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FOMC Protocols, Pandemic, Data and New ZealandIn terms of macroeconomic statistics, yesterday also included the weekend Thursday and Friday. So there was no end of the data. To begin with, the Reserve Bank of New Zealand raised the rate by 0.25% to 0.75%. This is the second increase this year. And although the New Zealand dollar has not yet appreciated this very much, it is worth taking a closer look at the kiwi, because in terms of the percentage differential here and now, and most importantly in the foreseeable future, it has a good handicap over the US dollar, and especially the euro. By the way, about the euro. Yesterday's data on business sentiment in Germany from IFO came out worse than forecasts and past values, and most importantly, in light of the outbreak of the pandemic in Germany, there is no feeling that this is an accidental decline. Rather, it is the beginning of new problems for both the Eurozone economy and the euro. So the sale of the single European currency looks quite promising. Especially against the US dollar, which continued to dominate the foreign exchange market. Yesterday's data generally played into the hands of this. What is at least the data on initial applications for unemployment benefits, which came out below 200K, and the States have not seen this since 1969 (!). So much for the bad shape of the US labor market. Given the fact that inflation is not going anywhere (the PCE price index came out at 4.1%, which is more than twice the Fed's target), the US Central Bank has fewer arguments in favor of continuing the ultra-soft monetary policy. In this regard, the publication of the minutes of the last meeting of the Federal Open Market Committee (FOMC) came in handy. The text of the minutes showed that the US Central Bank is ready to act and respond to inflationary pressures in the form of rate hikes. Plus there was a discussion about a more aggressive reduction of the quantitative easing program. In general, the future of the dollar looks bright enough. The same cannot be said about oil. Which is clearly trying to put a good face on a bad game, refusing to go down. And at the same time, oil reserves in the United States and according to official data are growing. We continue to remind you that oil sales are a very promising undertaking in the horizon of several months.
Short
by Trade24Fx
3
Erdogan Finishes the Lyre, and Biden Prints Out ReservesErdogan continues to demonstrate miracles of economic insanity. His attempts to change economic laws by the sheer force of his will, of course, inspire some respect in terms of perseverance, but this does not make the lyre any easier. After three successive rate cuts amid inflation of 20%, some experts began to hope that Erdogan would be good at 2 + 2. But the President of Turkey made it clear yesterday that no. He doesn't give up. It is not only possible to reduce rates, but also necessary. Sighing wearily at these comments, the Turkish lira collapsed by nearly 15%. As a result, in the last week alone, the scale of losses amounted to about 30%. In total, the lira has lost about 60% in a year. This is the kind of help we get to the economy. On the other side of the ocean, Biden continued to build a coalition of dissatisfied with high oil prices and by personal example inspired China, Japan, South Korea and other countries to unseal their strategic reserves. We already wrote that over 3 million barrels were withdrawn from the US SPR last week. But yesterday Biden officially announced that the United States plans to free about 50 million barrels of oil from the SPR. This is somewhere in the middle of Citi's previously announced forecasts. The bank's analysts believe that the cumulative volume of intervention in the oil market will be about 100 million barrels (China will add about 30 to US 50 million, Japan and South Korea will free 10 million and India about 5 million). This volume will be quite enough to eliminate the deficit in the oil market for the next couple of months, and there the growth in production against the background of weaker growth in demand will do their job and the market will stabilize on its own. In this light, we cannot but remind that the current oil prices are high and selling the asset is a very promising undertaking. But it is still worth monitoring the situation, because OPEC has already stated that retaliatory measures in the form of production cuts may follow. In general, we are watching the development of events with interest.
NASDAQ:NDXLong
by Trade24Fx
Thanksgiving, Pandemic in Europe and the Doom of EvergrandePurely statistically, the current week for the US stock market should be successful. Beginning in 1950, on average, the last five trading days of November ended with an increase in the US stock market. The market has a two-thirds chance of rising on the day before Thanksgiving, and a 71% chance of the market rising on the Monday after Thanksgiving. But these are statistics, how it will actually be - time will tell. Although there is reason for optimism here and now. This refers to the successful House vote on a $ 1.75 trillion bill that would radically expand the US social safety net. But markets also have reason to worry. Austria announced a complete lockdown, Germany, through the mouth of Merkel, announced the need for tougher restrictions to control infections. The situation is very difficult in the Netherlands, Hungary and a number of other European countries. In general, the rapid economic recovery in Europe seems to have to be forgotten. And the development sector in China is becoming more and more toxic for investors. Evergrande is excluded from the Hang Seng China Enterprises Index. And S&P Global predicts the default of the second largest developer in China at the start of next year. The fact is that in March and April 2022, the company will need to pay the principal amount of $ 3.5 billion on its public bonds denominated in US dollars. Considering that Evergrande is now struggling to scrape together hundreds or two of millions of dollars selling its properties, the chances of covering $ 3 billion look more than elusive. In general, we continue to monitor the mood in the markets - they will determine where prices will move.
