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19 March 2021
Video commentary for March 18th 2021
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Bond market gives no credence to dovish Fed commentary, growth and innovation plays sell off, cyclicals continue to exhibit relative strength, oil pulls back, gold steady, bitcoin fails to hold $60K.
CTA, Money Manager Unwinds Could Be Behind Oil Drop
This trading note from Bloomberg may be of interest to subscribers. Here is a section:
Crude oil has fallen the most in nearly three months, sliding as much as 4.75% today, and on its way to a test of the March 4 low at $60.52 per barrel. The move is probably linked to some unwinding of long positions from CTAs as daily price gains or losses of more than 3% can often trigger this account group to quickly unload. Watch for this unwind to continue if price action maintains this pace in the days ahead.
Beyond that, money managers could be unwinding longs. This group’s crude holdings are the longest in more than two years, according to the most recent CFTC data. Let’s not forget Iran is swamping China with oil. Also, quarter-end window dressing can also get in the way of an otherwise nice trend.
There is no shortage of oil. OPEC is deliberately restricting supply. The shale properties massively reduced drilling activity in response to low prices and rising borrowing costs have inhibited a swift recovery. However, it is not as if the world has to spend hundreds of billions to find new sources of supply. Everyone knows where the oil is. The question is only at what price it will be produced. The higher prices move the greater the sensitivity to supply gains.
Deutsche Bank Investment Banking Revenue Up 20% This Year
This article from Bloomberg may be of interest to subscribers. Here is a section:
Deutsche Bank AG​​​ said investment banking revenue has risen about 20% so far this year, as the market volatility that spurred gains during the height of the pandemic endured into early 2021.
Chief Transformation Officer Fabrizio Campelli gave the outlook for the German lender’s largest revenue contributor at an online event hosted by Morgan Stanley on Thursday, saying also the firm has continued to win market share in investment banking. He didn’t give further details.
Germany’s largest lender earlier flagged a “good start” to 2021, signaling that trading returns are helping to offset a weak economy. Credit Suisse Group AG and Societe Generale SA each flagged strong investment banking momentum recently, with the Swiss lender seeing revenue up 50% from last year.
It’s not so long ago that investors feared Deutsche Bank would go bust or need to be nationalised. The return to profitability in trading and the steepening US yield curve is a tailwind for many investment banks. Banks are highly cyclical stocks that thrive on liquidity provision during steep yield curve phases.
ByteDance embarks on hiring spree in Singapore
Thanks to a subscriber for this article from the Financial Times which may be of interest. Here is a section:
Singapore is viewed as a neutral city by Chinese technology companies as tensions continue to rise between Washington and Beijing. Tencent and Alibaba both announced last year that the city would serve as a key international hub, with Alibaba spending half a billion dollars to buy a skyscraper in the heart of the financial district in May.
ByteDance has not confirmed which of its international offices is its global hub outside China but its expansion in Singapore — it moved into a larger premises in a landmark office tower late last year — comes amid setbacks in India, the US and the UK, where it has been blocked or accused of breaching privacy regulations.
“As we grow our presence in Singapore, we continue to look for the best global and local talents to support our business and augment local skills and capabilities,” the company said.
The Financial Times reported last year that ByteDance could seek to separate TikTok and other units into a global business that was separate to its Chinese entity. Joe Biden’s administration is reviewing an executive order from former president Donald Trump that sought to force the sale of TikTok’s US operations.
Hong Kong is quickly being absorbed into the Chinese economy. That means its system of governance, with a focus on rule of law and contract negotiation, is being subverted by deference to political will. There is a need for an alternative East-meets-West centre. Singapore is well placed to fulfil that role.
Eoin's personal portfolio: stock market short initiated
One of the most commonly asked questions by subscribers is how to find details of my open traders. To make it easier I will simply repost the latest summary daily until there is a change.
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