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Commodity market Report - November 2019

COMMODITY MARKET REPORT

EXECUTIVE SUMMARY

Trade war risk has transformed into the source of positive news for the markets as Trump is desperately willing to support stocks in election year especially as he faces an impeachment process. On the other hand ultra dovish expectations from the global CBs are leaving the way to more neutral and balanced approach with the Fed is mostly done with it stimulus and new Chairwoman of ECB is not going to cut rates anymore. Overall risk conditions switched to neutral mode with unexpectedly low volatility in equities but higher one in bonds and commodities. Oil and Gasoline resumed their rally with Nat Gas trying to follow. Precious metals corrected from the recent peak levels but still a little bit overvalued. Agri commodities (ex rising cocoa and coffee) are moderately undervalued. Copper and Aluminum are still undervalued but saw a rotation from overvalued Zinc and Nickel

Macroeconomic drivers neutral to moderately negative as the hopes for Trade Deal and Fed and PBoC stimulus moved higher stock prices and have finally resulted in an incremental improvement in business confidence. EM is still in slowdown mode with Turkey, S.Africa, Argentina and Venezuela are close to crisis.   

Chinese economy is facing a reduced risk of Trade War escalation, but capital flight risks are not abating with unrest in HK and slowing economy. Moreover there are signs of overheating in housing market and stress in overleveraged corporate and banking sector

Investors’ interest in commodities was good over the last months. There is no excess in overall commodity universe with net long elevated in Gold and Gasoline and net short in Aluminum, Copper, Nat Gas and Corn. Open interest in commodity trading is rising despite the drop in volume traded – sign of longer term investment

Weather conditions are in moderate chance of El Nino that is negative for prices of most grains and natural gas, but a little bit positive for cocoa and coffee. Political risks turned neutral for most commodities except Gold as Trade War and recession risks abating and tensions in the Middle East are less acute

TOP TRADING IDEAS:

  • Add Short in Palladium at 1800 $/oz (target 1200 $/oz). Hold Long in Platinum and add at 800-850 $/oz

  • Play the range in Brent: long at 50-55 and short at 65-70 $/bbl.

  • Buy Gold at 1400 $/oz with mid-term target of 1600 $/oz; hedge with Short in Silver at 17.5-18.0 $/oz

  • Play the range in Cocoa: long at 2200-2250 and short at 2650-2700 $/mt.

  • Add to long in Coffee at 100-105 cents/lb for March futures with target above 125 cents/lb

  • At 250 c$/lb Copper could be a good contrarian buy with expectation for the Trade War Truce

  • Long June Nat Gas futures at 2.0-2.1 $/MMBtu for better fundamentals and target 3.0-3.5 $/MMBtu

commodity;

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Banking Sector Monthly Report - August 2021

US banks outperformed the broad market noticeably in August 2021, after two consecutive months of their significant underperformance. Thus, BKX index increased by 5.2% MoM vs +2.9% MoM of SPX index, the first growth in absolute terms during last 3 months. Absolute August performance was +0.6 std from the mean monthly performance and it is in the top 23% since the index inception. 

investment, banks;

ИНВЕСТИЦИОННЫЙ ПОРТФЕЛЬ 2021 ГОДА

ПОРА ВЫХОДИТЬ ИЗ АКЦИЙ И ПОКУПАТЬ КРАТКОСРОЧНЫЕ ГОС. ОБЛИГАЦИИ ИЛИ МЕНЯТЬ СТРУКТУРУ ПОРТФЕЛЯ АКЦИЙ?

Вероятность повышения уровня ставок (особенно долгосрочных) в США и ЕС (в первую очередь – Германии) уже гораздо выше, чем вероятность их снижения, что создаст риск глобальной коррекции для акций и облигаций. Растущая американская инфляция подогревает дебаты о скором начале процесса сворачивания стимулов от ФРС, сместив фокус рынка на вторую часть ее мандата – обеспечение ценовой стабильности.

investment, banks;

Oil Market Report - August 2021

Crude oil prices continued to rise in July 2021 for the third consequent month with ICE Brent and NYMEX WTI first-month contracts ended the month respectively 1.2% and 1.5% higher over a relatively volatile month. Crude oil prices started the month generally higher, extending the previous months’ gains, as the market continued to be supported by strong oil market fundamentals, primarily driven by robust oil demand growth outlooks and expectations of slow global oil supply growth, which point to a significant oil supply/demand deficit in 2H21. 

oil, investment