Short
by Trade24Fx
2
Week in a Glance: Retail Reports, Bank of Turkey, JapanThe past week did not seem to bring anything radically new to the balance of power in the financial markets, and there were no important planned events either. But as a result, a lot of things have accumulated, starting with the signing of an infrastructure plan by Biden and the adoption by Congress of a social spending plan for almost 2 trillion, ending with another shot by the Bank of Turkey in the leg of the lira and the announcement of a new large-scale stimulus program in Japan. The week began with an interview with the head of the ECB, Christine Lagarde, in which it was very clear: no rate hike in the foreseeable future, because the economy needs to be saved and the hell with inflation will dissipate by itself. The Bank of Turkey was more categorical in this regard: the rate was cut by 1%. And this is with inflation at 20%. It turns out that it is possible to fight fire anyway - by filling it with gasoline. The Turkish lira, as expected, burns, continuing its fall into the abyss. It's not just Turkey or the US that suffers from inflation. Data from the UK was released last week, showing the fastest growth in consumer inflation in the last 10+ years. And retail prices have risen so much, unprecedented since 1991. On this occasion, everyone again looked towards the Bank of England (we are talking about the expectations of a rate hike by the Central Bank). Perhaps the only country that now has no problems with inflation is Japan. But it has problems with the economy - GDP in the third quarter dipped by 3%. As a result, it was decided to spend about 56 trillion yen ($ 490 billion) on the stimulus package. In general, the past week was a week of retail: the largest US retailers reported (easily beat the forecasts for both profit and revenues), and also published statistics on retail sales in the US, China and the UK (the data came out much higher than forecasts). This gave a reason for the US stock market to grow further. But in general, in light of the fact that all good things have already happened (the reporting season is almost over, Biden's infrastructure plan has already been adopted), there are big questions about his future. After all, there are no fewer threats on the horizon, on the contrary, there are more and more reasons for concern. Austria, for example, is introducing a nationwide lockdown. And it is very likely that this is only the first sign, since the pandemic situation in Europe is rapidly deteriorating. And then Yellen reminded of the public debt ceiling and that the Treasury will run out of money by mid-December, and there, without a new law, there will be default. And there is no law, as well as the desire of the Republicans to help the Democrats pass it.
TVC:UKOILShort
by Trade24Fx
1
Bank of Turkey Does Lira In, and EV-Investors Fix ProfitsYesterday can hardly be called overly eventful in terms of news. Perhaps the main news can be considered another attack of economic insanity on the part of the Bank of Turkey. After Erdogan multiplied the independence of the country's Central Bank by zero, his vision of economic laws materialized in the form of a change in the vector of monetary policy in the country. Recall, according to Erdogan, to fight inflation, rates need to be lowered. And since inflation in the country is at 20%, it is not surprising that the Bank of Turkey cut the rate for the third row in a row yesterday. This time by 1%. The main problem with this approach is that everyone in the foreign exchange market believes that the rate cut will accelerate inflationary processes in the country and further devaluation of the national currency. Accordingly, sales of the lira continued with new all-time lows. It is difficult to find today a more hopeless asset in the foreign exchange market than the Turkish lira. So, despite the fact that it has already decreased in price by 6 times over the past few years, this is far from the limit. Another highlight is the announcement of a new stimulus package in Japan. Everyone has already begun to forget, in light of the sharp intensification of inflationary processes and vaccinations, about billions of dollars in incentives to support the economy. But since inflation is not a problem for Japan (not a problem yet), but economic growth is a problem (recall, in the last quarter, the country's GDP collapsed by 3%), the news about the plan to spend about 56 trillion yen (490 billion dollars) on the stimulus package looks logical enough. For buyers in the Japanese stock market, this is great news. But they don't buy everywhere now. In the US stock market, investors decided it was time to take profits in the overheated EV segment of the US auto market. Rivian closed down 15.53% and Lucid down 10.47%. Note that Rivian and Lucid (in fact, two shell companies) occupy the 2nd and 3rd places in terms of capitalization in the US automotive market, ahead of such titans as Ford and General Motos.
Long
by Trade24Fx
Inflation's Everywhere, and Yellen Reminds of the US DefaultYesterday was rich in inflation data from everywhere: the Eurozone, Great Britain, Canada. And decisively everywhere it grew, even relative to the already multi-year maximums. Take the UK, for example. Consumer prices there rose to their highest level in the last 10 years, and if you look at retail prices, they generally climbed to rates that have not been seen since 1991. Naturally, everyone is now looking towards the Bank of England. Even the pound, which had been dull lately, raised its head in the hope of a rate hike at the start of 2022. The situation in the Eurozone is not much better, but Lagarde was extremely clear in her last interview, so you can return to the idea of ​​medium-term sales of the EURGBP cross. And although the US stock market is in a very good state after a super-successful reporting season, this does not diminish the clouds on the horizon. Let us recall the key threats today: inflation and tightening of monetary policy by leading central banks, a pandemic and new strains of the virus, and the development sector in China. So yesterday, US Treasury Secretary Janet Yellen reminded everyone with a short memory that there is still a threat of US default. According to the latest estimates, the money from the government will end on December 15 (according to previous estimates, the deadline was December 3). That is, if in the near future Congress does not raise the ceiling of public debt, it will not seem enough to anyone. First of all, the totally overvalued US stock market. We will remind, the Republicans publicly refused the new vote in conjunction with the Democrats. So very soon the focus of the markets may shift from the topic of the successful reporting season to the topic of default.
