Monday Digest #88
Weekly summary of finance, economic and tech news. Vision from DreamTeam. With 💜
The Bank of England has left interest rates unchanged at 0.25%.
The Committee also voted unanimously to continue with the programme of £60 billion of UK government bond purchases to take the total stock of these purchases to £435 billion, financed by the issuance of central bank reserves.
CBR has lowered the interest rate to 10%.
CBR: The outflow of capital from Russia in August gave way to a net inflow of $ 1 billion.
Former Fed Chairman Alan Greenspan: “The U.S. economy is headed toward a period of stagflation — stagnant growth coupled with elevated inflation.”
“It is the worst economic and political environment that I’ve ever been remotely related to”.
The main factors that contributed to the inflow are:
- relatively small foreign debt payments
- high interest rates on ruble debt market with the continuing attractiveness of the ruble (Carry Trade)
- relatively high price of oil.
Let us recall that the carry trade is a speculative strategy, with the use of the difference in interest rates. Because of the rate of return is at zero level or below in many countries, a quite large return on carry trades it is particularly attractive for foreign capital. But this capital easy comes and easy goes .
(We told you about this in the Digest # 83).
Bloomberg and CNBC have launched information flows about the rising cost of money (LIBOR rate).
The Information spiral will probably enhance the speed of this growth.
#macro #finance
WSJ: The U.S. demand from Deutsche Bank $ 14 billion.
Experts believe that during the period up to 2008 Deutsche Bank was one of the credit institutions, which underestimated the risk assessment on the securities. As a result, these securities were bought by the mortgage companies Fannie Mae and Freddie Mac, the problems of which have led to the global financial crisis.
It should be noted that the bank is now facing serious financial problems, it suffers multibillion-dollar losses, and many experts see this as a real threat to the new financial collapse.
The bank’s shares have responded with the fall by 7.3% since the start of trading.
Colleagues, we try to inform you in advance and warn against possible shocks in the financial markets.
You, our readers, customers and partners were aware of the problems of banks in Germany in advance.
Thank you for being with us)
We are glad to be helpful.
Managing Partner of DreamTeam Investments Alexander Butmanov in Kommersant on 25.11.2014:
“… With the rise of Fed interest rates we will see a new Lehman Brothers …”
Details: http://www.kommersant.ru/doc/2618580
Managing Partner of DreamTeam Investments Alexander Butmanov in Kommersant on 19.03.2015:
“… May cause another Lehman Brothers …”
Details: http://www.kommersant.ru/doc/2689489
Managing Partner of DreamTeam Investments Alexander Butmanov in Kommersant on 02.10.2016:
“… The problems we see in Shanghai, will haunt not only particularly in Germany. Deutsche Bank, Credit Suisse, who is the first to show the terrible losses on reporting …”
Details: http://www.kommersant.ru/doc/2912650
In 2016 IMF mentioned the similar risk: German banking system represents a higher degree of possible external chain reaction as compared to the risks that it creates within.
>> This means that in a global interconnected game of counterparties, Deutsche Bank problems are not only the problems of Deutsche Bank.
The situation on the global financial market with each passing day becomes more and more intense, the volatility has peaked since the British referendum. Sales now take place even in the bond market, which had previously served as a safe haven.
Yields of German ten-year bonds, which have been in a negative territory for a long time, have gone into a “plus”.
For nearly 10 years China has been building a strategic alliance with Venezuela, which has one of the largest oil reserves. But now, against the backdrop of nonperforming debts and the growing threats to security of their citizens and businesses in Venezuela, China is changing the relationship with the country, which it has lent about $ 60 billion.
As a result, Caracas may no longer receive loans and investment from Beijing.
This will increase the likelihood of worsening of economic crisis in Venezuela and its default on bonds more than $ 100 billion.
Analysts of Bloomberg predict the depreciation of the Mexican currency, if Donald Trump wins in the struggle for the presidency of the USA.
Investors have already received appropriate advice from Citigroup and Barclays banks.
Fears that in case of victory in the elections Trump will fulfill all his promises with regard to Mexico, led to the fact that this year the peso has lost more than 10%.
#facts
Inflation in the UK in August in annual terms amounted to 0.6%. According to Reuters, analysts expected the annual inflation rate of 0.7%. It should be noted that inflation in the UK remains below the target level of the Bank of England, which is 2% since 2013.
JP Morgan has become the most expensive bank in the world, leaving on the second place the US Wells Fargo, which was fined last week for the manipulations with customer accounts with the aim of overvaluation of indicators of banking products sales, has lost its status of the most expensive bank in the world last Tuesday.
S& P has changed the outlook on the sovereign ratings of the Russian Federation from “negative” to “stable”.
The reason: reduced external risks and the ongoing adjustment in the economy.
S & P and other rating agencies do not have such an impact on the crowd for now, as they used to in the last century. In particular, this applies to the Russian rating. Their influence has “devalued” significantly due to the political intrigues and shenanigans on the market.
