US crude to $100pb?

US indices continue flirting with all-time high levels following a surprise NFP read, the approval of Biden’s $550 billion spending bill and the discovery of an oral Covid treatment from Pfizer. 

But inflation worries come to overshadow the Monday optimism in the run up to the most recent Chinese and US inflation data release due Wednesday, which should reveal a further rise in producer and consumer prices. 

On the corporate end, the biggest news was of course Tesla, which tanked 5% yesterday, on speculation that Elon Musk would sell 10% of his Tesla stock following a positive answer to his Twitter poll, asking his followers whether he should sell stake to pay taxes. But this week’s Rivian IPO will certainly be a more critical test for Tesla, as the company is seen as the most serious competitor to Tesla in the EV race.  

Rivian boost its IPO price target to $72 – 74 a share, which would give it some $65 billion valuation and the company could raise near $10 billion at its market debut. And I believe that there is even more upside potential to that IPO for two reasons. First, a couple of months ago, there were rumours running that the Rivian IPO would be valued at something near $80 billion, and second, people love new tech IPOs and are looking for crazy market bids, and Rivian could be an excellent target for those looking for some good intraday potential, a super rally, and the possibility of rapid gains.  

If everything goes according to the plan, Rivian will carve itself a good place within the car industry. With a $60-65 billion valuation, the company will be worth more than Honda and Ferrari, and way more compared to EV start-ups like Canoo ($2 billion market cap), Lordstown Motors (less than $1 billion valuation) or Nikola Corporation ($5 billion in market cap). 

Else, the big mover of the after-hours trading was Roblox yesterday, which saw its share price soar more than 30% after it announced its revenue doubled in the third quarter. People spent 11 billion hours on Roblox, helping the company double its revenue in the third quarter. Roblox is seen as a serious competition for Facebook’s Meta.  

And the metaverse race boosts appetite in chip makers. AMD rallied 10% yesterday on news that it won Meta as a chip customer, while Nvidia had recorded a similar jump last week, after Wells Fargo had revised its price target 30% higher to $320 a share on expectation that the video-chip maker will grandly benefit from the metaverse race. On top, Bank of Montreal lifted its price target by 50% to $375 a share. Who says more? 

A last word on gold and oil. We saw gold drilling above the thick $1800 offers Friday. The price of an ounce reached $1823 this morning, perhaps supported by the recent decline in US yields, which lowered the opportunity cost of holding the non-interest-bearing gold. Yet, gold did a poor job in an environment of ultra-low rates and steep rise in inflation and inflation expectations. Therefore, I don’t see why it would pick up positive momentum, especially looking at how strong the risk sentiment is right now.

On the other hand, the weakness in oil prices didn’t last long, as oil bulls took opportunity to pile in below the $80pb mark in US crude following the post-OPEC plunge. The overall trend remains comfortably positive on the back of a decent energy crisis, which is not OPEC’s problem to solve. In this environment, I don’t see why US crude wouldn’t advance towards the $100 a barrel.