WSJ Asked Adam About Commodities

India, Buried in Sugar, Tries to Dig Out

Government price controls have created an unsustainable glut, with 13 million tons stockpiled

RAJPURA, India—The Indian government’s price controls have created an unsustainable sugar glut, and now New Delhi wants to dump it on the already struggling world market for the commodity.

India is the world’s second-largest producer and biggest consumer of sugar. Thanks to strict controls of imports, exports and prices, the country generally produces all it needs.

In a holdout from an era of central planning, New Delhi sets the minimum price for cane, and to keep sugar-cane farmers sweet with the government, it keeps raising that price. But end-user sugar prices are free to fluctuate and currently are so low that refiners say they lose money on every teaspoon they sell.

“Stocks get added every year, but there are not as many takers,” said refiner Amit Agarwal, who runs sales operations in a sugar mill in the northern state of Uttar Pradesh. Pointing to a warehouse packed with 77,500 metric tons of sugar he can’t sell, Mr. Agarwal said his mill is under pressure to pay farmers on time. “But where is the money to pay them?” he said.

Refiners are required to buy everything the cane farmers bring them at a government-set price. But because they only have to pay the farmers after they sell it, they are hoarding the sugar and waiting for a better price—or better incentives.

The result: piles and piles of sugar, in warehouses all over India. Mr. Agarwal’s five warehouses all have sugar bags piled 34 feet high. At last count, in late May, Indian refiners had a stockpile of 13 million tons of sugar—more than all the sugar consumed in the U.S. last year.

India’s sugar output is expected to rise to 31.5 million tons in the 12 months that began on Oct. 1, exceeding the annual demand by 6.5 million tons, according to latest estimate by the Indian Sugar Mills Association, a New Delhi-based industry group.

India’s roughly 50 million sugar-cane farmers say they deserve a living wage for their hard work, and acknowledge that government guarantees have improved their lives. But they are desperate to get paid.

“We invest our entire earnings in the crop. If we don’t get paid on time, how will we eat?” said Bansi, a farmer in Rajpura who goes by one name and owns a 6-acre plot. He says the mills owe him 150,000 rupees ($2,213).

New Delhi is pressuring the refiners to sell so they have the cash to pay off the cane farmers and is even offering refiners an extra incentive to export their extra sweetener.

The government wants to placate farmers since they are a large and politically influential lobby, forming a huge voting bloc. With national elections due next year, the government is trying to court the cane farmers and secure their votes.

India hopes to get rid of around 2.5 million tons of its excess sugar on the international market. While refiners lose money on the global market just as they do at home, the government is creating incentives, such as the elimination of sugar export taxes, to help them offset more of their losses through exports. In March, the Indian government discarded a 20% export duty, hoping mills would sell excess supplies in the overseas markets.

New Delhi is also working to subsidize a part of cane payments made by mills to farmers. Earlier this month, India’s cabinet permitted a payment of 5.5 rupees a kilogram of sugar to be paid directly to the farmers on behalf of the mills. New Delhi is also considering building a buffer stockpile of three million tons to help lift domestic prices, which it hopes will in turn get the refiners to sell and pay what they owe to cane growers.

Refiners say these measures don’t go far enough. “If the government wants to keep the mills alive and running, it should stop raising the cane price. That is the only solution,” Mr. Agarwal said.

As new cane starts coming in for the next harvesting season beginning in October, Mr. Agarwal plans for his mill to either sell sugar on the local market at lower prices or keep stocks until next season.

Sugar traders are watching India’s plans closely.

Appeasing the huge bloc of restive cane farmers remains a major concern for Prime Minister Narendra Modi’s Bharatiya Janata Party as the country goes to the polls next year, analysts say. Simply because there are so many of them, cane farmers’ support is crucial for political parties to gain power in state and national elections.

But the world’s sugar market is already hurting. A global glut has pushed sugar prices close to a three-year low, amounting to a big kick in the gut for countries like Brazil and Thailand that depend on export revenues.

Adam Sarhan, chief executive of Orlando, Fla.-based investment firm 50 Park Investments, said he has been betting on lower sugar prices since early 2017. He and others are unlikely to change that view while India sits on its surplus, he said.

