawn towards Russia,” said Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo. “So suddenly vessel supply was almost gone yesterday.”
The cost of moving gasoline and other fuels on ocean-going tankers is soaring days after sanctions targeting Russia’s petroleum sales.
Daily earnings for relatively tiny tankers delivering refined fuels in the Atlantic ocean have surged about 280% this week, reaching $41,968, according to the latest data from the Baltic Exchange in London. *_They surged by 58% on Thursday alone, the largest one-day gain since late 2021._*
The surge has been spurred in part by a bifurcation of the fleet with some tankers serving Moscow’s interests and others the international market. It highlights a possible flipside of aggressive measures aimed at limiting Russia’s petroleum revenues.
“Russian volumes continue to flow at more or less the same rate and that takes up a lot of ships,” said Lars Bastian Ostereng, an analyst at Arctic Securities. “Ultimately the spike shows demand is pretty good, and the fundamentals are strong.”
As many as 600 vessels have joined a ‘shadow fleet’ of ships helping Russia to keep its petroleum flowing. That in turn is leaving fewer vessels serving other oil exporters and is boosting the cost of freight.
The surge isn’t purely about tankers switching to Russian trade.
The European Union banned Russian fuel imports from Feb. 5. Prior to that, the bloc lifted its purchasing of refined products from elsewhere to ensure plentiful supply, something that displaced some vessels in an already-thinly stretched fleet.
Now as buying picks up elsewhere, rates are spiking. Ships sailing from Europe to West Africa posted their biggest daily gain since figures began being published last year on Thursday.
A switch of some tankers to Russia may be contributing though.
“What we hear is that many vessels suddenly were removed from tonnage lists and drawn towards Russia,” said Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo. “So suddenly vessel supply was almost gone yesterday.”
*Left guessing on terminal rate, bonds embrace economic uncertainty*
It appears that the Indian sovereign bond market (G-Sec) is in direct conflict with the contentions of Eugene Fama’s efficient markets hypothesis theory. The American economist suggested that the market gives very little time to financial mavericks to outperform the consensus as it quickly adjusts to any new information introduced, whether public or insider.
With over 250 bps worth of repo hikes delivered over a span of 10 months, the Indian 10-year sovereign bond yield has hardly budged, largely remaining within a range of 7.30-7.45 percent. In the meantime, an equivalent US security is yielding an incremental 165 bps, over the same period. Additionally, at 374 bps, the US-India 10-year GSec differential is now among the lowest points in four years.
*_Riskier Bet_*
This is surprising because, despite its bright star credentials, India is an emerging market and a comparatively riskier investment bet. Therefore, when the 10-year bond yields moved just 2 bps as a reaction to the RBI’s February 2023 Monetary Policy Committee’s (MPC) 25 bps rate hike, eyebrows are bound to be raised. Moreover, India’s net debt issuances over the last three years have significantly overshot budget estimates and it is likely that the FY24 number will exceed the Rs 12.2 lakh crore threshold, given the 2024 general elections.
Looking at the ‘actual’ yield curve, the differential between a 30-year and 2-year bond is pegged at 26 bps, the lowest in three years. At the same time last year, the differential was a whopping 222 bps, but this preceded the monetary tightening cycle. The ‘forward’ yield curve calculations on the hand predict a differential of just 13 bps, with a yield curve inversion in the 5 and 10-year duration. What this means is that one year from now, the bond market is predicting that a 5-year bond will yield higher than a 10-year instrument.
As understood, a flattening yield curve is a predictor of an impending recession, and past research suggests that the previous ten US recessionary cycles have been anticipated by an inversion.
Nevertheless, now that the MPC has destroyed all preconceived notions regarding the terminal rate of 6.5 percent, there is a chance that rates may go up further. While this forward march on rates will anchor inflation expectations, there is a high chance that the costs on economic stability will be high, at least in the short to medium term.
*_Confusing commentary_*
Accordingly, the Indian bond market seems to be unsure of India’s economic performance as things stand and nothing explains this better than a flattening yield curve. As the terminal rate cannot be realistically predicted given the confusing MPC commentary, bond investors are no longer anticipating a significant return differential between the short and the long end of the curve. Theoretically, when this happens, the longer-duration securities are held for longer and all the action shifts to the shorter duration, accompanied by a lot more volatility.
