To drill or not to drill: evaluating exploration licenses off Canada’s east coast

The Canadian Environmental Assessment Agency (CEAA) is currently overseeing the federal environmental assessments of seven proposed exploration projects for the Newfoundland and Labrador offshore region (see table below). In addition, other exploration projects not included in this article have either already received environmental approval but have not yet been drilled, or they are still in the early stages of the …

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Diversification into low carbon raises questions about returns for oil and gas companies

Investments in the low-carbon segment among global integrated oil and gas companies have become increasingly material in recent years. In fact, IHS Markit currently forecasts nearly $7 billion in average annual spending in the low-carbon sector among this peer group between 2019 and 2021. This higher spending has led to questions about the profitability of investments in sectors outside of …

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Forecast dividend yield basket outperforms

Basket of US large caps selected using IHS Markit Dividend Forecasts data outperformed the US broad market from 2010 to date. Selecting stocks with high forecast dividend yields, using IHS Markit estimates, resulted in 20.9% outperformance compared to historical trailing yields. Back-testing results since 2010 indicate that the Dividend Forecast Yield basket (DFY Basket) rose 269.1% vs. 231.3% for the …

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Capital Markets Weekly: Worldline convertible bond sets new record for negative coupon

Negative-yielding debt A seven-year convertible bond for French company Worldline established a record negative return in the public bond markets. The EUR500 million deal offered a zero coupon and was priced at 107% to yield -0.96%, with a conversion premium of 60%, versus a indicated 55-60% range. Proceeds will repay a bridging facility. According to Reuters, by early July a …

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Markets should not be confused by the FOMC

Communication that followed yesterday’s decision by the FOMC to cut interest rates, announced via a statement that seemed to hint that future cuts were possible but not highly likely and followed by the Chairman’s press conference, seemed to catch markets off-guard and uncertain about the most likely course of Fed interest-rate policy over the next several FOMC meeting cycles. We …

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Caixin China PMI signals stabilisation in manufacturing, but no signs of recovery yet

Caixin China manufacturing PMI rises to 49.9 in July, up from 49.4 in June Rebound seen in both output and new orders Backlogs continues to rise as job losses increase Business confidence strengthens Caixin PMI data, compiled by IHS Markit, indicated that China’s manufacturing sector was close to stabilisation at the start of the third quarter. However, forward-looking data underscore …

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Assessing slack: How tight is the French labor market

Despite a still elevated unemployment rate, our analysis suggests that market conditions in France have become increasingly tight. We find the nominal wages are particularly sensitive to measures of labor market slack, such as the number of underemployed. However, we estimate that other factors, such as labor productivity, may have a larger role in determining wage dynamics and may help …

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Week Ahead Economic Preview: Week of 5 August 2019

Global services PMI for July, including IHS Markit and ISM US surveys UK GDP, German industrial updates Japan GDP, China inflation and trade Special reports on European growth forecasts and global manufacturing With central bankers around the world focusing on the extent to which global economic conditions might necessitate further stimulus, services PMIs will provide an important steer at the …

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UK PMI surveys point to stagnant economy at start of third quarter

All sector PMI rises to 50.3 but signals zero GDP growth after second quarter decline Modest service sector expansion masks steep falls in manufacturing and construction Business optimism slips lower Further job gains bode ill for productivity The PMI surveys indicated that the UK economy stagnated in July, steadying after a contraction in June, but still signalling one of the …

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IHS Markit US PMI hints at weak economic growth persisting into third quarter

Uplift in services PMI does little to change picture of lacklustre GDP growth at start of third quarter Manufacturing slowdown gathers pace Future business expectations hit new low The pace of US economic growth slowed in the second quarter, and PMI survey data hint that the expansion could remain relatively lacklustre in the third quarter.   An improvement in the …

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Crude Oil Trade: Saudi Arabia focusing on Chinese demand

It came as no surprise that Saudi Arabia’s oil revenue declined 5% year-on-year, as the OPEC+ production cut agreement has been shaping the country’s crude oil output. But meanwhile, officials have been increasing capital spending to support the struggling working classes and stimulate the sluggish domestic economy. This resulted in the budget deficit widening further, after reaching USD 8.9 billion …

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Non-damage business interruption

Terrorism activity has changed, with attacks typically causing no or little property damage but inflicting significant losses to civilians and businesses. In the aftermath of these incidents, small-and-medium sized businesses have suffered significant financial losses, either because the authorities have denied access to their premises or because customers visit less frequency due to the perception of risk associated with the …

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Security in Kashmir

On 5 August, India’s Home Minister Amit Shah introduced four bills in parliament’s upper house regarding Jammu and Kashmir (J&K) state, including legislation to abrogate Articles 35A and 370 of the Indian Constitution – which grant special autonomy to Indian Kashmir – and a bill to bifurcate the state, establishing it as a union territory. On 4 August, the Indian …

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Sustainability’s impact on the global soda ash market

The recent history of the soda ash market has been turbulent, with the market balance and prices across the world’s major soda ash producing and consuming regions being buffeted by a number of factors. One factor, which is beginning to have more of an impact on the soda ash market, is sustainability, and it is expected that its impact will …

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