Monday Digest #97

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

#macro #finance

Venezuelan authorities have banned public and private banks to lend through branches and ATMs more than 10 thousand bolivars (about $5) a day. 
The country’s Central Bank took such a decision due to the lack of cash. Over the last month inflow of cash in public and private financial institutions decreased by 50%.

The yield on 10-year government bonds in Japan turned positive for the first time since the end of September.

Thus, they were touched by the world the trend of increasing yields (=the fall of their prices because the market is in Risk-On) caused by the victory of trump.

WSJ: Bank of Japan offered to buy unlimited amount of Japanese government bonds at a fixed rate above the market (i.e. the price will be below the market one) for the first time since reviewing the monetary policy.

The Bank of Japan Governor Haruhiko Kuroda:

Interest rates could rise in the US, but that doesn’t mean we should automatically allow the Japanese interest rates to rise behind them.

According to one of employees of the Bank of Japan, by the mean of this proposal the Central Bank tries to signal that it wants to confront the sharp growth of the yields of short — and medium-term bonds. 
Towards the end of Thursday, the Central Bank said that no financial institution has made the proposal on their sale.

The U.S. Treasury: the world’s governments and Central banks in September have sold US treasuries to a record amount of $47.1 billion since 1978. In the last 12 months sales exceeded $200 billion, and the total investment of the world’s governments and Central banks fell to its lowest level $3.9 trillion since July 2012.
Analysts believe that it’s the way the market reacted to the upcoming December meeting of the fed on which regulator will take the decision on increase in the base rate. Note that now the Fed Fund Futures show 95,4% probability of raising rates in this year’s last fed meeting.


#COMMODITIES

IEA: crude oil inventories in the U.S. last week increased by 5.29 million barrels. Note that reserves growth continues for the third consecutive week. Analysts expected growth of stocks by 1.48 million barrels.

While stocks in Cushing increased by 1.13 million against the forecast of +0.15 million => the tankers continue to come after the storm.

Bloomberg: oil traders in Europe have faced a shortage of space in land-based silos, which were overcrowded because of the growth of supply and lack of demand.
The oil reserves in the ports of Amsterdam, Antwerp and Rotterdam have reached record highs since 2013 amid new supplies from Libya, Nigeria and Russia, as well as growth in shipments from fields in the North sea up to the highest level in almost 5 years.
The unsold oil remains in tankers waiting for buyers. Currently, 16 courts of class Aframax are turned in floating storages, overall, there are about 9 million barrels on Board.


#INTERESTING

FT: the Swedish Riksbank, the oldest Central Bank in the world, first issued paper banknotes in 1661. Now it is the first of the major Central banks to issue its own virtual currency amid falling popularity of cash at home.

Reuters: the company SpaceX of Elon Musk has applied to the Federal communications Commission of the USA on placing 4425 earth orbit satellites to provide ubiquitous access to the Internet.
So SpaceX intends to provide wireless satellite Internet for all people on Earth.

Domino’s Pizza and Flirtey in New Zealand have successfully started an experiment of a commercial pizza delivery using drones.


#OPINION [dti in the media]

Managing partner at DTI Alexander Butmanov on the “Exchange” on Euronews on 18.11.16:

From the point of view of the market, actions of Trump are like Reagans’. Recall that the markets also reacted very positively to his arrival, because he began to curb inflation, and he had slogans similar to those that trump said, about making America great. But then we saw that with the high interest rates, it was really hard for markets during the next decade after the arrival of Reagan.
I believe that with Trump it will be the same. I believe that now copper, industrial metals — have all grown because, really, for the revival of the American automobile industry reindustrialization is needed.
About the rate: there is no escape, because de- facto, when the new US President announced that he produces so-called tax stimulus, i.e. increases the amount of money available for households and businesses, this means that the money supply at their disposal will increase => long-range inflation in the U.S. => the fed will have to curb it, because the market provides long inflation of 2.5–3.5%. It is quite dangerous, as far as the inflation that had emerged from figures 3.5 and 4% is like a bottle with Gin. Again, we’re going to Reaganomics, and even worse — in the Great Depression. So, in fact, the probability of a rate hike by fed has only increased with the arrival of Trump and declaring by him de-facto new stimulus. In General, rates will increase, and I don’t remember a period when American and overall world economy managed to grow aggressively in the long term, together with a series of rate hikes.

IN THE VIDEO:

  • Fundamental forecast for the movement of the index SnP500.
  • Will there be a strong correction in the American market.
  • What will two Lehman Brothers (Asian and European) mean for the world economy.
  • Where will major funds invest in the instability in the markets.
  • What will happen to the ruble in the correction of the U.S. market.
  • Trading recommendations from Alexander Butmanov.

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