Monday Digest #106
Weekly summary of finance, economic and tech news. Vision from DreamTeam. With 💜
Russian Ministry of Finance will start buying currency in February. This may result in increased currency risk for positions in rouble assets. Carry trade players may start to massively close the positions. All this will put additional pressure on the ruble quotes.
Bloomberg:
The monthly volume of interventions at current oil prices will, probably, be around $1 billion.
The Dow Jones hit over 20,000.
Bloomberg: Professional investors see this as mainly a warning.
Since March 2009 the growth of Dow Jones Industrial Average index, which broke on Wednesday (25 Jan.) another line, exceeded 200%. This makes one recall the events of 17 years ago, when the index of “blue chips” broke the level of 10 000 points by capturing individual investors on the eve of the collapse of the dot-coms.
Note that now US stocks by price/sales are traded at the highest level in 15 years. This level is significantly higher than before the 2008 crisis.
Strategists and investmanagers, interviewed by Bloomberg on Wednesday, this time warn against chasing the rally, in particular fearing inflated estimates and uncertainty with the policies of Donald trump.
Interestingly, history may be on their side. Data on the yield of the market after each Dow’s overcoming of 1000 points milestones show that, although in subsequent months the shares, as a rule, grew stronger than average, they started to slip after six months or a year.
#macro #finance
The Federal reserve system has twice raised interest rates, moving in the direction of their normalization.
Now the control of the Central Bank prepares to discuss more complex step — cutting on its balance sheet securities that were accumulated during the struggle with the financial crisis.
Assets have reached $4.5 trillion, and in recent days, several fed officials have spoken on this subject.
President of the Federal reserve Bank (FRB) of Philadelphia Patrick Harker:
“This question will become Central as soon as short-term interest rates will reach 1%. It is expected that this will happen in 2017, now they are equal to 0.5–0.75%”.
Member of the Board of governors of the Federal reserve Lael Brainard:
“Strong fiscal stimulus by the administration of Donald trump may bring the day when the Central Bank will reduce the balance.”
RBC strategist Michael Cloherty:
“Although the reduction in the fed’s balance sheet will increase the need of government in funding, it can be compensated by the issue of the short-term bonds, as they are still in high demand.”
The French authorities at the end of 2016 have revealed a €3.7 billion of unclaimed Bank deposits and insurance contracts.
This is reported by Le Figaro, citing the data from the Ministry of budget of France.
All the funds were transferred to the state Deposit cash, where they will wait for the rightful owners or heirs.
Recall, a law, which introduced the concept of unclaimed Bank deposits was passed in France in 2016. According to this document, deposits are considered as unclaimed if transactions have not occured in the course of 10 years, and three years after the death of the owner of the Deposit. However, even in the case of recognition of unclaimed, deposits are available to citizens for 30 years, and only after this period become the property of the state.
Cryptocurrency exchanges OKCoin, Huobi and BTCC announced the introduction of Commission fees for operations with bitcoin and Litecoin in the amount of 0,2% from each transaction.
As reported, fees are charged since 24 Jan, 12:00 PM UTC. The corresponding statements are posted on the official websites of the exchanges.
The market instantly reacted to this news by a sharp decline in prices — if in the first half of the day (Sunday, January, 22) bitcoin exchange rate reached $940, later, the price of the cryptocurrency quickly went down. At some point, the rate fell to nearly $886. At the close on January, 22 the rate stood at $923.76.
As it is known, until recently, the cryptocurrency exchanges in China did not charge commissions for transactions, and the main source of profit for trading platforms were margin trades. However, on January, 13 the BTCC and the exchange Huobi announced the stop of trading with the use of leverage, and exchange OKCoin has established 1x shoulder. It turned out later, that this decision was taken by results of check of exchanges by the people’s Bank of China.
Note that the reason for checking of the cryptocurrency exchanges, initiated by the people’s Bank of China, was the high volatility of the bitcoin exchange rate and the sharp swings in its exchange rate observed in the first days of this year.
#Commodities
The US Department of energy: Office of the U.S. Department of energy for fossil-based resources on Wednesday (25 Jan.) signed contracts for the first of several planned sales of crude oil from the strategic reserve.
