Thursday, August 18, 2016

"Slipping Up? Stocks Edge Higher as Oil Soars"

From Barron's Stocks to Watch:
The market managed to squeak out a gain today as oil entered a bull market less than three weeks after having entered a bear market.

The S&P 500 advanced 0.2% to 2,187.02, while the Dow Jones Industrial Average advanced 23.76 points, or 0.1%, to 18,597.70. The Nasdaq Composite rose 0.2% to 5,240.15.
WTI crude oil, the U.S. benchmark, rose 3.1% to $48.22 a barrel, helping spur the energy sector to a 1.8% gain today. RBC’s Helima Croft and team explain why oil prices are rising:
Oil prices have been propelled higher by Saudi Arabia’s apparent willingness to join September’s OPEC discussions about possible market stabilization measures. While the planned Aramco IPO has been cited as one factor for the renewed interest in cartel cooperation, the Kingdom’s upcoming bond issuance (and desire to keep borrowing costs contained) may be another key consideration. Saudi Arabia is expected to debut $15bln in bonds in the coming weeks to help alleviate the drawdown on its FX reserves. In May, Saudi secured a five-year $10bln loan from a consortium of banks, its first foray into international borrowing since 1991. According to MEES, it has been a record year for GCC borrowing, with $34bln of debt issuance in H1 2016 and an additional $30bln anticipated in H2. The run-up to $50/bbl earlier this year helped Qatar avoid a sovereign credit downgrade in advance of its $9bln issuance in May....

This is a melt-up: