$C Citigroup catch upLooking at long term charts, the bank crisis has opened an opportunity to invest in bank stocks. Lowest risk is to go with the too big to fail banks. Citigroup is one of them. If you compare it to the other big bank stocks since 2008 you'll see that C has lagged behind while others recovered to pre-crisis levels. I think C can catch up in next few years. It is my choice to invest of the big banks.
Citigroup
BEFUDDLED BANKINGIt’s no secret that the US banking industry is facing some significant challenges when it comes to securities losses. In fact, the Big 4 US banks - JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America - are sitting on a combined $211.5 billion in unrealized losses. That's a huge amount of money, and it's certainly cause for concern among investors and analysts alike.
One of the key reasons for these losses is the ongoing volatility in the financial markets. As we've seen over the past few years, there have been a number of factors - from geopolitical tensions to trade disputes to the COVID-19 pandemic - that have contributed to significant swings in the value of securities. For banks that hold large portfolios of these securities, these fluctuations can have a major impact on their bottom line.
Another factor that's contributing to the securities losses among US banks is the current low-interest rate environment. When interest rates are low, banks tend to invest in higher-yielding securities in order to generate returns for their shareholders. However, as we've seen in recent years, these securities can be risky, and when their values decline, it can lead to significant losses for the banks that hold them.
When it comes to regional banks, the situation is even more dire. These smaller institutions often have smaller deposit bases, which means that they have less capital to work with when it comes to investing in securities. As a result, they may take on more risk in order to generate returns for their shareholders. Unfortunately, this can backfire when the securities they've invested in experience significant declines in value.
So what does all of this mean for investors and consumers? Well, for one thing, it's important to be aware of the risks that banks are facing when it comes to securities losses. While the banking industry is generally seen as a stable and safe place to invest, the reality is that there are always risks involved. As always, it's important to do your own research and due diligence before making any investment decisions.
For consumers, it's important to be aware of the financial health of the banks where you keep your money. While the FDIC provides insurance for deposits up to $250,000 per account, it's still a good idea to make sure that the bank you're working with is financially stable and secure. Doing so can help to protect your money and ensure that you have access to the services and resources that you need.
Free Market vs The FedAs of late, the vast majority of us probably have been hearing about "too big to fail" or " a free market vs. a central market" What does all of this mean?"
Well, let's go over some of the basic stuff. As in some of my prior posts, it is important to understand that the "Fed" does NOT control mortgage rates or loan rates from your local banks. Let me repeat that the Fed does NOT control mortgage rates or consumer loan rates
So now you might ask yourself why the Fed raises rates matter?
Well, that's a great question. Because, in short, it should not matter if we were in a free market. Well, sadly, we are not in a free market. We are in a centralized market with different flavors available to us.
"Ah, but Guy, you just contradicted yourself by saying the fed does not control mortgage rates, and now you're saying we're in a controlled market rabel rabel rabel "
Let me explain... The Fed cannot have any direct contact with "average" consumers; it's currently illegal FOR NOW . Now, everyone, the biggest fear with CBDC is a rightfully placed fear. And we will discuss this in a separate post.
So, view the Federal Reserve's manipulation of the economy as a game of pool (billiards) or snooker; what have you. In billiards (for the purpose of the post, billiards = pool), the player cannot directly hit the numbered balls with the stick (cue). Instead, one must use a medium to engage the cue ball. So, to pocket your balls, you must have a small degree of understanding of physics to transfer energy from you to the stick to the cue ball to the desired ball into the desired pocket.
The Fed (cue) is the same way. They set the FFR (cue ball), which then goes to the regional and big banks (numbered balls), which then sink into the economy (pocket)
So, how does this work? To explain that, you need to understand how a bank makes money.
(The Following is highly watered down for simplicity's sake)
A bank does not make money because you have an account with them. On the other hand, a bank makes money BECAUSE you have an account with them.
So when you use your local JPM, WFC, or C bank :) as a piggy bank, they pay you an interest rate of something like a percent of a percent; however, it's still considered a liability to the bank because that's cash flow going to you from them even if it's a penny a year.
So, how can they make money then?
The fractional Reserve system. Mike Maloney debates this, and I'm super interested in hearing his thoughts on this... another post for another time.
What is the Fractional Reserve System? Basically, for every dollar you put into your account, the bank can lend out 10$
It's basically in place because you're not running to the bank to close your account. So, they can do this. When you put money into your account, it's already out the door into someone else's pocket in the form of a loan by the time you place your wallet in your pocket/ purse what have you. And that's probably too slow for the bank. (velocity of money)
Well, that bank's balance sheet of physical liquid cash probably only is enough to pay the onsite staff hourly wage the bank needs more. so they have one of two options
1. go to the Fed and borrow money at the FFR
2. go to the repo market and borrow from another bank by offering t-bills and bonds as collateral. (shadow banking)
Typically they go with number one because it's cheaper.
The vast majority of times they use the repo market is for cash now! or if their risk management department is trying to make some quick cash off the bond market. (shadow banking is outside the purview of this post, and I'm still learning about it. I will post about it later)
( the fed lining up their billiard shot) So, the Fed has decided the US economy needs to grow more...
