Tuesday, December 8, 2020

Too much optimism in economy 2020

If we see just the grahps, the different index graphs, we can see there was some turbulence on march but that it has ben recovered fully from it.

However, I don´t think we are actually in the same economy pace as we were before the covid started, however the markets seems that are counting as all economy is at full pace or will be at full pace soon.

To be honest, does not seems we will be at full pace as before covid in 1, 2 or 3 months ahead. Already many discretionary jobs has been lost, most of them are tourism related business that were not able to aford their monthly expenses at went to bankruptcy (it they do not declare bankrupty yet, they could be close to it).

So what`s the real unemployment percentage in U.S. or Europe? Many unemployed people is out of the numbers because of the stimulus checks they are having. How much time, those stimulus can move ahead into the future?

All is counted in the markets as if we will be at maximum pace in few months, any obstacle in the middle, could mve the market down. 

November was the biggest increase in many years in one month period on markets, due to central bank help and the covid vaccine optimism. 

The real economy effect most probably will emerge when covid phase is finished, central banks move their monthly debt purchases to previous to covid numbers and all the unemployed people is counted as it is. We will be able to see then the real unemployed percentage. Meanwhile, try to estimate it and bet on it.

*Country debt increase
*Central bank debt purchases increase
*Possible country default and external investment risk (stop external investment)
*High Inflation (real inflation) due to stimulus
*Corporate and private debt defaults if economy does not recover at proper pace

Sunday, December 6, 2020

US 10 year Interest Rate Yield close to 1%, take care

Since covid started, mid March, all countries around the world had maximize the debt to GDP ratio, to be able to pay for those stimulus checks, more debt was issued, country debt was generated.

The US 10 year yield was around 1.5% at that time, mid february or so, and it dropped directly to 0.5% after the world has stopped instantly due to covid in march 2020. The yield was moving between 0.6 and 0.5 from march till september, and from that month is going up slowly, having it around 1%.

Why is it going up?
It can be that the world is expecting a high inflation or inflation in goods and services, because of all the money that has been printed or the expansion of the economy that they were forced to execute

I`m thinking also that it is also possible because the central banks started to underload their purchases, and they are buying less, on a slowly pace, in order to keep the yield on the same rate as it was in the covid. If this is the case, when yield goes up, some people, funds and so on, could change from stock market investments to bonds, pressing the stock market drop (but this still does not show up, we had the best november in terms of rentability)

Apart from that, if interest rates goes up, the actual over debted countries will be forced to pay more interest, and will have more difficulties to pay their interest requirements. Perhaps, some country will suffer paying that debt interest, if the interest of all countries move higher.

In Europe, Italy at least has already ask to pardon for the debt generated during the covid. I don´t think the rest of European countries will accept it, but it is alarming that a big european country is asking for it

The USD is lossing power against the rest of the currencies, at least the Euro. It has dropped from around 1.08 to 1.21. So, I don´t know the reason for it, because because if central bank would be buying more debt, I suppose currency would drop as well as interest rates (but thats not the case, so I`m confused).

The SP500 has done well finally in 2020, it is up for more than 10% even though there was a big pandemic in the world. 

What could happen in stock market if interest goes up more?

What could happen if some medium country declares debt default?

What could happen if USD strenghtens quickly to 1.08?

What could happen if all the stimulus checks cannot be paid? in United States and all around the globe. European countries has also provide huge stimulus checks to unemployed people due to covid


Many uncertainties and many unknowns about the market future trend.

Saturday, April 25, 2020

Can inflation emerge after coronavirus-covid19

Since Paul Volcker era, on 1980 the interest rates had been in a downside spiral with small correction or increases in interest rates, but not enough to close the gap.

Since then, there were 3 clear long downtrend in the interest rates, and there were small peaks on the 2000 and 2006 year, mainly on the dot.com bubble era and the subprime mortgage era.

Since mid 2017, the FED has also been increasing the interest rates on a slower pace till mid 2019 when some kind of downtrend in stock market was approaching.

