Venezuelan oil to the rescue?

00:00:00: Oil remains the key driver across global markets.

00:00:03: Crude prices eased yesterday as US unveiled plans to double Venezuelan production, but obviously additional Venezuelans barrels won't replace disrupted Middle East supply overnight.

00:00:16: Meanwhile elevated energy prices are keeping inflation expectations and rate hike bets alive across major central banks.

00:00:24: Now on a brighter note though for investors, software u.s jobs data this week could eventually offer some relief to investors by cooling the federal reserve rate hike expectations and bond yields as a result especially if oil prices stabilize.

00:00:40: so you are watching swiss coast daily market talk right now.

00:00:44: it is thursday Third of September, I'm Ipekos Kardashian and everything i will say here is based on my own opinion and analysis.

00:00:52: And this not financial advice.

00:01:02: So oil prices continue driving price action across global financial markets, this time giving some relief as U.S.

00:01:10: crude is one point forty percent.

00:01:12: yesterday in the US session after hitting highest levels and more than a month earlier maybe on news that Venezuela under the US lead will be doubling its oil production within years As many companies are now preparing to sign a series of deals according to Bloomberg News to extract their oil.

00:01:35: Among them, Chevron promised to invest up to seven billion US dollars within five years to double its own production.

00:01:41: Now broadly, Venezuela currently produces around one point one to one-point two million barrels of crude per day and exported roughly one point seventeen million barrels per day in the month of August.

00:01:54: Double that!

00:01:54: Venezuela would eventually bring more than one million barrels for a day additional crude oil to the market And this could be yes bearish for the market pricing.

00:02:05: So yes This extra Venezuelan supply story is potentially bearish For oil in the longer run, but the latter is much less straightforward than Venezuela.

00:02:15: doubles production which will equal to another one point two million barrels per day of crude hitting their market.

00:02:22: To replace that Middle Eastern oil for example because first extra-production would be less then one percent off the global oil demand versus twenty plus something percent that transited through the straight up homeless before the war started in Iran.

00:02:36: On that, by the way, Besson said earlier this week that The Strait of Hormuz will be nothing but a worthless piece of water in two years.

00:02:45: He said words pronounced just few hours before the Venezuelan deals news hit market.

00:02:51: Here he was rather referring to idea that seventy percent oil that transited the strait of hormuz and oil tankers so far could flow through pipelines instead.

00:03:01: I'm not starting to war with the view much better.

00:03:03: But anyway, then... Much of Venezuela's crude oil is very heavy and very sour.

00:03:08: unlike their lighter barrels produced by many Middle Eastern producers Venezuelan Oil requires dealings To transport it And sophisticated refiners The process.

00:03:18: Therefore additional Venezuelian production could certainly put downward pressure on global oil prices AND more specifically On competing heavy crude grays.

00:03:27: But it cannot and will not substitute for disrupted Middle Eastern supply, especially not in the short run.

00:03:35: Yes!

00:03:35: The bigger picture tells that US is putting today all its way to bring these energy prices lower.

00:03:42: A cheaper energy was Donald Trump's dream, right?

00:03:45: Drill baby drill remember.

00:03:47: But these plans the Venezuelan oil or the pipelines in the Middle East are medium-term plants.

00:03:53: they won't replace disrupted gold barrels today as I said and They want poor cold water on heat inflation expectations In the short run.

00:04:01: so that ultimately means that we will be facing rate hikes in The coming weeks.

00:04:06: whatever the US decides to do it is oil strategy.

00:04:09: We'll be facing a rate hike from your European Central Bank with new certainty in September, after inflation spiked past the three percent level of August.

00:04:19: We will be facing rate hike from the bank of Japan.

00:04:21: The BOJ board member Takata suggested this week that the pace off rate hikes should be assessed at every meeting rather than assuming tightening will continue at roughly twice a year paced scene so far and also brought up possibility of consecutive rates hikes.

00:04:40: bet that the BOJ could potentially announce a jumbo rate hike to stop bleeding in the Japanese Yen.

00:04:47: The dollar yen on the other hand, tanked below the one hundred fifty-eight level leaving investors guessing whether it was Takata's words or Then, we're also facing a possible rate hike from the Reserve Bank of Australia.

00:05:01: Mark is now seeing September rate hike as increasingly likely and may be one from the Bank Of England though the Brits could bypass September meeting until November when it will have budget news and fiscal inflation implications in hand.

00:05:17: And finally, of course The Fed –the most important one that shakes global risk pricing at that matters for everyone.

00:05:26: activity on Fed Fund's futures today, assesses about two chances out of three for a twenty-five basis point rate hike in September from the FOMC.

00:05:35: Now we talk about how Kevin Walsh could be handcuffed and not able to act before the midterm elections in the US.

00:05:42: But if energy prices keep pushing inflation higher, he won't have a choice unless he sets the bond markets on fire.

00:05:50: as such The common denominator of all these monetary policy expectations is crude oil prices.

00:05:56: You can see that retreating crude oil price yesterday softened central bank's expectation a little bit, pull global yields lower and the US dollar lower as well.

00:06:05: The latter helped limit the major equity in the sea selloff.

00:06:08: This MP-Five hundred even eked out a point forty six percent gain at end of session while Nasdaq hundred index added some point twenty three percent.

00:06:18: now hope here is that must off to hockey.

00:06:21: central bank expectations are already baked in the market pricing, meaning that if prices remain in check or better.

00:06:29: If they soften further on funded comments from US officials are just enough to do their job while we can see appetite for equity indices return.

00:06:39: After all, the S&P five hundred just came out of an earnings season where eight out of these eleven sectors printed double-digit earnings growth.

00:06:49: Interestingly though we always say that stock markets are not representative off underlying economies because economic data isn't as shiny.

00:06:57: ISM numbers from the US for example showed earlier this week that manufacturing activity slowed in the month of August but price pressures haven't The JOL status suggested July but slower than Pennsylvania.

00:07:11: And finally, yesterday's ADP report came in softer then expected saying that the US economy added around thirty eight thousand new non-farm jobs last month and The latter certainly also helped pulling the US two-year yield lower along with falling career prices.

00:07:30: because when Kevin Walsh told at the Jackson Hole meeting last Friday, he pointed out resilient U.S growth and some established jobs market in the US.

00:07:40: So if the US job markets starts looking weaker from here, the Fed must readjust its monetary policies since by softening a stone And the latter would mean lesser and smaller rate hikes Hopefully lower borrowing costs as well across the yield curve because slower jobs grounds should also tame inflation expectations, and that could throw a floor under any equity sell-off.

00:08:03: And would be positive for equity appetite!

00:08:06: So this week I certainly believe bad news from The Jobs Stator could eco as good news across to financial markets especially for risk appetite.

00:08:14: but for the magic to operate we need prices to remain in check.

00:08:19: On the individual front, Dell announced better than expected earnings after Tuesday's closing bell, sending the stock price more.

00:08:33: The company did better than expectations on both earnings and revenue, printed a two hundred twenty-one percent surge in AI chip sales.

00:08:42: But it gave us slightly slower guidance for the current quarter.

00:08:46: that took some shine off the table and resulted in a post hours loss of more then one per cent.

00:08:51: European and US futures are timidly in the positive at the time I'm talking here this morning all eyes our own oil prices as investors await tomorrow's U?

00:09:01: S jobs data.

00:09:02: So this is all for today.

00:09:04: I'm Ipek Oskar Deshkaya and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

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00:09:41: So I will meet again tomorrow.

00:09:43: Until then Good day trading.

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