“The surplus continues to grow like The Blob,” Tobin Gorey, an agricultural commodity strategist at Commonwealth Bank of Australia , said of India’s sugar supplies. “Larger every time you look.”

With a possible trade war brewing, any blatant dumping of sugar could trigger a backlash, with politicians around the world particularly sensitive to unfair trade and more likely to react.

If India floods the market with its sugar surplus, other producing countries like Brazil, Thailand and Australia would “worry about losing money and complain to the WTO,” said Michael McDougall, a New York-based commodities analyst at ED&F Man Capital Markets Ltd., a financial-brokerage firm.

“The WTO really can’t send police and stop them from exporting sugar. But in the long-term, India might have trade-support issues with the WTO,” Mr. McDougall said.

Link:

https://www.wsj.com/articles/india-buried-in-sugar-tries-to-dig-out-1527591604

Reuters Asked Adam About The Stock Market

Stocks Opened Lower As China Retaliates

9:45am

* Indexes open down: Dow 1.02 pct, S&P 0.71 pct, Nasdaq 0.81 pct

* S&P opens below 200-day moving avg; Nasdaq in red for the year

* Industrials hit: Boeing down 4 pct; Caterpillar down 3 pct

* FAANG stocks down 0.3 to 2.9 pct; Chipmakers also drop (Updates prices, adds more comment)

By Sruthi Shankar

April 4 (Reuters) – The Dow Jones Industrial Average dropped just over 1 percent on Wednesday as big U.S. manufacturers and chipmakers bore the brunt of a deepening trade conflict between China and the United States.

Boeing and Caterpillar led the slide as a raft of major U.S. firms saw millions knocked off share values by the announcement of tariffs on $50 billion worth of the goods exchanged daily between the world’s two largest economies.

President Donald Trump’s claim on Twitter that the two countries were not in a trade war did little to cool fears that have been building since the White House launched new charges on steel and aluminum a month ago.

The S&P 500 opened below its 200-day moving average, a key technical level, and the Dow lost as much as 510 points before recovering some ground to stand 250 points lower at .

“The level of uncertainty has definitely surged,” said Adam Sarhan, Chief Executive of 50 Park Investments in New York. “When you see China retaliate stronger than the U.S. that’s a very strong signal that they mean business.”

At 10:48 a.m. ET, the Dow was down 1.02 percent at 23,787.67. The S&P 500 fell 0.71 percent to 2,595.96 and the Nasdaq Composite dropped 0.81 percent at 6,885.06.

The declines were broad based, with 23 of the Dow’s 30 components lower. The industrials index’s 1.4 percent slide was the most among the 11 major S&P sectors, as has been the case since the trade war fears surfaced.

While Washington’s list covered many obscure industrial items, Beijing’s covers 106 key U.S. imports including soybeans, planes, cars, and chemicals.

Shares of Boeing, the single largest U.S. exporter to China, tumbled 3.8 percent. Caterpillar fell 3 percent.

Ford, General Motors and Fiat Chrysler fell between 0.2 percent and 0.8 percent as investors weighed the competing impacts on their global operations and production.

While manufacturers were the bigger losers as a group, the technology sector’s 1.3 percent drop weighed the most on the market.

Major tech names Apple and the FANG group – Facebook, Amazon, Netflix and Alphabet were down between 0.3 percent and 2.9 percent.

Chipmakers, many of which have the highest revenue exposure to China among S&P 500 companies, also fell. 28 of the 30 constituents of the Philadelphia semiconductor index were lower.

“As a sector, technology has the most to lose from a world in which global trade is restricted and of course, some of the subjects of the tariffs, will also be hit,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

Among the few bright spots was housebuilder Lennar, whose shares jumped 6.8 percent after it reported quarterly revenue that beat estimates as it sold more homes at higher prices. (Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D’Souza and Patrick Graham)

Link:

https://www.reuters.com/article/usa-stocks/us-stocks-dow-falls-1-pct-as-china-u-s-trade-spat-intensifies-idUSL4N1RH4M4

CNBC Asked Adam About The Stock Market

Nasdaq falls for second day as tech struggles to rebound

  • Amazon and Apple helped push the Nasdaq lower.
  • Apple declined nearly 2 percent at its lows after analysts at Goldman Sachs predicted lower iPhone sales in March and for the June quarter than the rest of the Street.
  • Amazon fell as much as 7.4 percent after Axios reported that President Donald Trump was “obsessed” with the company.
  • “Big Tech is no longer a sleek, elegant black box; it is a jumble of wires that requires the constant intervention of an increasing number of humans to keep it on the rails,” says Nicholas Colas of DataTrek Research.

