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16 June 2020
Video commentary for June 15th 2020
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include:stock markets bounce on additional Fed bond buying. Bad COVID-19 news is good for stock markets. oil and gold steady, dollar weak, Treasuries ease but corporate bonds rally.
Global Thematic Diary June 12th 2020
Thanks to Iain Little for this edition of his investment note. Here is a section:
After the recovery from the 23rd March lows (supreme irony: the very date that many countries went into social and economic “lockdown”) and the -6% mini-crash last Thursday, we see stock markets as being in a redistribution phase as “shareholder regret” kicks in. Nervous Nellies who regret holding equities will either exit altogether (“phew, I’m out!”), or switch money into “cheaper”, lagging sectors like banks, oils, real estate, airlines. Optimists will do something similar except that they’ll be more inclined to hold onto the quality (tech, healthcare, FMCG) that has stood them in good stead. These bulls will regret not holding lower quality sectors if their relative outperformance starts to slip. So lower quality could out-perform higher quality for a while. But….Caution!
A man-made Frankenstein (Modern Monetary Theory, which means hiring monetary policy to do the job of fiscal policy) is ringing an early bell for “stagflation” (low growth plus inflation). There may not be enough global demand or monetary velocity to revive stagflation…..yet. But survivors of the 1970s know what this implies for portfolios at the end of the day: inflation-proof growth equities, index linked bonds, real assets and……gold.
Eoin Treacy's view
We are at a very interesting point in the market. There are completely different ways of looking at the market. For those who are long, the clearest rationale is $10 trillion has been thrown into the global market and more is on the way. One way or another that is going to inflate asset prices.
Global Strategy Weekly June 11th 2020
Thanks to a subscriber for this note from Albert Edwards at SocGen. Here is a section:
Eoin Treacy's view
A link to the full note is posted in the Subcsriber's Area.
There is probably no more important question than in which direction bond yields are likely to move. Is the Anglosphere moving increasingly towards negative yields or are we on the cusp of a revolt which will see interest rates rise?
BP Writes Off Billions as Covid Redraws Rules of Oil Demand
This article by Laura Hurst and Amanda Jordan for Bloomberg may be of interest to subscribers. Here is a section:
BP PLC will make the biggest writedown on the value of its business since the Deepwater Horizon disaster a decade ago, as the coronavirus pandemic hurts long-term oil demand and accelerates the shift to cleaner energy.
In a dramatic revision that prompted questions about the affordability of its dividend, the British giant cut its estimates for oil and gas prices in the coming decades between 20% and 30%. It also expects the cost of carbon emissions to be more than twice as high as before.
Under its new Chief Executive Officer Bernard Looney, BP has been quicker than many of its peers to plan for a low-carbon world. Yet moves toward a more sustainable future are bringing financial pain today, and investors are asking fundamental questions about the value of oil majors.
Eoin Treacy's view
It’s a good time to take write downs for any major corporation. With the negative economic backdrop, global pandemic and collapse in oil prices, more than a few companies are likely to use this as an opportunity to clean their balance sheets.
Eoin's personal portfolio: short position increased June 12th
Eoin Treacy's view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.