Regarding the unanticipated yield curve reaction to rate hikes, this author has a four-pronged hypothesis. Firstly, an analysis of the issuance basket planning indicates that the RBI reduced the proportion of 10-year securities from 25 percent in FY22 to 20 percent in FY23. What this move has done is that it has smartly reduced the supply of these securities artificially, lowering the issued value by Rs 22,000 crore in addition to the anticipated increase for the year. This was probably done to calm the markets as the said duration instruments are used as benchmarks.
*_Happier Banks_*
Secondly, the record systemic liquidity brought forward from the COVID era has led the RBI to conduct considerable reverse repo operations under liquidity adjustment windows. This resulted in GSecs finding a safe passage into commercial bank balance sheets in exchange for cash.
It appears that the Indian sovereign bond market (G-Sec) is in direct conflict with the contentions of Eugene Fama’s efficient markets hypothesis theory. The American economist suggested that the market gives very little time to financial mavericks to outperform the consensus as it quickly adjusts to any new information introduced, whether public or insider.
With over 250 bps worth of repo hikes delivered over a span of 10 months, the Indian 10-year sovereign bond yield has hardly budged, largely remaining within a range of 7.30-7.45 percent. In the meantime, an equivalent US security is yielding an incremental 165 bps, over the same period. Additionally, at 374 bps, the US-India 10-year GSec differential is now among the lowest points in four years.
*_Riskier Bet_*
This is surprising because, despite its bright star credentials, India is an emerging market and a comparatively riskier investment bet. Therefore, when the 10-year bond yields moved just 2 bps as a reaction to the RBI’s February 2023 Monetary Policy Committee’s (MPC) 25 bps rate hike, eyebrows are bound to be raised. Moreover, India’s net debt issuances over the last three years have significantly overshot budget estimates and it is likely that the FY24 number will exceed the Rs 12.2 lakh crore threshold, given the 2024 general elections.
Looking at the ‘actual’ yield curve, the differential between a 30-year and 2-year bond is pegged at 26 bps, the lowest in three years. At the same time last year, the differential was a whopping 222 bps, but this preceded the monetary tightening cycle. The ‘forward’ yield curve calculations on the hand predict a differential of just 13 bps, with a yield curve inversion in the 5 and 10-year duration. What this means is that one year from now, the bond market is predicting that a 5-year bond will yield higher than a 10-year instrument.
As understood, a flattening yield curve is a predictor of an impending recession, and past research suggests that the previous ten US recessionary cycles have been anticipated by an inversion.
Nevertheless, now that the MPC has destroyed all preconceived notions regarding the terminal rate of 6.5 percent, there is a chance that rates may go up further. While this forward march on rates will anchor inflation expectations, there is a high chance that the costs on economic stability will be high, at least in the short to medium term.
*_Confusing commentary_*
Accordingly, the Indian bond market seems to be unsure of India’s economic performance as things stand and nothing explains this better than a flattening yield curve. As the terminal rate cannot be realistically predicted given the confusing MPC commentary, bond investors are no longer anticipating a significant return differential between the short and the long end of the curve. Theoretically, when this happens, the longer-duration securities are held for longer and all the action shifts to the shorter duration, accompanied by a lot more volatility.
Regarding the unanticipated yield curve reaction to rate hikes, this author has a four-pronged hypothesis. Firstly, an analysis of the issuance basket planning indicates that the RBI reduced the proportion of 10-year securities from 25 percent in FY22 to 20 percent in FY23. What this move has done is that it has smartly reduced the supply of these securities artificially, lowering the issued value by Rs 22,000 crore in addition to the anticipated increase for the year. This was probably done to calm the markets as the said duration instruments are used as benchmarks.
*_Happier Banks_*
Secondly, the record systemic liquidity brought forward from the COVID era has led the RBI to conduct considerable reverse repo operations under liquidity adjustment windows. This resulted in GSecs finding a safe passage into commercial bank balance sheets in exchange for cash.