U.S. stocks alternated between gains and losses on Wednesday as tech struggled to bounce back from steep losses seen in the previous session.

The Nasdaq composite pulled back 0.7 percent, after briefly trading higher, as Apple slipped 0.8 percent and Amazon dropped 4.5 percent. The S&P 500 fell 0.1 percent, with technology declining 0.5 percent. It traded higher earlier on Wednesday.

The Dow Jones industrial average traded 27 points higher after falling more than 100 points. The 30-stock index also rose more than 200 points earlier in the session.

Amazon fell as much as 7.4 percent after Axios reported that President Donald Trump was “obsessed” with the company. The report also said Trump wants to “go after” Amazon. Amazon’s stock traded 3 percent lower in afternoon trade.

Apple declined nearly 2 percent at its lows after Goldman Sachs analysts predicted lower iPhone sales in March and for the June quarter than the rest of the Street. They also cut their price target on the stock to $159 from $161.

The Technology Select Sector SPDR fund (XLK) briefly entered into correction territory on Wednesday.

“Tech is driving the news today,” said Adam Sarhan, CEO of 50 Park Investments. “What you’re seeing is a rotation out of tech and into some of the more fairly and under-valued areas of the market.”

Tech fell 3.5 percent on Tuesday, marking its biggest one-day decline since Feb. 8. The move lower in tech sent ripples through the entire stock market as the major averages fell more than 1 percent. The drop in the sector took place after Reuters reported Nvidia is temporarily suspending self-driving tests.

The selling was exacerbated by further pressure on Facebook shares. Reports emerged last week alleging that Cambridge Analytica, an analytics company, had gathered data from 50 million Facebook profiles without users’ permission. CNN reported Tuesday that Facebook CEO Mark Zuckerberg will testify in front of Congress on the Cambridge Analytica leak.

“Big Tech is no longer a sleek, elegant black box; it is a jumble of wires that requires the constant intervention of an increasing number of humans to keep it on the rails,” Nicholas Colas, co-founder of DataTrek Research, said in a note. “In short, the bloom is off the tech rose.”

Investors also flocked to traditionally safer assets like bonds, pushing the 10-year Treasury yield below 2.8 percent. On Wednesday, the yield hit its lowest level in seven weeks.

Meantime, investors around the world have been keeping a close eye on global trade issues, debating what economic implications there could be if a trade war occurred between China and the U.S. This comes after Trump signed an executive memorandum that would inflict tariffs on Chinese imports — of up to $60 billion, prompting the Asian nation to retaliate.

In economic news, the U.S. economy grew by 2.9 percent in the fourth quarter, according to the final read on the U.S. economy for the period.

Link:

https://www.cnbc.com/2018/03/28/us-stock-futures-dow-data-tech-and-politics-on-the-agenda.html

CNBC Asked Adam About The Stock Market

U.S. stocks closed well off session lows on Friday, helped by a sharp rise in health care shares.
The S&P 500 ended 0.5 percent higher at 2,691.25 after falling more than 1 percent. Health care sector was the best-performing sector, gaining 1 percent. Shares of Universal Health Services and Perrigo were among the best-performers in the index.
The Nasdaq composite rose 1.1 percent to 7,257.87 as the iShares Nasdaq Biotechnology ETF (IBB) advanced 2.4 percent. At its low, the Nasdaq fell as much as 1.3 percent.
The Dow Jones industrial average closed 70.92 points lower at 24,538.06 after falling as much as 391 points. Johnson & Johnson and Merck were among one of the best-performing stocks in the index, rising 1.2 percent each.
“When there’s an opportunity to buy on the dip, people are taking it,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. “Economically, you’re healthy … and earnings continue to be strong.”
But despite trading off their lows, the major averages posted a weekly loss for the first time in three weeks. For the week, the Dow, S&P 500 and Nasdaq fell 3.1 percent, 2 percent and 1.1 percent respectively.