SP:SPXShort
by Trade24Fx
2
Retail Day, IEA Report and Some Problems in ChinaYesterday can be called a retail day, at least on a US scale. Data on retail sales in the United States were published, as well as reports from key retailers: Walmart and Home Depot. And it was a good day. Retail sales in the US rose 1.7%, while experts expected growth of 1.4%. The reporting of retailers was also encouraging. Both Walmart and Home Depot's third-quarter earnings and earnings exceeded experts' expectations. As a result, Walmart raised its revenue forecast for the year. And this season of festive madness has not begun yet. In general, according to FactSet, almost 95% of companies from the S&P 500 have already reported, of which 81% presented better-than-expected profit results. So the reporting season was more than a success. In this light, the growth of US stock indices looked quite logical and reasonable yesterday. Following the OPEC and EIA reports, the International Energy Agency (IEA) published its vision of the oil market yesterday. The demand forecast for the fourth quarter is unchanged, but the supply growth is expected to be 330K more than before. And in general, by December, Saudi Arabia and Russia will be pumping more than 10 million barrels per day - for the first time since April last year. As for oil prices, the EIA is not particularly counting on it: not only because of expectations of an increase in supply, but also due to the increase in Covid-19 diseases in Europe and weaker manufacturing activity than previously expected. Since we started talking about problems, it would be no sin to remember China, where developers are desperately looking for cash: someone like Sunac China sells off shares on the cheap, someone like China Aoyuan Group real estate in Hong Kong, and someone like Kaisa Group all I also could not scrape together the money for the next payment and delayed it by starting the timer of my loan day. So you shouldn't relax: there are enough threats on the horizon.
Short
by Trade24Fx
Grantham Is Against Tesla, and the ECB Is Not Against InflationWe already wrote last week that the analysis of basic investment multiples shows that Tesla shares are overvalued by an average of 40 times relative to competitors. The other day, one of the legends of the investment world, Jeremy Grantham, warned that a bubble was inflated from Tesla shares. Tesla's current stock prices are a projection of investor expectations that the company will be super successful in a super successful market. The reality is that there is practically no chance of meeting expectations. The competition is intensifying: today every major car company is introducing electric vehicles into its lineup. As a result, Tesla's share in the global electric vehicle market is now not 90%, or even 50%, but about 15%. Volkswagen alone has already sold under 300K electric vehicles in the first three quarters. And this is already close to the volumes of Tesla. But at the same time, the same Volkswagen sells about 10 million more cars from above. And the growth rate of sales of electric vehicles from Volkswagen is almost 2 times higher than that of Tesla. Another 1-2 years at such a pace and a new king may appear on the electric vehicle market. But for some reason, none of those who foaming at the mouth speaks about the bright future of the electric car market are running to buy Volkswagen shares. But the company is not much less the leader in the electric vehicle market in Europe, which in turn, after China, is the largest in the world 4 times ahead of the US market. In general, the selectivity of perception of reality is not only a problem for Tesla fans. At the start of the week, the head of the ECB Christine Lagarde confirmed that a rate hike by the Central Bank in 2022 is very unlikely. On the one hand, the ECB does not want to harm the economic recovery. By the way, data on the Eurozone GDP will be published today. On the other hand, the ECB is convinced that inflation is a temporary phenomenon and will resolve itself. That is, the Central Bank will not even have time to do anything, as it will be gone.
Short
by Trade24Fx
Week in a Glance: Inflation, Pandemic, Infrastructure PlanThe past week was quite busy for the financial markets. And if it began very positively for risky assets with the news that Congress had finally adopted Biden's infrastructure plan, then after the publication of inflation data from the United States, the mood changed radically. Manufacturing inflation has renewed historical highs, while consumer inflation has reached its highest levels in the last 30 years. At the same time, the CPI already exceeds the Fed's target by 3 times. As a result, the markets are again thinking about tightening US monetary policy and raising rates in 2022. We also remembered the markets and the pandemic. And although the main concern, according to the results of surveys by the Federal Reserve Bank of New York, is new strains, but so far the good old delta is enough for Germany, Greece and a number of other countries to reach new highs in the number of cases. Another cause for concern has traditionally been the Chinese developer Evergrande. Another deadline expired on Wednesday. It seems that at the very last minute, the default was again avoided, but the future still looks extremely gloomy, since the company is simply selling itself in parts and sooner or later liquid assets will come to an end. The reporting season continues, but last week it was not very happy: Disney and Coinbase flopped. Major US retailers as well as Nvidia are reporting this week and the season can be closed after that. Oil was under pressure last week following the publication of monthly OPEC and EIA reports. OPEC expects a decrease in demand at the end of the year due to high oil prices, and EIA predicts a surplus in the oil market as early as 2022. So oil sales look very promising in the medium term, especially in light of the fact that the energy crisis has lost some of its severity: coal prices in China fell by 50%, and in Australia - by a third, and Russia has also increased gas supplies to Europe. The coming week will not be rich in super important events, but there will be quite a lot of macroeconomic statistics from the Eurozone (GDP, consumer inflation) and the UK (labor market, retail sales, inflation), Canada (inflation and retail sales), China and the USA (retail sales ). So it won't be boring anyway.
