Well, well, well.
Steel stocks have been obliterated. I’m sure it’s a temporary phenomenon. We can destroy China and be perfectly insulated from the whole ordeal, right?
Joined Nov 10, 2007
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..and copper, while maybe no longer a Dr, is threatening to fall into a hole.
watch this — there will be defaults soon by mid/end-summer and then default of sovereigns. The capital will start shifting from EU and Asia to US…this should boost equities and drive interest rates down at the same time. the unknown is what happens in Shanghai on Mar26th and forward with this petroyuan2gold oil futures trading.
https://tinyurl.com/yd7cvgbt
zh had a couple of good articles on libor/ois spread in last couple days.
Powell’s hiking of interests will attract global capital to US and the increased demand for TSY will exert downward pressure on int rates. This may be orderly. Or something breaks along the way and the deep states gets what it wants, …a bombed market blamed on Trump and leading to impeachment efforts.
a coal hole?
Perhaps this is the dip to buy – Solar stocks dropped before they popped. Most solars needed a quarter to work thru excess inventory that was dumped in anticipation of tariffs.
or perhaps some capex is needed to upgrade and expand facilities; thus, more debt will be taken on in spite of uncertainty of future profitability
They don’t need capaex to expand
From the Commerce Dept:
“3. Utilization Rates are Well Below Economically Viable Levels
Overall, steel mill production capacity utilization has declined from 87 percent n1998, to 81.4 percent in 2008, to 69.4 percent in 2016…The U.S. steel industry uses 80 percent as a benchmark for minimum operational efficiency.”
Jesus Christ.. You’re like our own personal Gartman.
At the lowes. Trade war and rising rates are a bitch.
Fly eating a sandwich again? I want some kneejerk hyperbole!
On Thursday, it was announced that in addition to Canada and Mexico, the European Union, Argentina, Brazil, South Korea and Australia would be exempt. They accounted for 64.5% of steel imports in 2017, which means the tariff would ahve appplied to 35.5% of impots.
Now you can imagine that the exempted countries will increase their share of imports, both through more of their own domestic production as well as pass-thru prodcuts from the non-exempted countries, so the amount of tariffed imports will probably be closer to 20-25%. So that means that a 25% tarrif on the non-exempt countries will amount to a net price increase of imported steel to about 5-6%: not that helpful to US steel manufacturers.
Also, as I previously noted (https://ibankcoin.com/flyblog/2018/03/07/wall-street-concludes-resignation-gary-cohn-net-positive-stocks/#comment-546469), the tariff was *actually* recommended by the Commerce Dept. in February which is when US Steel spiked up.