WTI Oil (USD 70.71) : A correction has started …

Tensions in Middle East, tough US positioning versus Iran and Venezuela pushed oil prices further up in recent weeks .

Saudi announcement of a potential boost in oil supply is reversing price action and WTI @ USD 60-62 could be seen again very quickly .On top of this, extreme bullish positioning of futures traders might exacerbate the move down short term.

 

 

IBM … New generation mainframes, cognitive technologies & AI with Watson , blockchain = Bright future.

See also previous post on IBM :   August 26th Post : “Buy IBM”

 

On IBM in TheStreet.com

On IBM as future of Economy (Bloomberg Podcast)

Stifel : Target USD 182

200D MA around USD 156 will now act as support  … not too late to buy for long term on due consolidation .

 

 

 

Brazil / iShares MSCI Brazil (EWZ) : Profit taking on position bought in May

 

Initial blog post May 19th  : http://www.investorid.one/2017/05/19/political-crisis-in-brazil-again-market-moves-overdone-buying-opportunities/

 

Triple Top forming and pending reversal.

RSI & MACD divergences & ADX showing bearish signs.

25% profit booking : Purely Tactical = We remain Positive on Brazil & EM in general for the long term.

 

 

 

 

EUR/USD : Reversal Day ?

Shooting Star Bearish Reversal pattern appeared yesterday on EUR/USD chart : A strong push to nearly 1.21 and a move back to below opening level. This bearish pattern is especially significative when coming after a strong push which is the case here . The pattern would be negated should EUR/USD close back above yesterday’s high i.e. 1.2070.

SocGen, UBS , ING, Credit Agricol ,.. on what’s next for EURO

Shooting Star explained

 

 

EURO : Next – big – threat ? Berlusconi is back !

Talks of parallel currency gets bigger again in Italy after last weekend Berlusconi interview.

Following Citi , more than 2/3 of italian voters would support anti EUR parties.

The 3 right & centre rights parties will finalise a common program in september likely including parallel currency project.

Risk of Italy (even if low) going this way totally underestimated by FOREX markets but Italian Bonds have started to react negatively  with Bund/BTP spread  up 20 bps in the last week.

 

See more details in  FT’ link here below :

https://ftalphaville.ft.com/2017/08/21/2192571/parallel-currency-talk-gains-ground-in-italy/?ft_site=falcon&desktop=true

 

Italy + ECB obviously not wanting to see EURO above 1,20 + ECB potential tapering discussion in september already in EUR price + more dovish Fed priced as well = EURO/USD  to correct from current 1,18 to 1,20 range is becoming more and more likely.


 

 

Political crisis in Brazil … again ! Market moves Overdone … buying opportunities !!!

 

Following reports President Temer would be involved in a bribery scandal , Bovespa lost on thursday 9% and Real 6.5% in a complete panic mode. Markets are fearing Brazil could enter another period of political trouble endangering ongoing needed social and pension reforms . The Msci ishares Brazil ETF is down 16% on the day !!! which might price already part of worst case scenario i.e. prolonged political uncertainty ( Temer resigning or not , no reforms being implemented,..)

Our recent Tactical Buy Vale opened yesterday at USd 7.49 and is trading today pre market at USD 8.25, just to show the extent of the panic. In my  ( .. and most of analysts this morning) opinion this is clearly an exaggeration.

Here below Petrobras chart : PBR lost 16% in USD terms …  / see also Barron’s on PBR for more fundamentals reasons why to step in .

Action : Buy 0.5 unit in petrobras at opening (Max USD 9.10) and 0.5 unit at yesterday’s closing price of USd 8.50 based . Rationale 1/ Panic move 2/ Volume 3/ Low end of trading range .

Action : Buy 1 unit in EWZ (iShares Brazil ETF) for an exposure to Brazilean market in USD terms (down 16% yesterday ) at opening (Maximum USD 34.75) .

 

Petrobras in Barron’s last week end :

Re-energized Petrobras Headed Higher – Barron’s

 

 

European markets ready to play catch-up.

 

European equities (and Japan) have massively underperformed US equities in recent years especially for USD based investors . Not only equities return were poor but currency performance was very weak : – 33% for the EUR against USD  since 2008  (-31% since 2011 for the Yen).

Situation has started to evolve since early 2016 with SP500 underperforming Eurostoxx 50 :6.53% vs 8.84 %. Main  explaining factors are:

1/ Economic recovery in Europe is gathering pace  while some data out of US economy are a bit more on the negative side.

2/ European markets priced (and still partially do ) the risk of populist parties to win major elections with the attached questions about EURO survival. This risk has been reduced with Macron win in first round election in France .

3/ The much cheaper valuation of European equities compared to their US counterparts.

4/ Catch up potential (See Chart Below)  and rising interests from US investors seeing risk on their own market and opportunities in others .

 

Source : The Bespoke IG

Politics and Equity Markets … Don’t mix up to much

 

One of the most controversial leader in the world this year : Erdogan in Turkey  = Turkish Equity Market +19.98 % year to date , second best in the world since December 2016 

 

General Strike in Brazil last friday =  Brazil Equity Market +2. 87% in last 5 days , second best in the world on the period .

https://www.nytimes.com/2017/04/28/world/americas/brazil-general-strike.html?_r=0

“… austerity measures proposed by the scandal-ridden government of President Michel Temer…”

 

Donald Trump and multitudes of markets collapse warnings in the weeks before = US Markets up 15% for SP500 and 20% for Nasdaq since Election day .