Selective US Stocks Analysis 

OPEC on Monday (Nov 14) cut its forecast for 2022 global oil demand growth for a fifth time since April and also trimmed next year’s figure, citing mounting economic challenges including high inflation and rising interest rates. Oil demand in 2022 will increase by 2.55 million barrels per day (bpd), or 2.6 per cent, the Organization of the Petroleum Exporting Countries (Opec) said in a monthly report, down 100,000 bpd from the previous forecast. This report is the last before Opec and its allies, together known as Opec+, meet on Dec 4 to set policy. The group, which recently cut production targets, will remain cautious, Saudi Arabia’s energy minister was quoted as saying last week. Next year, Opec expects oil demand to rise by 2.24 million bpd, also 100,000 bpd lower than previously forecast. Despite commenting on the rising challenges, Opec left its 2022 and 2023 global economic growth forecasts steady and said while risks were skewed to the downside, there was also upside potential. “This may come from a variety of sources. Predominantly, inflation could be positively impacted by any resolution of the geopolitical situation in Eastern Europe, allowing for less hawkish monetary policies,” Opec said. Oil maintained a decline after the report was released, trading around US$95 a barrel. For October, with oil prices weakening on recession fears, the group made a 100,000 bpd cut to the Opec+ production target, with an even bigger reduction starting in November.

Boeing Co got a glimmer of hope after US President Joe Biden and his Chinese counterpart Xi Jinping called for a cooling of tensions at a face-to-face meeting on Monday (Nov 14). After a three-hour meeting in Bali, Indonesia, Biden committed to send US Secretary of State Antony Blinken to China for a visit, and the countries pledged to continue talks on a range of issues. While aircraft sales didn’t come up as a topic, any improvement in relations is a welcome sign for Boeing. It has been three and a half years since a mainland Chinese airline took delivery of a Boeing 737 Max aircraft – a wait brought on by a pair of fatal crashes, a global pandemic and simmering tensions between the world’s two most powerful countries. China used to take a quarter of the cash-cow jets that the US planemaker built each year, and the beleaguered aerospace company could use a lift. Still, the first signs of a thaw this week could lead to upside for Boeing. The company isn’t counting on Chinese orders in its plan to restore cash flow, reduce its US$57 billion in debt and emerge from crises that wiped out US$150 billion in market value in the past three years. But they sure wouldn’t hurt. Boeing shares fell less than 1 per cent just before 10.30 am in New York following Biden’s meeting with Xi. The stock had declined 12 per cent so far this year through Friday’s close. Jetliners have been a barometer of US-China diplomacy since Richard Nixon first flew to Beijing on a Boeing 707 a half-century ago. Shock-and-awe aircraft orders have been a staple of head-of-state visits over the decades, underscoring China’s growing clout. In fact, Xi unveiled a splashy 300-jet deal worth US$38 billion with his first official tour of the US in 2015. American presidents get to use such orders as political wins, helping shore up the US trade deficit and create work for hundreds of thousands of people, between Boeing and its suppliers. China is one of the last nations that hasn’t returned the workhorse 737 Max to commercial service following two fatal crashes in 2018 and 2019. That milestone has slipped repeatedly amid Covid flare-ups and lockdowns. It is a big reason why Boeing twice pared its annual target for 737 deliveries this year to 375 planes, after initially aiming to hand over nearly 500 aircraft.

The world’s biggest cryptocurrency platform Binance on Monday pledged to establish a liquidity fund to curb sector fallout from the collapse of rival FTX, boosting the value of bitcoin. Cash-strapped FTX filed for bankruptcy Friday (Nov 11) after Binance scrapped a takeover bid, sending chills across the cryptocurrency world. “To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis,” Binance chief executive Changpeng Zhao said on Twitter. He said further details would appear soon. Bitcoin climbed 2.5 per cent to US$16,773 in reaction. The world’s most popular digital currency last week tumbled to a two-year low at US$15,574 as speculation grew over the health of FTX. Bitcoin remains 20 per cent lower than it was on Nov 6, when FTX’s troubles began to weigh on markets. As recently as 10 days ago, FTX was considered the world’s second-largest cryptocurrency platform with a valuation of US$32 billion. “FTX held US$900 million in liquid assets the day before it went down, compared to US$9 billion in liabilities,” said SwissQuote analyst Ipek Ozkardeskaya. “This is something that could’ve never happened in a traditional, regulated financial institute.” FTX is headquartered in the Bahamas, a tax haven with looser regulation than most other jurisdictions. Police there have said they are investigating the company. On the same day that FTX filed Chapter 11 bankruptcy proceedings in the United States, its high-profile founder and chief executive Sam Bankman-Fried resigned.