Monday Digest #81

Weekly summary of finance, economic and tech news. Vision from Russia. With 💜

Bank Of Japan. Outcomes of the meeting:

  • the increased volume of purchases of securities ETF, up to 6 trillion yen from the previously announced a 3.3 trillion.
  • plans to buy government bonds, which account for the main part of the program for the purchase of assets also remained unchanged;
  • budget spending increased by 7.5 trillion yen;
  • loan program doubled from $12 billion to $24 billion;
  • interest rates remained unchanged, including the Deposit rate at minus 0.1 per cent;
  • policy incentives will hold up to until the inflation rate reaches the key level of 2%.

Investors were disappointed with the results of the meeting. 
Nikkei 225 fell 1.65%. The value of the yen to the dollar (USDJPY) at the end of trading on the last day of the last week strengthened by 3.16% against the US dollar to the level of 101,87.

The Bank Of Russia. Outcomes of the meeting:
The key rate remained unchanged at the level of 10.5% per annum, and also kept a moderately rigorous approach to the conduct of monetary policy.

FED. Outcomes of the meeting: 
The regulator has left rates unchanged.
The table below shows how the market assesses the probability of the fed rate hike the United States at the following meetings:

The probability of 50.3% for 14.12.2016 is sufficient to have a positive decision regarding the rate increase, provided of course that the data on inflation, unemployment, and the US GDP will be satisfactory. 
Recall that the FED always has in mind the expectations of the market. This opinion is no less important than inflation, GDP, and unemployment.

Stress tests of the EU. The results: 
Italian Banca Monte dei Paschi di Siena (BMPS) and the Allied Irish Banks were the most troubled banks of the European Union. 
Their adequacy ratio core capital 1 tier (CET1) in the complete basis can be lowered by 2018, below the required level controllers 4.5%

Other banks that entered the top ten with the lowest level of this indicator, steel Raiffeisen (6,12%), Bank of Ireland (6,15%), Banco Popular (to 6.62%), Unicredit (7.1 per cent), Barclays (7.3 per cent), Commerzbank (7,42%), Societe Generale (7,5%), Deutsche Bank (7.8 percent), Criteria Caixa (7,81%) and Erste Group (8,02%).

The total volume of overdue loans all participants in the stress test exceeded €1 trillion.

Pound tries to recover after a heavy fall against the background of decisions but generally remains weak for all 16 major currencies. 
The market expects at the next meeting of the Bank of England will cut rates (the probability is estimated at 96%).
Experts interviewed by Bloomberg, believe that fundamentally, the pound will remain under pressure, which will increase ahead of the Bank of England meeting.


#macro #finance

Deutsche Bank. Bank’s second-quarter net profit fell down to 98% (!). 
It’s revenue fell by 20%. The Ministry started checking securitized mortgage loans and mortgage notes Deutsche Bank. 
Recall that from the beginning of the year shares of Deutsche Bank fell by 46%. However, the stress tests the EU has shown an acceptable level of capital adequacy of Deutsche Bank even in the case of the adverse scenario. Markets immediately responded to these messages: after-hours trading, shares of the Bank rose by 1.5%.

After the collapse of the stock market of China in August 2015, Beijing took the lead in support of the stock market.
That’s just for this support, as can be seen, almost turned the market into a zombie.
Trading volumes from August-September on the Chinese stock market are almost absent, that is, real investors almost there.
Short-term volatility of the main Chinese index Shanghai Composite has fallen to less than 10.

This is one of the lowest values of volatility in the history of the market, and all this is happening despite increased uncertainty around the stimulus and changes in the economic model.
We will remind that recently the Chinese market, the volume of which is estimated at $6.2 trillion, was known for its sharp fluctuations.
This calm in the market is expected to decline against the background that the rebound was not stable because of the speculation regarding the stimulus causes some concern. 
In addition, the memory of last year’s UPS and downs also scares investors, as they will not be able to receive a steady income.

Ratio index 30-day volatility and a 93-day volatility (VIX/VXV) stock market index USA s & p 500 at the close of trading on Friday was at its historic lows at 0.8
The ocean of money is forcing market participants to continue purchase. 
Currently this is not in the format of a selection of rare investment gems, but on the principle of “bulk purchase all at once” (investing in index portfolios).


#commodities

Futures on Urals oil will be launched by the end of 2016 at the St. Petersburg international commodity exchange with physical deliveries from the port of Primorsk (Russia’s largest oil port, located on the Baltic sea).

Goldman Sachs: short term Uncertainty in the oil market makes the price factor depend on more the movement of the US dollar than to market fundamentals.
Again, the demand may be much lower supply (due to sudden cessation of stockpiling by China and increased production in Libya and Nigeria). 
These factors can derail oil prices to $35 per barrel.


#interesting

Norwegian engineers working on the project of underwater floating tunnels to be placed on the surface of the fjords. 
As noted by Wired, there are no such structures in the world.

RBC: MTS will allow customers to pay by account number. Payment does not require Bank cards. The company expects that the project will improve customer loyalty. The outflow of the customers who use immediately and communication, and financial services, a quarter less than the average for the operator’s subscriber base.

The value of the shares of Groupon soared by 28.84% on the background of statements of guidance on revising upward expectations for the company’s revenue for the end of 2016.

For the first half of 2016, the sales volume of luxury cars in Russia amounted to 675 units, which is 24.5% higher than a year ago.


#opinion [Press]

Kommersant, Aleksandr Butmanov: “The Russian economy would feel better at a smooth, predictable weakening of the ruble in the next three — four years”

RBC-TV. Aleksandr Butmanov: For every Kuroda there’s 2 Soros.
Live on Top Russian Finance TV Stream (RBC) of 29th July, 16.
Alex Butmanov, *Managing Partner, Founder & CEO at Dream Team investments*, shared his opinion why Italian banks are not the only problem for EU. To discover it, just watch this video.