According to the report, the Ministry of energy will sell up to 8 million barrels of oil from three strategic locations. In particular, up to 3 million barrels will be sold from the vault Bryan Mound, the same volume of oil is planned to be implemented from the vault Big Hill. Yet up to 2 million barrels of oil is to be sold from West Hackberry.
The tender offers for the purchase of oil were accepted until January, 17.
The supply of oil is planned to be held in March-April.
In December, the US Congress adopted a resolution for continued funding of current government expenditures. The resolution, in particular, allows the US Department of energy to sell part of oil from strategic reserves by the total amount of $375,4 mln.
The raised funds should go to improving the infrastructure associated with the strategic oil reserves, in the framework of the corresponding modernization program (SPR Modernization Program).
Bloomberg: “Gazprom” plans to freeze dividends at last year’s level until the end of 2019.
Note that the company will face large building projects, the main ones are the Power of Siberia, Nord stream — 2 and Nord stream, the cost of which is estimated at 294 billion rubles in 2017 and this is in addition to the main investment program of the company in the amount of $ 1 trillion.
In the plans of “Gazprom” there are the following points:
- Sale of assets that will bring around 350 billion roubles (see the three-year budget below).
- An increase in the borrowings in the current year by 53% to 705 billion rubles.
Despite the fact that this document has received the approval of the Board of Directors in December, Bloomberg sources indicate the absence of a final decision on the sale of assets and the time frame of these transactions.
#INTERESTING
Bloomberg: 17 Metrics to Watch in the Trump Era.
We present only some of the metrics by which to judge the new president:
- WORKING-CLASS MEN
On the campaign trail, Trump highlighted the need to look beyond the unemployment rate to understand the challenges that today’s workers are facing. Trump’s promise was broader than simply increasing the number of manufacturing jobs in the U.S. It was to make jobs plentiful for those left behind: working class men.
Labor force participation rates of prime age (25–54) men with a high-school degree or less have plummeted over the last 50 years. In 1964, 97 percent of such men were in the labor force; today, that number is roughly 83 percent. What are they doing instead of working? Playing video games, according to recent research.
If Trump succeeds in fulfilling his promise, then more of these men should end up in jobs and the best metric to assess that will be the labor force participation rate of less-educated prime age men.
- BABIES NAMED DONALD
Among other metrics, Bloomberg highlights the number of children which will be named “Donald” after Trump was elected. The Agency argued that parents often call children by the names of the politicians they admire.
If the name “Donald” abruptly reverses its decades-long decline — it’s currently the 441st most popular name for boys — that’s significant.
But Trump fans beware: this particular metric can also register growing disapproval. The name “Herbert” became newly popular in 1928 when Hoover was elected, moving from the 42nd to the 25th most popular name. But after the stock market crash the following year, to say nothing of the Great Depression, “Herbert” swiftly sank like a stone, beginning a decline that continues to this day.
- REAL MEDIAN INCOME
No gain in real median income since 1999.
In recent years, people have been paying more and more attention to real median household income. That is the amount of money that the average U.S. household makes in a year, adjusted for inflation. If Trump’s economic plans restore lost jobs or give wages a boost, we should expect to see real median household income go up.
The full list of metrics is available here: Read
Lemon — automated financial assistant.
Team of online-catalog of startups Betalist published a selection of projects, on which it lays big hopes in 2017. Among them is the financial assistant, money tracker — Lemon.
The creators describe the project “Like a Fitness Tracker, but for Credit” — the analog of a credit card that allows you to analyze expenses and financial condition.
Lemon:
- Shows you the structure of your spendings on all credit cards and Bank accounts, presenting data in the form of beautiful graphs.
- Accumulates bills in all institutions in one place.
- Offers monthly financial literacy.
- Recognizes recurring charges for services you might no longer be using.
The service will become available in Spring 2017.
Vice-President of the Chinese company Xiaomi Hugo Barra will soon leave his post and return to Silicon valley. This was announced by the top Manager on his page in Facebook.
According to Barra, his decision to return to the United States was influenced by the longing for home, family and friends. He also noted that life in Beijing has reflected on the state of his health. Barra thanked his colleagues, highlighting among them CEO Lei Jun, and promised to remain a committed fan of Xiaomi products.