“We saw no volatility for 18 months until the first week of February,” said Rich Guerrini, CEO of PNC Investments. “We were all sort of numb to it. All of the sudden, we have to get used to volatility again.”
Stocks traded sharply lower earlier in the session on fears that President Donald Trump’s announced tariffs on steel and aluminum could spark a trade war. Domestically-oriented companies in industries like health care would be among the least affected by a trade war.
Trump made the announcement on Thursday, saying the U.S. will implement a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports next week. The news sent stocks reeling, with the Dow closing 420 points lower, while the S&P 500 and Nasdaq dropped more than 1 percent. It also raised concern that other countries may implement retaliatory tariffs on U.S. exports.
“The tariff announcement that was made is being considered to be a lot more serious than people were expecting,” said Tom Martin, senior portfolio manager at Globalt. “Many people thought this would be more targeted. Instead, it’s like hitting something with a blunt instrument.”
Shares of steel and aluminum users like General Motors and Boeing fell 1 percent and 1.4 percent on Friday, extending Thursday’s losses of 4 percent and 3.5 percent, respectively. Harley-Davidson also slipped 2 percent. Meanwhile, U.S. Steel fell 1.4 percent after posting strong gains in the previous session.
“Clearly, the environment has changed dramatically since the beginning of the year,” said Adam Sarhan, CEO of 50 Park Investments. “Fundamentally, you have more bearish dominoes falling.”
The tariffs announcement was widely condemned, including by European Commission President Jean-Claude Juncker, who said it “can only aggravate matters.” Consequently, markets overseas fell sharply on Friday. The German Dax dropped 2.3 percent, while the Stoxx 600 index— which tracks a broad swath of European stocks — pulled back 2.1 percent.
But Trump stuck to his guns on Friday, tweeting: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”
In corporate news, Foot Locker shares dropped 12.7 percent after the company reported a bigger-than-expected decline in same-store sales for the previous quarter. Foot Locker’s same-store sales fell 3.7 percent, while analysts polled by Reuters expected a decrease of 2.5 percent.
Meanwhile, J.C. Penney’s stock fell 5.4 percent after reporting weaker-than-expected revenue and same-store sales.
Link: https://www.cnbc.com/2018/03/02/us-stock-futures-dow-data-earnings-fed-and-politics-on-the-agenda.html

FoxBusiness: Coffee, Cocoa, Orange Juice Futures Rally on Demand Hopes

Coffee, Cocoa, Orange Juice Futures Rally on Demand Hopes

By Amrith Ramkumar 
Several soft commodities rallied with energy products and metals Monday as the dollar fell following the International Monetary Fund’s upward revision to its global growth forecasts for 2018 and 2019.
Arabica coffee for March delivery climbed 1.1% to $1.2255 a pound on the ICE Futures U.S. exchange. Meantime, March cocoa added 0.4% to $1,938 a ton, paring gains after rising as high as $1,975 in the session. Frozen concentrated orange juice for March also posted gains, closing up 1.3% at $1.4845 a pound.
The IMF said the global economy will gain momentum, driven in large part by recently approved U.S. tax-code changes.
Although analysts say several soft commodity markets are well supplied, Adam Sarhan, chief executive of 50 Park Investments, said he expects demand to grow as the global economy strengthens, supporting prices.
“The tax cuts have big implications,” he says. “That helps demand, both domestic and international.
“Commodities as an entire asset class are deeply undervalued” following a yearslong downturn in prices, especially relative to stocks, he added.
The greenback’s fall has been another factor boosting dollar-denominated commodities recently by making them cheaper for overseas buyers. On Monday, the WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, fell 0.2% following a sixth consecutive week of losses.
Some analysts have said investors covering short positions have also led to sporadic gains in the sector this year.
In other markets, March raw sugar pared earlier gains and closed down 0.6% at 13.17 cents a pound and March cotton inched down less than 0.1% to 83.41 cents a pound.