Since commercial banks use such securities for strengthening their Liquidity Coverage Ratio (LCR) and associated availing facilities they were never happier, lapping up supplies readily. This author’s earlier research has revealed that government securities form over 80 percent of Indian commercial bank treasuries. This has helped contain yields considerably as such securities are mostly held-to-maturity (HTM). Nevertheless, this façade of yield control will last until systemic liquidity dries up on the back of rising credit offtake. Once the credit-deposit ratio normalises, commercial banks will scramble for liquidity and offload securities for cash.
Thirdly, rising interest rates have doubled real returns YoY. What this means is that as on February 8, 2023, a 10-year GSec, which was yielding 7.35 percent, is offering a real return of over 120 bps, when considering the prevailing inflation rate. This return was roughly half, same time last year. Therefore, there is a possibility that some yield chase in the market could control the yields for a brief period, but this cannot be a major reason considering the volumes.
Finally, this could be a passing fad as the yield curve adjusts to the rising rates and may normalise as the domestic macro picture as well as central bank actions in other parts of the world becomes clearer. However, witnessing the evolving bond prices elsewhere in the world, it is apparent that Indian sovereign debt valuations may be at odds with expectations, as the market interprets the missing links. Only time will tell whether this is the calm before the storm.
Thirdly, rising interest rates have doubled real returns YoY. What this means is that as on February 8, 2023, a 10-year GSec, which was yielding 7.35 percent, is offering a real return of over 120 bps, when considering the prevailing inflation rate. This return was roughly half, same time last year. Therefore, there is a possibility that some yield chase in the market could control the yields for a brief period, but this cannot be a major reason considering the volumes.
Finally, this could be a passing fad as the yield curve adjusts to the rising rates and may normalise as the domestic macro picture as well as central bank actions in other parts of the world becomes clearer. However, witnessing the evolving bond prices elsewhere in the world, it is apparent that Indian sovereign debt valuations may be at odds with expectations, as the market interprets the missing links. Only time will tell whether this is the calm before the storm.
*Wall Street Sees Worst Week of 2023 on Fed Jitters: Markets Wrap*
The worst week in 2023 for stocks and bonds saw investors coming to the grips with the idea that the Federal Reserve may indeed have to keep rates higher for longer as it wages a war against inflation.
Wall Street has ramped up bets on the Fed’s peak rate to around 5.2%, from under 5% earlier this month, amid a barrage of hawkish remarks from US officials that followed a hot jobs print. And that’s not all. Traders who had been positioning for the central bank to hike only once more — in March — are suddenly being confronted with wagers on at least three more increases.
That’s why Tuesday’s consumer price index is seen as a litmus test for the Fed’s ability to thwart inflation amid the most-aggressive tightening cycle in decades. Core CPI will either point to the need to push further into restrictive territory or reflect the progress policymakers have made toward securing the anchor of inflation expectations, said Ian Lyngen at BMO Capital Markets.
“The new year’s bullishness has quickly faded as investors recalibrated forward expectations in the wake of the employment report,” Lyngen added. “As it presently stands, investors are biased for an upside surprise versus the consensus for core-CPI of +0.4% on a monthly basis.”
Treasury 10-year yields climbed to around 3.75%. Interest-rate options activity Friday included a large, apparently new position that will profit if the rate reaches 4% within a week’s time. The rise in yields weighed heavily on the tech space, with the Nasdaq 100 underperforming major gauges. The S&P 500 ended with a small gain Friday — but posted its worst week since December.
"It’s healthy to have these corrections along the way,” said Alec Young, chief investment strategist at MAPsignals. “Expectations are much more realistic about the Fed.”
After an indiscriminate risk rally that defied Fed hawkishness, sober-minded traders are upping their hedging game at long last.
The cost of contracts protecting against a 10% decline in the largest exchange-traded fund tracking the S&P 500 is now 1.7 times more than options that profit from a 10% rally. This so-called put-to-call skew is hovering at the highest level since August 2022, when a two-month rally abruptly reversed.
Meantime, global equity funds had outflows of $7.4 billion in the week through Feb. 8, according to a Bank of America Corp. note that cited EPFR Global data. Cash funds also saw redemptions at $10.1 billion, while $7.4 billion entered bonds.