TVC:UKOIL
by Trade24Fx
How Much Is Tesla Overrated?Electric car startup Rivian continues to fly sideways. Shares rose another 22% yesterday, bringing the company's capitalization to over $ 100 billion (more than Ford or General Motors). At the same time, the startup did not earn a penny, but generates losses at a rate of 1.2 billion per quarter. The world has definitely gone crazy. But since in the case of Rivian it is difficult to quantify the scale of insanity, because the company, in fact, does not even have a business model yet, let's look at the closest competitor in insanity. Tesla in 2021 became the most expensive car company in the world and entered the top 5 largest US companies in terms of capitalization, ahead of such monsters as Facebook (Meta), Nvidia and Berkshire Hathaway Warren Buffett. At the same time, Tesla produces 20 times fewer cars than Volkswagen or Toyota. And Tesla earns almost 10 times less than the same Toyota or Volkswagen. As you can see, the difference goes by orders of magnitude. It turns out a rather strange situation when people are willing to pay 20-30 times more for a dollar of profit, income or assets of one company than for a dollar of another company. But after all, in fact, this is the same dollar. Let's add some specifics using the analysis of special metrics - investment multipliers. The most commonly used metric is P / E (the ratio of a company's capitalization to a company's earnings), which shows how many dollars you have to pay per dollar of a company's earnings. So for a dollar of Toyota's profit, you pay $ 9, and less than $ 8 for a dollar of Volkswagen's profit. This indicates that the relatively fair price is in the $ 8-9 range. Now hold your breath for a second, because the P / E for Tesla is 347. Yes, not 3, and not even 34, but 347 (!). Roughly speaking, when you buy Tesla shares at current prices, you pay on average 40 (!) More than other automakers. But profit is a volatile category and is not a reliable metric. Let's look at an alternative P / S ratio (the ratio of the company's capitalization to the company's earnings), which shows how many dollars you should pay per dollar of the company's revenue (revenue). Less than a dollar is a dollar of revenue from Toyota (0.9) and Volkswagen (0.6). A dollar of Tesla's earnings will set you back $ 34. That is, again, on average, 40 (!) More expensive than when buying shares of other automakers. But let's say that Tesla is just reaching the peak of its financial form and the financial results are not indicative. Let's look at another metric that makes it possible to imagine the following situation: what if the company is auctioned off, how much money can we, as investors, return in the event of its liquidation? To do this, use the P / B ratio (the ratio of the company's current market capitalization to its book value), that is, how many dollars you have to pay for each dollar of the company's assets. Anything less than 1 indicates that the company is cheap, and anything above 1 indicates its high cost. A dollar of Toyota or Volkswagen assets will cost you a little more than a dollar. That is, the companies are valued relatively fairly. But in the case of Tesla, a dollar of assets will be worth $ 44. That is, again, we have a magic number exceeding 40 times. What is the conclusion from all this analysis? Tesla isn't just overrated - it's insanely overpriced. The company's shares are on average 40 (!) Times more expensive than competitors' shares. How to make money on this information? The answer is obvious - sell Tesla shares. Actually, this is already being done by the entire management of the company, including the head of Elon Musk, who just this week sold Tesla shares for more than $ 5 billion.
NASDAQ:RIVNShort
by Trade24Fx
6
Musk Is Running out and Buffett Is Hoarding CashMusk was the main hype generator in the financial markets yesterday. This time, he was not promoting Dogicoin or bitcoin. Instead, he staged a clowning on Twitter in the form of a vote to sell him 10% of his stake in Tesla or not. We will not describe the nuances of taxation of billionaires or Musk's option to buy almost 23 million Tesla shares at $ 6.24 apiece (yes, a little more than $ 6 apiece instead of the current $ 1200 + -), we just note that the "people" voted "for" to sell... Stocks in anticipation of sales for a couple of tens of billions of dollars at once, of course, fell down. Needless to say, this is, in fact, a manipulation of the stock price. And at one time, the SEC already beat Musk on the hands for this. But he clearly continues to run up. Well, we'll keep an eye on what's going on. The markets were optimistic - they worked out the positive of the last week (FOMC meeting, Biden's infrastructure plan and NFP). Tellingly, the main legend of the investment world, Warren Buffett, continues to bypass this feast. Berkshire buys his own shares, if anything, and prefers to invest exclusively in cash. They have already saved up under $ 150 billion. Buffett's idea is understandable - he is waiting for the collapse of the stock market in order to buy everything for nothing and head the list of the richest people in the world. Does he have a chance of that? If you look at the next highs in CAPE (Cyclically Adjusted Price-to-Earnings Ratio: the ratio of the company's capitalization to the average profit for a 10-year period, adjusted for inflation), it is easy to believe in it. The last time when CAPE reached such heights, Nasdaq, for example, lost under 80% (!) of its capitalization.