Link:
http://www.foxbusiness.com/features/2018/01/22/coffee-cocoa-orange-juice-futures-rally-on-demand-hopes.html

CNBC Asked Adam About The Stock Market

Dow jumps 250 points, breaks above 26,000 once again

  • The S&P 500 gained 0.8 percent, with staples and tech as the best-performing sectors.
  • Bank of America reported adjusted quarterly earnings that surpassed analyst estimates.
  • Earnings season is off to a strong start thus far.

Jan 17, 2018

Stocks traded higher on Wednesday following the release of stronger-than-expected quarterly results from some of the biggest U.S. companies.
The Dow Jones industrial average rose 219 points, breaking above 26,000 once again. The index first broke above the milestone mark on Tuesday, but failed to close above it.
The S&P 500 gained 0.8 percent, with staples and tech rising more than 1 percent. The Nasdaq composite rose 0.8 percent.
Bank of America reported adjusted quarterly earnings that surpassed analyst estimates. U.S. Bancorp also posted better-than-expected results.
Earnings season is off to a strong start thus far. Of the S&P 500 companies that had reported as of Wednesday, 78 percent have surpassed earnings-per-share estimates while 89 percent have beaten expectations on the top line, according to Nick Raich, CEO of The Earnings Scout.
“You’ve got a bullish start to the earnings season and earnings are expected to be strong for 2018,” said Adam Sarhan, CEO of 50 Park Investments. He added: “The very strong underlying trend for the market remains in place.”
Equities closed lower on Tuesday after a sharp reversal from record levels. The Dow closed 10 points lower after rising as much as 283 points and breaking above 26,000 for the first time.
The reversal took place as concerns of a government shutdown loomed over investors’ minds. Congress needs to pass a spending bill by the end of Friday to avoid a government shutdown.
Robert Pavlik, chief investment strategist at SlateStone Wealth, said there were concerns in the market that stocks had risen too much too quickly. “The government shutdown played right into that,” he said. “I think the pullback was cooler heads prevailing. I don’t want people chasing the market and pushing it higher for no reason.”
Overseas, European stocks fell slightly, with the Stoxx 600 slipping 0.1 percent. In Asia, the Nikkei 225 fell 0.4 percent.
Elsewhere, shares of Juno Therapeutics spiked 48 percent higher after The Wall Street Journal reported the company was in talks to be acquired by Celgene.

Link: https://www.cnbc.com/2018/01/17/us-stocks-dow-earnings-bank-of-america.html

CNBC Asks Adam About The Stock Market

Dow, S&P 500 and Nasdaq hit record highs; chip stocks rise

  • The Nasdaq composite jumped 0.6 percent to a record, with Advanced Micro Devices surging more than 6 percent; the Dow and S&P 500 also hit record highs.
  • Investors largely shrugged off a tweet from President Donald Trump about North Korea’s Kim Jong-Un.

Wednesday, January 3, 2018
U.S. stocks rose to all-time highs Wednesday as a gain in chip stocks propelled the tech sector higher. The Nasdaq composite jumped 0.6 percent, with Advanced Micro Devices surging more than 6 percent. The Register reported there is a security flaw with Intel processors. The report said the issue will require a significant security update of Linux and Microsoft Windows operating systems to work around it. AMD shares jumped on the back of the report. Nvidia’s stock climbed 5.2 percent, following AMD’s gains. Intel shares, meanwhile, declined more than 2 percent.
“The 2017 trends are continuing in 2018,” said Adam Sarhan, CEO of 50 Park Investments. “You’re seeing a lot of money flowing back into the semiconductors” after some profit-taking at the end of last year. The VanEck Vectors Semiconductor exchange-traded fund (SMH) easily outperformed the broader market last year. It rose 36.5 percent while the S&P 500 gained 19.4 percent.
The S&P 500 also posted an all-time high, advancing 0.4 percent with tech rising 0.9 percent. The index also broke above 2,700 for the first time. The Dow Jones industrial average traded 52 points higher to hit a record.
Investors largely shrugged off a tweet from President Donald Trump about North Korea’s Kim Jong-Un. Trump tweeted on Tuesday that his “nuclear button” was “much bigger and more powerful” than the one controlled by the North Korean leader.