In corporate news, Lyft Inc. tumbled the most on record after forecasting dramatically lower profits than expected and saying it will cut prices in an attempt to attract and keep customers. Expedia Group Inc. executives gave an optimistic outlook for travel demand in the current quarter, reassuring investors after the company’s fourth-quarter results were weaker than expected.
America’s largest banks are unlikely to return share buybacks to prior levels anytime soon given tougher-than-usual Fed stress tests, according to Wells Fargo analyst Mike Mayo. The assumptions in this year’s test, published by the Fed on Thursday, “seem tougher, and they are made so as the economy nears a recession,” he said.
Traders also kept an eye on the latest geopolitical developments.
President Joe Biden ordered the Pentagon to shoot down an object spotted at 40,000 feet over Alaska less than a week after fighter jets targeted an alleged Chinese surveillance balloon that had crossed the US and provoked a national uproar.
Elsewhere, oil gained as Russia plans to cut its oil output by 500,000 barrels a day next month, following through on a threat to retaliate against western energy sanctions and sending oil prices sharply higher.
The yen strengthened as much as 1.4% against the dollar after news reports that Kazuo Ueda would be picked to become the Bank of Japan’s next governor. Investors initially interpreted the decision as likely a hawkish choice.
The worst week in 2023 for stocks and bonds saw investors coming to the grips with the idea that the Federal Reserve may indeed have to keep rates higher for longer as it wages a war against inflation.
Wall Street has ramped up bets on the Fed’s peak rate to around 5.2%, from under 5% earlier this month, amid a barrage of hawkish remarks from US officials that followed a hot jobs print. And that’s not all. Traders who had been positioning for the central bank to hike only once more — in March — are suddenly being confronted with wagers on at least three more increases.
That’s why Tuesday’s consumer price index is seen as a litmus test for the Fed’s ability to thwart inflation amid the most-aggressive tightening cycle in decades. Core CPI will either point to the need to push further into restrictive territory or reflect the progress policymakers have made toward securing the anchor of inflation expectations, said Ian Lyngen at BMO Capital Markets.
“The new year’s bullishness has quickly faded as investors recalibrated forward expectations in the wake of the employment report,” Lyngen added. “As it presently stands, investors are biased for an upside surprise versus the consensus for core-CPI of +0.4% on a monthly basis.”
Treasury 10-year yields climbed to around 3.75%. Interest-rate options activity Friday included a large, apparently new position that will profit if the rate reaches 4% within a week’s time. The rise in yields weighed heavily on the tech space, with the Nasdaq 100 underperforming major gauges. The S&P 500 ended with a small gain Friday — but posted its worst week since December.
"It’s healthy to have these corrections along the way,” said Alec Young, chief investment strategist at MAPsignals. “Expectations are much more realistic about the Fed.”
After an indiscriminate risk rally that defied Fed hawkishness, sober-minded traders are upping their hedging game at long last.
The cost of contracts protecting against a 10% decline in the largest exchange-traded fund tracking the S&P 500 is now 1.7 times more than options that profit from a 10% rally. This so-called put-to-call skew is hovering at the highest level since August 2022, when a two-month rally abruptly reversed.
Meantime, global equity funds had outflows of $7.4 billion in the week through Feb. 8, according to a Bank of America Corp. note that cited EPFR Global data. Cash funds also saw redemptions at $10.1 billion, while $7.4 billion entered bonds.
In corporate news, Lyft Inc. tumbled the most on record after forecasting dramatically lower profits than expected and saying it will cut prices in an attempt to attract and keep customers. Expedia Group Inc. executives gave an optimistic outlook for travel demand in the current quarter, reassuring investors after the company’s fourth-quarter results were weaker than expected.
America’s largest banks are unlikely to return share buybacks to prior levels anytime soon given tougher-than-usual Fed stress tests, according to Wells Fargo analyst Mike Mayo. The assumptions in this year’s test, published by the Fed on Thursday, “seem tougher, and they are made so as the economy nears a recession,” he said.