Remember the two small correction of 2018 due to the complications that were in the REPO market, the liquidity has been disappearing and thus the market was getting nervous

Nowadays, we are experiencing the rapid coronovirus correction that feels like will blow up the full economy of all countries of the world. The sentiment is like no one will survive to this crisis, even though small correction has been experiencing the last month, recovering the SP500 index, from 2200 to 2800 [that`s a 30% recovery from lows], the general feeling is that the market should correct even bigger. Go to 1800 or lower.

The high liquidity programs implemented from all countries will not be enough and will destroy many small and also big businesses (today there are news that some big companies will need help to pay salaries).

I don´t think this will be the end of the economy, because on 1929 the financial market blowed up (all people lost their savings). This is not the case today, but most probably many business will not recover from the down trend and therefore the final picture will be that fewer plants and production capacity will be available in the economy.

If we sum in this equation the huge stimulus implemented that most likely will increase the M3 money supply and if we combine with less production capacity. In my opinion we could end up in an era where there is a lot of money chasing fewer goods in circulation, thus INFLATION

And if inflation kicks on, the savings will be the most affected investments. Inflation normally increases stock market prices, and could say, that being in the stock market while inflation kicks in, could be the best option, because companies use to have better revenues, mainly due to inflation effect, and their stock price increases in similar percentage.

Monday, April 20, 2020

SuperContango Crudo Mayo 2020

Siguiendo con el post del otro dia, https://iniciosentrader.blogspot.com/2020/04/supercontango-en-el-petroleo.html en el que hablábamos del supercontango que se ha formado en el crudo

Ahora la diferencia es aun mayor, el crudo que expira mañana, esta alrededor de 11$ el barril, pero el mismo crudo que expira un mes mas tarde, el 20 Mayo, esta a 22,5$ y el que expira el 22 de Junio a 27,5$ el barril

Lo ideal seria. Comprar ahora el que caduca mañana, y coger el "delivery", es decir quedarnos con el barril. Guardarlo durante un par de meses para venderlo a 27,5$, vendiendo el futuro de Julio (hoy mismo), sacando a cada barril un beneficio de 16,5$.

Pero, claro aquí esta lo difícil. Solo los grandes empresas inversores podrán contratar barcos petroleros para guardar esos barriles. Habría que hacer un calculo ya que tener un barco petrolero no es nada sencillo, suele estar en 40K/día (recuerdo haberlo leído). Si lo pretendemos guardar durante dos meses en el barco guardados, esos 700.000 barriles (por Suez el barco mas grande que puede pasar es de 1M barriles por barco). Obtendríamos un bonito beneficio, de los 700.000 barriles obtendríamos unos 11,5M $ (700K x 16,5$/barril de beneficio) pero el coste de contratar el barco 2,4M $  rondaría por dos meses. Mas otro tipo de gastos de enviar el producto hasta el barco etc. Pero hay margen suficiente seguro de 11,5M a 2,4M

Si hacemos el ejercicio para un mes, el beneficio seria 700K barriles y ganancia de 11$/barril ( 7,7M $ y un coste de mantener 30 dias de 1,2M$). 10M$ de puro beneficio para otros gastos

Todo esto lo cuento aun no teniendo experiencia en crudo, pero a primera vista parece bastante factible y razonable la jugada. Algo similar paso en el 2008, cuando el crudo alcanzo los 140$ el barril

Me temo que las siguientes noticias serán que grandes inversores estan contratando barcos petroleros para guardar barriles :)

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Sunday, April 19, 2020

China vs USA y covid19

Todo el año pasado nos mantuvieron en tensión entre la guerra comercial entre China y USA, pero después de muchos meses de negociación parece que lo solucionaron y a todos se nos quedo en el olvido.

Ahora con el covid19 en primera linea de fuego de las bolsas y economías, no se habla de otra cosa.

¿Que puede pasar a medio plazo con el PIB y comercios de todo mundo?
¿Que pasará con aquellos países que ya estaban sobre endeudados y lo mas probable que tengan que endeudarse mucho mas ahora?

Pero se pueden agregar mas incógnitas al futuro si es que se abren las puertas ya cerradas y creo que el mercado esto no lo tiene en cuenta
¿Puede resurgir la guerra comercial entre USA y China de nuevo?