NASDAQ:TSLAShort
by Trade24Fx
3
Week in a Glance: Carte Blanche from Central Banks, NFP & OPEC+Markets have been waiting a long time for the past week as it could become the game changer that will reshape the financial markets landscape. Naturally, we are talking about the expectation of tightening of monetary policies by the leading central banks of the world. Judging by the reaction of the stock markets, these results were perceived as carte blanche for further growth. Tellingly, now it is not at all clear what can stop this growth in principle. Because if the markets were growing amid expectations of tightening monetary policies, an energy crisis, a potential US default and actual defaults in the development sector in China, then how can they not grow when some of these problems or not, or have they diminished in scale? So, the Federal Reserve Open Market Committee seemed to have started tapering, but did everything to make it clear that this is not any tightening of monetary policy and an increase in rates should not be expected, and in general, inflation is a temporary phenomenon. The last hope of those expecting a tightening of monetary policies was in the person of the Bank of England, which, by the way, was the most aggressive of the Central Banks in words (some even expected the rate to rise on Thursday). Instead, they received assurances that inflation is a temporary phenomenon, which, moreover, is not controlled by the Bank of England, which means that it is not worth doing anything. Since such results of the Central Bank meeting took place against the backdrop of one of the best reporting seasons in the United States in the last 10+ years, and the US labor market finally met the expectations of analysts, generating over 500K new jobs, there is nothing surprising in the growth of the US stock market. Greed in the markets goes off scale and once again we note that it is not clear what can reduce its level. Moreover, in the United States, legislators have finally adopted Biden's long-suffering infrastructure plan, that is, the economy will receive another trillion of money. On the oil market, there is a start of a price correction, which is taking place against the background of an increase in oil reserves in the United States for the 6th week in a row, as well as the decision of OPEC + to continue to increase oil production: in December, the allies will add another 400K b / d to the current level of production. After such a busy week, a respite is expected in fundamental terms. Reporting season ends. Central banks "shot". It remains only to follow the statistics, which, as we can see, no one cares about, but still. Inflation data from the US and China, as well as UK GDP and industrial production in the Eurozone will be released.
TVC:DXYLong
by Trade24Fx
2
Blind Central Banks and Mindless MarketsThe Bank of England extended the series of disappointments for those who expected a change in the vector in the monetary policies of the leading Central Banks. Following the ECB and the Fed, the Bank of England said that inflation is temporary and does not require much intervention, since the problem will disappear by itself over time. This mantra has been repeated since summer and looks more and more ridiculous with each new portion of inflation data. Take, for example, yesterday's data on manufacturing inflation in the Eurozone. Compared to last year, the price increase was 16% (!), Which is the highest in the entire history of observations. And the main thing is the 9 (!) Month in a row inflation growth. Nothing so temporary growth. Moreover, he is clearly not going to stop. But we have what we have. As a result, the pound yesterday received a powerful blow in the stomach and fell apart. Taking into account the general shape of the country's economy (thanks to Brexit), with such a Bank of England nothing good shines for the pound. So while it is below 1.3620 in tandem with the dollar, it is not only possible to sell it, but also necessary. Meanwhile, the US stock market continues its mindlessly insane growth. Given that the discrepancy between current prices and reality is clearly visible in market reactions to quarterly reporting for a number of corporations. For example, Moderna shares fell by almost 20% yesterday, and Peloton by 35%. That is, yesterday it was not a pity to pay $ 90+ for a Peloton share, but today it is no longer worth $ 60. But an even clearer sign of insanity is yesterday's rally in electric car maker Nikola. Well, as a manufacturer - in its entire history, the company has not produced a single electric car. And the average, or the maximum quarterly income of the company for the last year is 0. Yes, zero. The company does not produce or sell anything. But it has a capitalization of 5.5+ billion. It only generates losses. And if last year in the same quarter the loss was less than 80 million, then this year it was almost 270 million. And against this background, shares rose 21.5% yesterday.
Short
by Trade24Fx
2
ed Will Finish Badly, Oil Waiting for OPEC+The main event of this week - the meeting of the Federal Reserve Open Market Committee - was generally held in line with the expectations of the markets. Tapering will be: from November, the volume of asset purchases by the Fed will be systematically reduced by $ 10 billion a month. It would seem to be the most material signal for the markets that the money rain is coming to an end. But the markets preferred to hear not this, but the fact that the Fed still considers inflation to be a temporary phenomenon and that there is no talk of raising rates yet in principle. As a result, the US stock market grew steadily. Apparently, nothing can stop this bull until he drives himself to death. Because how to embarrass an optimist who should have been upset that he was shot in the leg, but he says that he was lucky, because they could have shot two. In general, the bubble will not deflate smoothly, but there will be a loud explosion. But the question of timing, as well as the reasons for the collapse, remains open. Today the word is for the Bank of England, which is expected to be as aggressive as possible in relation to other leading central banks of the world (Fed, ECB, Bank of Japan). Even the possibility of a first rate hike is on the agenda. Although the most likely option is still the option with an unchanged rate, but comments about its growth at the start of 2022. In any case, the pound has a good chance of growth today. So we pay attention to this. As for the chances of a decline, today oil has them. The hysteria surrounding the energy crisis has subsided somewhat (which, however, does not mean that all problems have been resolved) and the oil market has become more actively interested in the growth of oil reserves for the 6th week in a row, the resumption of negotiations with Iran on the atomic deal. In addition, today is the OPEC + meeting, which should mark the emergence of an additional 400K b / d supply on the oil market. In general, there are enough reasons for correction.