Traders also kept an eye on the latest geopolitical developments.
President Joe Biden ordered the Pentagon to shoot down an object spotted at 40,000 feet over Alaska less than a week after fighter jets targeted an alleged Chinese surveillance balloon that had crossed the US and provoked a national uproar.
Elsewhere, oil gained as Russia plans to cut its oil output by 500,000 barrels a day next month, following through on a threat to retaliate against western energy sanctions and sending oil prices sharply higher.
The yen strengthened as much as 1.4% against the dollar after news reports that Kazuo Ueda would be picked to become the Bank of Japan’s next governor. Investors initially interpreted the decision as likely a hawkish choice.
Those gains were trimmed after Ueda spoke to reporters and said the BOJ’s stimulus should stay in place.
“Why do we care? Because the BOJ is locked into ultra-dovish policy,” said Chris Low at FHN Financial. “It is the only major central bank fighting to keep inflation high rather than trying to lower it. Now we’ll have to see how long he sticks to the old policy.”
“Why do we care? Because the BOJ is locked into ultra-dovish policy,” said Chris Low at FHN Financial. “It is the only major central bank fighting to keep inflation high rather than trying to lower it. Now we’ll have to see how long he sticks to the old policy.”
*Fed’s Harker Favors Rates Above 5%, Says Odds of Soft Landing Grow*
Philadelphia Fed President Patrick Harker said the odds of the Federal Reserve being able to control inflation without triggering a recession are growing, but that the key interest rate must get above 5% and stay there to ensure price pressures ease.
“We actually are increasing the odds — we can get a soft landing. That doesn’t mean we’re out of the woods,” Harker said in an interview on Wharton Business Radio Friday. “It’s still possible, but I think we can avoid that by just being prudent.”
He said he favors “a couple more” 25 basis-point increases.
“We need to get above five — we’re really close to that right now — and then pause,” Harker said. “How much above five? We’ll see.”
Fed officials lifted their benchmark interest rate by a quarter percentage point to a range of 4.5% to 4.75% last week. The smaller move followed a half-point increase in December and four 75 basis-point hikes prior to that.
Officials in December forecast rates peaking at 5.1% this year, according to their median projection. They will update those estimates next month.
Federal Reserve Chair Jerome Powell said this week that further rate hikes would be needed to quash inflation. Investors have lifted where they see rates peaking this year and are now largely in line with policy makers’ projection following the much stronger-than-expected January employment report.
“We just can take our time. See how things work out again, if the inflation numbers continue in trajectory they’re on right now, which would be great,” Harker said.
US central bankers are battling to ease inflation to their 2% target — prices climbed 5% in the 12 months through December, according to the Fed’s preferred measure, the personal consumption expenditures index.
Philadelphia Fed President Patrick Harker said the odds of the Federal Reserve being able to control inflation without triggering a recession are growing, but that the key interest rate must get above 5% and stay there to ensure price pressures ease.
“We actually are increasing the odds — we can get a soft landing. That doesn’t mean we’re out of the woods,” Harker said in an interview on Wharton Business Radio Friday. “It’s still possible, but I think we can avoid that by just being prudent.”
He said he favors “a couple more” 25 basis-point increases.
“We need to get above five — we’re really close to that right now — and then pause,” Harker said. “How much above five? We’ll see.”
Fed officials lifted their benchmark interest rate by a quarter percentage point to a range of 4.5% to 4.75% last week. The smaller move followed a half-point increase in December and four 75 basis-point hikes prior to that.
Officials in December forecast rates peaking at 5.1% this year, according to their median projection. They will update those estimates next month.
Federal Reserve Chair Jerome Powell said this week that further rate hikes would be needed to quash inflation. Investors have lifted where they see rates peaking this year and are now largely in line with policy makers’ projection following the much stronger-than-expected January employment report.
“We just can take our time. See how things work out again, if the inflation numbers continue in trajectory they’re on right now, which would be great,” Harker said.
US central bankers are battling to ease inflation to their 2% target — prices climbed 5% in the 12 months through December, according to the Fed’s preferred measure, the personal consumption expenditures index.