Nadie sabe lo que puede pasar, cada día que pasa

Las bolsas cayeron alrededor de 35% y han recuperado mucha parte de ella. Suponiendo que el segundo trimestre será peor que el primer trimestre en cuanto a resultados. ¿Caerá la bolsa de aquí a Junio?

El EuroStoxx50 cotizaba en los 3850 a mediados de Febrero y a mediados de Marzo ya cayo a 2250. Un 42% de caída en un mes, algo nunca visto antes. Lo mismo es la recuperación que esta experimentando, un mes mas tarde ya ha subido un 26% de mínimos y se acerca a los 2850

Viendo la recuperación y la sobreventa que hubo el mes pasado, si tuviera que elegir, mi voto va a que alcanza los 3100 (250 puntos por encima de ahora) antes de que caiga a los 2600 de nuevo.

La media móvil de 50 sesiones, en gráfico semanal, ronda los 3300. Y la misma media en gráfico diario en 3000. La idea es que el siguiente punto de resistencia es la media móvil semanal de 50 sesiones que puede que baje a 3200 para cuando el precio alcance dicha media, por eso nuestra opción por ir a los 3100 y ver después que pasa.

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Supercontango en el Petroleo

Futuros del Petroleo de Mayo (expiran el martes 21 Abril) están a 18.12
Futuros del Petroleo de Junio a 25.14
Futuros del Petroleo de Julio a 29.52
Futuros del Petroleo de Agosto a 31.32
Futuros del Petroleo de Septiembre a 32.20

Si se prefiere ver de otro modo, el crudo entregado a 1 mes vista el 20 de mayo, lo tenemos un 39% mas caro. Este diferencial no suele ser normal, y lo que nos dice es que actualmente se esta bombeando demasiado crudo, mucho mas de lo necesario por tanto el precio de este mes se ha descorrelacionado con los del siguiente mes.

Con el acuerdo que se ha pactado en la OPEP, de dejar de producir 9 o 10 millones de barriles diarios a partir de Mayo, el precio de Mayo en adelante ya se ve que se ira corrigiendo situándose alrededor de 30$ barril de nuevo

Precio Mes Incremento
18.12 Mayo
25.14 Junio (entrega 20 Mayo) 39%
29.52 Julio 63%
31.32 Agosto 73%
32.3 Septiembre 78%

Seguiremos de cerca estos precios los siguientes meses para ver si la economía coge ritmo. Ya que si juntamos el recorte de producción y una posible mejora de la economía el precio de septiembre del petroleo debería de ir marcando mayores precios (el futuro del barril de Dic20 por ejemplo lo tenemos a 33,95).

Si después de 2 o 3 meses ( Julio mas o menos) vemos que el barril de Septiembre se encuentra a 32,2 o el de Diciembre a 33,95 o mas bajo. Nos confirmaría que la economía podría vivir un parón para largo (lo que tenemos ahora es un pánico en las bolsas por algo que nunca ha pasado, hay que esperar a que amaine para ver la imagen final)

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Friday, March 13, 2020

Will stock market jump after coronavirus crisis?

Good news I would say. If we look to China stock market, even though they drop around 15%, less than European or American markets, they were able to recover from the dump in less than a month, even though they were battling meanwhile with the virus since end december.

So, we could have them as reference, and the future does not seem so critical and dramatic. The dump on European market are more closer to 30% and in US around 25%, but all countries finally have decided to apply same measures as China did, so, we are in the correct path I would say.

Europe and US are controlling people`s free movements to avoid the expansion of the virus and in the same time are using fiscal policies to protect market as much as possible. Even though, it is known that there will be some decline in the production for a while, until all goes to normal. China finally was able to contain  the virus expansion so it is not the end of the world and we have something else on our advantage, the hotter weather is closer than the first time that the virus started in China. So, it could be easier for us to recover.

So, I would say that even though it is hard to decide, it could be a good moment to take some positions on stocks and buy as there are 25% in discount, of course, it will not be a right path to glory, but if you are a medium to large time investor, is not a madness to invest in this moment.