TVC:SPXShort
by Trade24Fx
1
The Fed: What to Expect and How to Respond?On the financial markets yesterday it was expected to be unchanged. Greed was off the charts, pushing prices in the US stock market to new highs. The earnings season remained the main generator of optimism injections . According to the latest data, among the companies that reported the SP500 (more than half of the companies have already published their reports), 83% exceeded the forecast for profit. Yesterday, Pfizer, Under Armor, DuPont, Estee Lauder and others were pleased with the good financial results. Despite all this celebration of life, according to the latest CNBC poll, 72% of respondents believe that stocks in the US stock market are overvalued. Recall that the needle that can burst this bubble is the Fed's monetary policy. In this light, today can decide a lot. If the Fed is expected to announce the start of a reduction in the quantitative easing program (the current consensus is that tapering will begin in November and will amount to 15 billion cuts per month), as well as outline the timing of the start of the rate hike cycle (current expectations are at least September, maximum - June), then the stock the market will not be nice, and the dollar will feel like a king in the foreign exchange market. But if the Fed takes a position similar to the ECB (last week the European Central Bank pretended that inflation does not exist, and if so, then there is no reason to tighten monetary policy), then those who like risky assets will be able to breathe deeply and continue to buy at the US stock market without fear of the consequences. In this case, you cannot envy the dollar. In addition, today it is worth paying attention to the data on US employment from the ADP. While they have been at odds with NFP lately, they continue to be an important marker for the markets. US oil inventories, according to the ADP, rose for the 6th week in a row. Which cannot be attributed to chance or coincidence. In this light, oil sales look quite promising, even in spite of the energy crisis.
TVC:DXYLong
by Trade24Fx
4
Decisive Month for Chinese Developers, Failure of Active FundsEven though China's second-largest developer Evergrande escaped default again last week by paying at the last minute, it's still a long way from a happy ending. And the point is not even that another large developer from China cannot pay off its obligations (Yango Group said on Monday that it is going to extend payments on three of its dollar bonds). The problem concerns the sector as a whole. Bond yields skyrocketed to 20%. That is, it will not work out especially to refinance the debt. At the same time, according to Bloomberg, in November, Chinese developers will have to repay over $ 2 billion in loans. It is possible that as a result, the ranks of defaulters will be replenished with new names. In the meantime, China is trying to avoid a crisis, let's talk about active investment. Back in the 60s of the last century, it was empirically proven that in the long term active investment management in one wicket loses out to passive one. Roughly speaking, the average return on investment funds is usually lower than the growth rate of the stock market as a whole. That is, there is no point in trying to choose one or another set of shares, it is more efficient to buy the entire index. So the other day another study was published, which showed that nothing has changed over the past 50-60 years. Of the nearly 3,000 active funds analyzed by Morningstar, only 11% of actively managed large-cap funds outperformed passively managed funds over a 10-year time frame. As for the period of the pandemic, which seems to be ideal for active management (high volatility, wild jumps in macroeconomic indicators, etc.), it did not work here either: only 47% of active funds were able to survive and outperform passive funds. That is, in fact, random and the notorious 50/50. In general, we continue to follow Katie Woods: with her investment policy, she is a typical candidate for the queue of those who did not pass natural selection in the long term.
SSE:000300Short
by Trade24Fx
1
Week in a Glance: Central Banks Amid Peak Earnings SeasonOctober turned out to be an extremely successful month for the US stock market. The past week played a significant role in this. The main events of the week were meetings of a number of key central banks (ECB, Japan and Canada), as well as the publication of data on US GDP for the first quarter (first reading). Against the background of low inflation, the Bank of Japan naturally did not change anything in the parameters of monetary policy and does not plan. But the Bank of Canada announced that it could raise the rate earlier than previously predicted. The reason is obvious - inflation. Although, as is obvious, the ECB, for example, continues to believe that inflation is a temporary phenomenon that will dissipate by itself, which means that ultra-soft monetary policy is the best option for the Central Bank. Markets were taken by surprise by the ECB's position as more aggressive rhetoric was expected amid apparently high inflation. But the European Central Bank has its own vision, which is that you need to look not at the inflation readings for the past or current month, but at the average inflation for the period (which is not known). So, if you carefully calculate the average, it turns out that inflation in the Eurozone is below the target. As if deciding to cast the ECB in an unfavorable light, Friday's inflation data in the Eurozone came out at a 13-year high, more than double the ECB's target. But after such results of the ECB meeting, the markets began to think, what if the Fed does the same this Wednesday and instead of the expected tapering starts calculating the average inflation values? In our opinion, this is largely due to the growth of the US stock market last week. Moreover, the data on US GDP came out very disastrous and give the FRS a reason to include a backward one in the issue of tightening monetary policy. Well, another reason for the growth of the US stock market, of course, was the reporting season. It peaked last week and continues to beat forecasts in both earnings and earnings 80% of the time. Although not without surprises: half of the FAAMG participants managed to show reports worse than the markets expected. However, it did not help to stop the bulls. The week ahead is unlikely to be a week of rest. We are waiting for the announcement of the results of the FOMC meeting and the decision of the Bank of England - if not actions, then at least signals about future actions in terms of tightening monetary policy are expected from both Central Banks. In addition, a block of data on the US labor market, including numbers on NPP, will be released on Friday. Although the reporting season has passed its peak, it will be extremely busy and active. We are also waiting for the next meeting of OPEC +. In general, it will definitely not be boring.