#commodities
IEA: In 2015, global investment in the energy sector fell by 8% to $ 1.83 trillion. Much of this was due to the decrease in capital expenditures in the exploration and production of oil and gas by 25% to $ 583 billion.
According to the prediction, in 2016, for the first time in 30 years, the investment will be reduced for the second year in a row by 24% more to $ 450 billion.
FT: During the years 2011–2014 investment in exploration and production of oil and gas on average exceeded $ 700 billion a year. Many of the major projects are starting to operate just now, which may lead to the oversupply. For example, on October 23 of this year one of the biggest and most expensive oil projects in the world will be launched. According to experts’ forecasts, the production at Kashagan will reach 370 thousand barrels per day in one year. This is more than now is produced in all fields of Libya altogether.
Because of the commissioning of such projects, OPEC has increased the daily production forecast in countries outside the cartel by 190,000 barrels in 2016 and 350,000 barrels in 2017.
Bloomberg: Short-term factors may intervene the restoration of the balance of supply and demand.
Nigeria and Libya, where production has fallen dramatically due to internal conflicts this year, are prepared to return to the market more than 800,000 barrels per day in the coming weeks. In this case, an excess of oil on the world market will increase by more than three times; IEA currently estimates it at 370,000 barrels per day.
Let us recall, the oil reserves in the US showed a record since 1999 decline in stocks last week. This fact is explained by the hurricane (we wrote about it in our last Digest # 87); perhaps a few tankers were unable to unload. The hurricane seemed to be finished, so the experts were fairly waiting for the rapid growth of imports and, as a result, stocks.
However, according to recent data, which were published by the API, commercial oil reserves in the United States have not increased by 4 million barrels, as it was expected, but only by 1.4 million. Oil has showed short-term growth on this news, but after 30 minutes of trading the price returned back and continued to decline.
Losses of creditors on defaults of oil and gas companies in the US, which occurred since 2015, have become more than in previous years, the study of Moody’s reports. Of the 15 examined the agency defaults, lenders were able to return only 21% of the nominal value of debt on average, compared with an average of return of 58.6% through 2015.
Onthe predictions of deficit, Zinc rose by 38% this year. Analysts of the U.S. investment bank Morgan Stanley have proclaimed zinc to be the best choice among raw materials, predicting further price increase due to the maintenance of steel production in China at a high level.
#INTERESTING
The proposed new service mVisa allows consumers to get access to all of their bank accounts for TSC and individuals payments. For the first time the service was launched last year in India, where it has joined several banks and about 30,000 TSC.
Now Visa is planning to expand the scope of use of the service to the whole Africa. Now the service is being launched in Kenya.
Twitter will appear on TV — the company has released an applications for the Apple TV, Amazon Fire TV and Xbox One.
Also, starting from September 19, Twitter will no longer take into account in the limit of 140 characters per tweet with media applications (images, video, GIF-files, polls) and quotes tweets.
Amazon and Blue Origin founder Jeff Bezos on Monday announced plans to create a giant reusable missiles, capable of delivering humans and satellites into orbit. This will make Blue Origin a direct competitor to company SpaceX of Elon Musk.
MTS and Nokia tested 5G technology, which allowed to obtain the speed of 4.5 Gbit /s in the band 200 MHz.
This speed allows you to send a file size of 1 GB in less than two seconds.
The volume of investments in the development of the technology was not revealed. Launch of the fifth generation network is scheduled for 2020.
#OPINION [dti in the media]
Managing partner of DTI Alexander Butmanov on the “RBC. Expert “on RBC-TV on 14.09.16:
“Personally, I think that once again nothing will happen in Algeria. If you have look at the statistics for the last 10 attempts to influence the price of oil, the prices before the meeting usually grow, and then there is a plummet to the same level as before, and often even lower. That is why 9 out of 10 shortlisted attempts of OPEC to pull out the oil prices is a profitable strategy for the last 3/5 years. I do not know how it will work out now, I can not guarantee, but that is the statistics.
In terms of quarter and year everything is determined by demand, supply and inventory. And in the short term — in days and weeks (on days exactly, on weeks it depends) oil has become a proxy indicator of the risk appetite of investors: that is, when oil goes to $ 50, it begins to respond more to supply and demand, when the oil is in the corridor $ 40–45, it responds to the risk-up and the risk-down. I.e. oil oil at the bottom reacts on a risk, oil at the top — on macroeconomic statistics.
Trading is not for some OPEC actions, which they will not do in any case, the question is, what will be the statement: hard or not. It is something like central bankers Draghi and Yellen.
Predictions: if you see $ 50 for Brent grade, it can be safely sold + you will still be paid a positive carry. Risk-profit set at 1 to 3. At $ 50 I would sell, and looked at least at $ 45, you can set take profit at $42, if you have strong nerves. To buy oil below $ 40 (Brent) is a really good strategy in terms of medium-term speculative investment. “
You can watch video here: https://goo.gl/VsnHCa
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