History:
Barra joined Xiaomi in 2013, leaving the position of Vice President of Google. During the work in Xiaomi, Barra has made a significant contribution to the development of the company and increased its recognition. So, at the time of his arrival Xiaomi was actually a mediocre wannabe of Apple, and now the devices of the company have a recognizable design: in the past year Xiaomi has introduced a futuristic smartphone Mi Mix with a large and nearly edge-to-edge screen.
During the work of Barra at Xiaomi, the company expanded its presence in the global market, but at home the Xiaomi development gradually slowed down. So, last year Xiaomi left the five largest manufacturers of smartphones, according to IDC. Although Barra calls the cause of his leaving “homesickness”, one can not exclude that this step is associated with the company’s desire to implement its ambitious plans.
SA”robot lawyer” created by a British teenager has overturned tens of thousands of parking tickets in London and New York.
The chat bot designed to help people dispute parking violations in just 30 seconds has negated 160,000 fines since its launch last year.
DoNotPay is the brainchild of 19-year-old Joshua Browder, originally from London. Browder, who is currently in his second year at Stanford University, describes the chat bot as “the world’s first robot lawyer”.
Users chat with the robot lawyer, which can offer advice on a range of subjects beyond parking tickets. The bot asks a series of questions designed to work out if a ticket can be appealed, including whether there were clear parking restriction signs or if the driver was travelling to hospital urgently. After determining that an appeal is viable, it then walks the user through the steps of appeal.
Browder plans to expand the artificial intelligence lawyer, which can also work out compensation for delayed flights, to help vulnerable groups navigate complicated legal systems, including people who are HIV positive and refugees in foreign countries. The latter will use IBM Watson to translate Arabic and English.
Joshua Browder:
“The success of the parking tickets has made me realise this is bigger than parking charges. I think there’s a real value in providing free legal help through a chat bot.”
At the moment he is working entirely for free and on his own. But he has plans to hire some designers and in-house lawyers as the chat bot lawyer’s capabilities grow.
The grand opening of the printed bridge took place on December, 14 in the Park Castile-La Mancha in Alcobendas, South of Madrid.
It consists of 8 pieces and is made from cement powder reinforced by thermoplastic polypropylene. The construction is about 12 meters long and 1.75 meters wide. It is the first world’s working bridge, printed on a 3D printer.
From the press release of the Institute for advanced architecture of Catalonia (IAAC):
“The 3D printed bridge, which reflects the complexities of nature’s forms, was developed through parametric design, which allows to optimize the distribution of materials and minimize the amount of waste by recycling the raw material during manufacture. The computational design also allows to maximize the structural performance, being able to dispose the material only where it is needed, with total freedom of forms, maintaining the porosity thanks to the application of generative algorithms and challenging the traditional techniques of construction.
The second bridge in the world, created using three-dimensional printing technology may appear this year in the Netherlands. Local startup MX3D has developed a robotic 3D printing system that allows to create bridges in the air. The company promises to build the first bridge across one of the canals of Amsterdam in 2017.
#OPINION [dti in the media]
Managing partner at DTI Alexander Butmanov on Kommersant on 23.01.2016:
“All initiatives to introduce a maximum turnover of cashless payments is in favour of bankers and banks. Also, the winner will be, of course, the Federal tax service. The losers will be those, who go in the shadow sector. In fact, the restriction on some purchases will not change anything, and will even likely increase the cost of going in the shadow operations. Our people will find a way to get around. Can be limited: real estate transactions, new cars and, of course, jewelry.”
Read more: Kommersant (in Russian)
Managing partner at DTI Alexander Butmanov on Kommersant on 25.01.2016:
“Such sectors as pharmaceuticals and biocompanies were better off. McDonald’s, Burger King, Coca-Cola are below the market. It seems to me, that the companies which are represented in hundreds of other countries will be affected the most: Trump will make them return not only plants, but also their capital to arrange them in the United States and then to invest in the rest of the world. Unlike the companies that produce the hardware and organized the production outside of the United States, high-tech companies, such as Google, will benefit”.
Read more: Kommersant (in Russian)