TVC:UKOILShort
by Trade24Fx
1
US GDP Failure, Cowardly ECB and Stock Market RecordsYesterday may seem rather strange in terms of the dynamics of prices in the US stock market, although in fact everything was quite logical in light of the events that took place. The two main events of Thursday - the publication of data on US GDP and the announcement of the results of the ECB meeting - seem to have little to do with each other, but in fact it was their combination that provoked the growth of the US stock market. The figures for US GDP can be safely called a failure. Although, of course, everything is relative. So, relative to the previous value of 6.7%, the published 2% is a failure. Compared to forecasts of 2.7%, a growth rate of 2% is also, in general, a failure. A reasonable question arises, why, against the backdrop of disastrous data on the country's GDP, its stock market decided to set new historical highs? Now it is worth looking in the direction of yesterday's decision by the ECB. The Central Bank of Europe was as "pigeon" as it is possible in the current environment. Recall that most experts agree on the need to tighten monetary policies. Accordingly, the ECB was expected to signal both the curtailment of the quantitative easing program and the possible timing of the rate hike. Instead, the good old ECB returned, which considers inflation to be a temporary phenomenon that will dissipate by itself. And in general, there is no excess of the ECB's target. So what if consumer inflation in the Eurozone is 3.4%, if we calculate the average for some period further in time, then the value will turn out to be less than 2%, which means that there is no excess of the ECB's target, which means nothing needs to be toughened up or changed. It would seem, what does the US stock market have to do with it? The point is that the FOMC is due to announce its verdict and comments next week. So the markets are worried about whether the Fed will repeat the ECB's rhetoric, especially in light of the extremely weak US GDP figures? In general, this has already happened more than once in the past, and more than a year ago, the new FRS doctrine just presupposes control not over inflation as such, but over its certain average value, and the general public does not need to know the period of averaging. That is, if it wants, the Fed can easily calculate the average for the last year, or two years if it wants, and will get some 1.5% and say - you see, no inflation. It is clear that this fact is not yet and we need to wait for Wednesday, but yesterday no one wanted to wait - everyone tried to have time to work out a possible scenario. And its development is precisely the growth of the stock market and the decline in the dollar against the background of expectations of the absence of tightening of monetary policy. So everything is logical. The main problem with this logic is the assumption that the Fed will copy the ECB. And if not? When the markets ask this question, we will see the opposite trend. So do not rush to conclusions and bury the dollar or buy on the US stock market at insanely high prices. Moreover, Apple and Amazon with a very loud crash yesterday failed with their financial results for the third quarter.
NASDAQ:NDXShort
by Trade24Fx
6
Winner's Curse, Central Bank Signals and Oil DecreaseThe reporting season continues to beat analysts' forecasts with ease. About 40% of S&P 500 companies have already reported earnings. 83% of them exceeded earnings expectations and 79% exceeded earnings forecasts. It would seem that the golden age and shopping is the only reasonable course of action. But not everything is so simple. Will companies be able to continue to demonstrate such results? Will they face the curse of the victor? Indeed, in the next quarter, decisions will be based on the results of the previous super-successful quarter. And it is likely that good data against excellent data will look not as good, but as weak. Moreover, changes are coming. The Bank of Canada was rather aggressive yesterday: the rate will be raised several months earlier than expected, the quantitative easing program is being phased out. And economists expect 13 out of 25 central banks to raise rates at least once before the end of next year, according to the latest global Reuters poll. In general, we are watching the ECB today and the Fed and the Bank of England next week. In fairness, we note that the Bank of Japan is happy with everything and it does not plan to change anything in monetary policy in the foreseeable future. But it has its own history - the absence of inflationary pressures, which is not typical for the United States or Europe. In this light, we recommend that you pay attention to the long-term sales of the Japanese yen across the entire spectrum of the foreign exchange market - primarily against the New Zealand and Canadian dollars. Oil was under strong downward pressure yesterday. Well, still, oil reserves in the US are growing for the fifth week in a row (according to API data), and Iran, it seems, is ripe for a new round of nuclear negotiations. Taking into account the fact that coal prices in China fell by 40% over the week, it is likely that we are witnessing the end of the energy crisis with all the consequences for the prices of natural gas, oil and other substitute goods.
Short
by Trade24Fx
1
Earnings Season, Bank of Canada and Another Default in ChinaThe markets continue to behave as if there will always be a lot of cheap money, which means that you can buy at absolutely any price: tomorrow there will be someone who will buy at even higher prices. We already wrote yesterday that for a dollar of Tesla assets in the US stock market, they are now ready to give more than $ 40. Actually, a clear illustration of this discrepancy is the growth of the company's capitalization by 120 billion on Monday for news, which will give an increase in income (if everything works out) by 4+ billion. Roughly speaking, for every dollar of additional income (not even profit), investors gave $ 30. So Tesla can be safely classified as one of the most overvalued companies on the US stock market. Moreover, nothing lasts forever. And the era of cheap money is coming to an end. Today the Bank of Canada may roll back quantitative easing and give hints of the timing of the rate hike. And the ECB tomorrow may express even greater concern about what is happening and give its hints on future actions. Meanwhile, another Chinese developer defaulted - Modern Land (China) Co Ltd announced that it had not paid the principal and interest on its $ 250 million bonds. By the way, who wants to earn 1000% + and sincerely believes that everything will be fine, can buy these very bonds, which are now being sold at a discount of 80%. And the problems with logistics are not going to be resolved in any way. An estimated $ 24 billion worth of goods is located near the two largest ports in California. Apparently, the problem of supply chains from 2021 will smoothly migrate to 2022. And finally, we recommend paying attention to Robinhood. The company issued an enchantingly disastrous report yesterday. Everything was bad, from weak revenues, which fell sharply compared to the previous quarter, to losses of more than a billion. At the same time, the number of active accounts, active users decreased, and the average revenue per user fell. In general, everything was bad, but the company's shares are still prohibitively expensive.