“The market has sort of priced in this kind of banter,” said Jeff Zipper, managing director of investments at U.S. Bank Private Wealth Management. He also noted investors may be numb to these tweets “because they’ve become somewhat daily.”
In economic news, the ISM manufacturing index hit 59.7 percent in December, while construction spending rose 0.8 percent in November. The Atlanta Federal Reserve raised its fourth-quarter real GDP forecast to 3.2 percent from 2.8 percent, citing the strong ISM number.
The Federal Reserve is also scheduled to release a summary of its December meeting at 2 p.m. ET.
In corporate news, Scana shares popped 23 percent after Dominion Energy announced it was buying the South Carolina-based utility company for $7.9 billion.
Link: https://www.cnbc.com/2018/01/03/us-stocks-amd-intel-trump-fed.html
 

Adam Discusses China's Housing Market – Dec 2017


Link: https://www.youtube.com/watch?v=Jx8ZaxraN7c

CNBC Asks Adam About The Market

Tech stocks rise as rest of market trades little changed

  • Tech stocks were on track Wednesday to post consecutive gains after being pressured over the past week.
  • Investors also kept an eye on Washington as they awaited new details on Congress negotiations to overhaul the U.S. tax code.

Tuesday, December, 6 2017

Tech stocks rose on the back of gains in Facebook. The rest of the market took a pause as investors awaited more details on what the final tax overhaul from Congress will look like
The Nasdaq composite rose 0.3 percent as Facebook share gained nearly 2 percent. Evercore ISI initiated Facebook with an outperform rating. Analyst Anthony DiClemente said Facebook will lead the “FANG” stocks higher in 2018.
The S&P 500 traded just 0.1 percent higher, as information technology rose 0.9 percent.Tech stocks were on track Wednesday to post consecutive gains after being pressured over the past week.
The Dow Jones industrial average gained just 7 points, with Microsoft rising 1.5 percent to lead advancers.
Investors also kept an eye on Washington as they awaited new details on Congress negotiations to overhaul the U.S. tax code. The GOP-led Congress passed a bill on Saturday that increased the chances of the overhaul —which would significantly lower corporate taxed — taking place this year.
But the Senate’s bill is different than another one passed by the House. Now both chambers have to work on and pass a new bill before sending it to the White House.
Traders work on the floor of the New York Stock Exchange.

Getty Images
Traders work on the floor of the New York Stock Exchange.
Expectations of tax reform have been a boon for U.S. stocks all year, helping then surge to record highs. But the rip-roaring rally has slowed down recently. The S&P 500 and Nasdaq completed a first three-day losing streak on Tuesday, their first since August.
“You definitely have a market that’s taking a pause,” said Art Hogan, chief market strategist at B. Riley FBR. “I think it’s really about how quickly we’ve rotated into the pro-tax reform sectors.”
Financials, one of the sectors that would theoretically benefit greatly from lower corporate taxes, have been on a tear recently. The sector is up nearly 2 percent over the past week. Tech, meanwhile, is down more than 1 percent in the same time period.
Komal Sri-Kumar, president of Sri-Kumar Global Strategies, said the market is taking a pause as it’s “not clear that the tax changes that the Senate approved during the early hours of Saturday are going to be as stimulative as the markets first thought.”
U.S. equities kicked off the session trading lower as overseas stocks declined. Asian stocks fell broadly, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng index both pulling 2 percent. The Shanghai composite also fell 0.3 percent.
In Europe, equities also declined. The German Dax dropped 0.4 percent while the Stoxx 600 index slipped 0.1 percent.
“We’re seeing some end-of-year jitters and we’re now taking some profits,” said Adam Sarhan, CEO of 50 Park Investments.
In corporate news, drone maker AeroVironment shares hit an all-time high after the company posted strong quarterly sales.
Meanwhile, OSI Systems plunged 30 percent after famed short seller Carson Block called the company “rotten to the core.”

 
Link:
https://www.cnbc.com/2017/12/06/us-stocks-global-markets-tax-reform.html