*India’s forex reserves falls after three weeks to $575.27 billion*
India’s foreign exchange reserves saw a drop after nearly three weeks, falling $1.5 billion to $575.27 billion in the week ended February 3.
The fall was the result of the decline in the Foreign Currency Assets (FCA), a major component of the overall reserves, the Reserve Bank of India’s weekly statistical supplement said on February 10.
The FCA fell $1.32 billion to $507.69 billion for the week ending February 3. Gold reserves were down $246 million to $43.78 billion.
In the previous three-week reporting period, the reserves had risen over $15 billion and touched a six-month high of $576.76 billion during the week ended January 27.
On February 10, the rupee ended at 82.50 against the US dollar.
The rupee has remained one of the least volatile currencies among its Asian peers in the calendar year 2022 and continued to be so in the new year as well, RBI Governor Shaktikanta Das said on February 8.
The depreciation and the volatility in the rupee during the current phase of multiple shocks was far lower than it was during the global financial crisis and the taper tantrum.
“In a fundamental sense, the movements of the rupee reflect the resilience of the Indian economy,” Das added.
India’s foreign exchange reserves saw a drop after nearly three weeks, falling $1.5 billion to $575.27 billion in the week ended February 3.
The fall was the result of the decline in the Foreign Currency Assets (FCA), a major component of the overall reserves, the Reserve Bank of India’s weekly statistical supplement said on February 10.
The FCA fell $1.32 billion to $507.69 billion for the week ending February 3. Gold reserves were down $246 million to $43.78 billion.
In the previous three-week reporting period, the reserves had risen over $15 billion and touched a six-month high of $576.76 billion during the week ended January 27.
On February 10, the rupee ended at 82.50 against the US dollar.
The rupee has remained one of the least volatile currencies among its Asian peers in the calendar year 2022 and continued to be so in the new year as well, RBI Governor Shaktikanta Das said on February 8.
The depreciation and the volatility in the rupee during the current phase of multiple shocks was far lower than it was during the global financial crisis and the taper tantrum.
“In a fundamental sense, the movements of the rupee reflect the resilience of the Indian economy,” Das added.
*India's IIP growth declines to 4.3% in December from 7.3% in November*
India's industrial growth, as per the Index of Industrial Production (IIP), declined to 4.3 percent in December 2022, data released on February 10 by the Ministry of Statistics and Programme Implementation, showed.
Industrial growth in December 2021 was 1 percent.
At 4.3 percent, the latest IIP growth figure is well below November's revised number of 7.3 percent.
The data further showed that the manufacturing sector's output grew by 2.6 percent in December 2022.
Electricity sector recorded the highest production in December, with a growth of 10.4 percent, followed by mining at 9.8 percent and manufacturing at 2.6 percent.
As per use-based classification, the indices stand at "144.8 for primary goods, 100 for capital goods, 151.3 for intermediate goods and 166.6 for infrastructure or construction goods" during December, the government data showed.
Further, the indices for consumer durables and consumer non-durables stand at 109.7 and 173.2 respectively for the month, it added.
For April-December 2022, the country's industrial output is up 5.4 percent on a year-on-year basis, down from 15.3 percent in the first eight months of FY22.
India's industrial growth, as per the Index of Industrial Production (IIP), declined to 4.3 percent in December 2022, data released on February 10 by the Ministry of Statistics and Programme Implementation, showed.
Industrial growth in December 2021 was 1 percent.
At 4.3 percent, the latest IIP growth figure is well below November's revised number of 7.3 percent.
The data further showed that the manufacturing sector's output grew by 2.6 percent in December 2022.
Electricity sector recorded the highest production in December, with a growth of 10.4 percent, followed by mining at 9.8 percent and manufacturing at 2.6 percent.
As per use-based classification, the indices stand at "144.8 for primary goods, 100 for capital goods, 151.3 for intermediate goods and 166.6 for infrastructure or construction goods" during December, the government data showed.
Further, the indices for consumer durables and consumer non-durables stand at 109.7 and 173.2 respectively for the month, it added.
For April-December 2022, the country's industrial output is up 5.4 percent on a year-on-year basis, down from 15.3 percent in the first eight months of FY22.