NASDAQ:TSLAShort
by Trade24Fx
6
Tesla's in Trillionaires' Club & La Niña Exacerbates CrisisThe week started for the US stock market for the 9th day of growth in a row. A surprisingly impressive series considering the heap of problems that now surrounds the global economy. Apparently, everyone wants to have time to buy before the publication of the reports of the FAAMG group. As a reminder, all key US tech companies are reporting this week. Facebook reported yesterday. The company's results can hardly be called very impressive, at least in relation to the expectations of experts. On the one hand, the profit, albeit insignificantly, exceeded the forecasts, but the incomes in the third quarter did not meet expectations, and in the fourth quarter they are planned to be smaller than the experts expected. But that didn’t stop the stock from rallying after the market closed. The main reason for this is the expansion of the share buyback program by 50 billion. Recall that the scandal with information leakage from the company is in full swing and continues to put pressure on its quotes, so we would not be in a hurry to buy Facebook shares. But everyone was in a hurry to buy Tesla shares yesterday. Quarterly reports published last week led to a revision of forecasts for the company's share prices by a number of analysts. But the main positive news was the information that Hertz will buy 100,000 electric vehicles. The largest batch of purchased electric cars in history, reaching a new level of being - that's all. By the way, this is the same Hertz, which initiated bankruptcy proceedings a year ago and sold its fleet of hundreds of thousands. But who cares about it and who remembers it? No one is interested in Tesla's investment metrics either: p / e above 500 (for a dollar of Tesla's profit, you need to pay more than $ 500), p / b above 40 (a dollar related to Tesla assets costs $ 40 - for example, a dollar is on the company's account , but for buyers of the company's shares it will cost 40), etc. Well, we cannot but note that this whole holiday is taking place against the backdrop of a global energy crisis, which at the start of the week received a new reason: the La Niña pattern emerged in the Pacific Ocean. China, Japan, South Korea - have already warned of colder weather and colder winters in the future. Natural gas prices went up again.
NASDAQ:TSLAShort
by Trade24Fx
Week in a Glance: Reporting Season, Lira, Evergrande, Crypto ETFThe main result of the past week, perhaps, is the following conclusion: the markets wanted to grow and found reasons for growth. About these occasions and the main events of the past week in today's review. The US stock market has turned into a real furious bull, which can only be stopped by the Fed. But the next meeting of the FOMC is still a week and a half, so the chances that he will continue to sweep away everything in his path are great. As the reason for the growth, the reporting season was chosen, which, in fairness, is really great. More than 70 companies from the S&P 500 have already reported and 86% of them exceeded analysts' forecasts. The main fears of the markets that the rise in inflation increased the costs of companies and hurt their profits did not materialize. Profits in the third quarter, according to the Earnings Scout, are expected to rise 35% over last year. Naturally, the markets did not notice that the damage was avoided by raising prices and, in fact, this is not a solution to the problem, since it shifts the problem from producers to consumers. Given that this week is the peak of reporting season, when the entire FAAMG is reporting, the chances of further growth in the US stock market are high. The main surprise of the week was the rate cut by the Bank of Turkey by 2%, which was a painful blow for the Turkish lira, whose prospects for the foreseeable future are extremely gloomy. Last week could have been the official default for Evergrande. But, apparently, the company was able to repay the payment of 80+ million. However, this week it is necessary to pay off the next many times larger tranche, so it is more than premature to exhale. The past week has become a real treat for cryptocurrency lovers. The SEC approved the first cryptocurrency ETF, the ProShares Bitcoin Strategy ETF (BITO), which tracks bitcoin futures on the CME. In the cryptocurrency market, this was perceived almost as the recognition of cryptocurrencies as an official means of payment in the United States.
Short
by Trade24Fx
Lira Hopelessness, Confusion & Vacillation in MarketsWe already wrote a month ago that Erdogan has finally found a man for the post of head of the Central Bank, who shares his unique view of monetary policy. The essence of this “vision” is as follows: a rate cut should help fight inflation. Don't ask why. Considering that inflation in Turkey is about 20%, it was not difficult to predict the results of yesterday's meeting of the Bank of Turkey - the rate was lowered, and immediately by 2% from 18% to 16%. The Turkish lira, however, for some reason lives according to classical economic laws and appreciated this maneuver, as it should - collapsed to the next historical lows. In general, while the Bank of Turkey is doing what it is doing, you can sell the lira from almost anywhere and earn guaranteed. On the financial markets yesterday, after several days of synchronized movement, there was confusion and vacillation. The cryptocurrency market was selling, the dollar was correcting after the test of the key support of 93.50 in the Index, the oil moved away from the highs, but at the same time, the Fear Index rammed support at 15.50, and the US stock market, represented by the SP500, showed new highs. In general, this situation shows that the single growth vector of all risk-taking in the financial markets has disintegrated. At least for now. Which at least testifies in favor of the ambiguity of the future. Growth is not the only form of movement. Moreover, the markets did not have any reasons for doubts yesterday. On the contrary, the news that Evergrande raised 80+ million to pay off the first of the late payments is a reason for further massive growth in demand for risky assets. In general, if yesterday showed anything, it is that everything can change at any moment and without any reason.
SP:SPXShort
by Trade24Fx