(the Fed hitting the cue ball) So, lets say the Fed makes the FFR 0% (hypothetically LOL)
( the cue ball hits the numbered ball) So your local JPM will go to the Fed and take out a loan at 0%, so they need to lend this money out and make money, and make their, JPM's rate, interest rate on that money 3% LOL!
(The numbered ball sinks into the desired pocket) you the consumer want to go out and buy something you can afford on your 9-5 salary.
So you go to the bank and qualify for a loan at their 3% rate to be amortized over 10-30 years, and the economy grows.
If that sounds familiar its coincidence LOL
However, in a free market how it would work is the loan system would be heavily dependent on the local economy and local wage potential.
How?
If a bank is set up in an area with low-income earning potential, then the market will tell the bank exactly how much they can charge on money.
Example: let's say the Risk Manager at your local WFC decides he is conservative and makes the DTI Ratio for loans 30%. That means the minimum someone must make for a 200,000$ loan is around 60,000$. If the local median income is 45,000$, no one can afford a 200,000$ loan. The maximum loan amount they can make is around 150,000$.
So, for the bank to grow, it either needs to up the DTI requirements, it needs to be content with its current earnings and hope the area grows or wages increase, or it can close down and move.
Now where the free market comes into play is when WFC is having their DTI at 30%, JPM is at 40%, and C is at 60%, (free market remember) in the same area as the example
The following happens:
WFC sees their default rate is less than 10%
JPM sees thier default rate at 40%
C sees thier default rate in the upper 80%.
So, what this means is that the market is telling WFC they are leaving money on the table but are playing it safe. Because less people qualify for the loan
JPM has almost found the sweet spot. 40% of their loans are in default, but more than half are paid on time. could use some minor tweaking but solid none the less. (With my risk tolerance, 30-35% default is a good number depending on loan size.)
C is in trouble because they have lent out too much, and people can't afford that much money in the area.
So in a free market, WFC will fail in the area because they're not seeing enough volume, and C will fail because they're seeing too much volume. which leaves JPM to buy up both of the failing banks and grow bigger LOL!
CITI GROUP MAYBE MAYBEThis bank holds more cash around the world but we know that banks has no more cash at their vaults because of Federal reserve banking system. Interest rates kill them.
So we might see CITI group might go below or pump atleast there is a buyer.
Follow for more.
This year is interesting on banks......
C Citigroup Options Ahead Of EarningsAfter the last price target was reached:
Now looking at the C Citigroup options chain ahead of earnings , I would buy the $52.5 strike price Calls with
2023-9-15 expiration date for about
$1.28 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.
Looking forward to read your opinion about it.
C Citigroup Medium term OptionsThis bank sell-off looks like a buy opportunity if you think medium to long term.
Looking at the C Citigroup options chain, I would buy the $45 strike price Calls with
2024-1-19 expiration date for about
$5.55 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.
Looking forward to read your opinion about it.
💾 Citigroup, Inc. | The Chart Looks Different But Still BadCitigroup doesn't look as bad as BAC or JPM as it has already been going down strong since June 2021, it also didn't recover much from the 2009 crash and so there is less room for a crash... But it is still quite bearish, the chart!
Here is the chart:
Maybe this people are more down to earth and this is why their stock is doing worse, they know whats coming, their customers are more aware and so they have been selling for a long while.
The others might be in the clouds.
What we went through with the capitulation phase within the Cryptocurrency market and the November 2022 lower low the traditional financial markets still have to go through, we went through the process first.
✔️ Citigroup moved above EMA10 in December 2022 and after struggling a lot it managed to move and close above EMA50 last week. This week this is all lost and we have a high bearish volume close below this very important level.
✔️ Citigroup now trades below all moving averages, a very strong bearish signal.
✔️ What the chart is clearly saying is that a continuation of the bearish trend is likely to take place.
Unless a miracle happens... Something like Trillions of dollars being produced out of thin air, this is like to crash as well with the rest of the giant banks... This is what the chart says.
Bearish all across.
The monthly chart, the main one above, is not as weak but still trading below EMA10 yet this month is still young.
I am getting mixed signals on the monthly chart.
The weekly chart reveals whats to come.
When a timeframe is not clear, we can go to lower timeframes to get a better picture.
Prepare yourself.
Namaste.
C Long Resault: 17.56% Profit✅A good opportunity to long position and get a good profit from the attractive American stock market
Stay with me to get more analysis after following me by sharing with friends and leaving a comment.
According to my risk and capital management system, the risk of each trade is one percent per position.
What do you think about this analysis and other analyses?
What symbol would you like me to analyze for you?
CA good opportunity to long position and get a good profit from the attractive American stock market
Stay with me to get more analysis after following me by sharing with friends and leaving a comment.
According to my risk and capital management system, the risk of each trade is one percent per position.
What do you think about this analysis and other analyses?
What symbol would you like me to analyze for you?
C Citigroup Options Ahead Of EarningsLooking at the C Citigroup options chain ahead of earnings, I would buy the $47.5 strike price at the money Puts with
2023-3-17 expiration date for about
$3.05 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.
Looking forward to read your opinion about it.
Citi - still downtrend - no signal for longhi
citi is my favorite bank to play. it is funny bank, when bankers can play how they want the money without any control, and then lost their job. I don't know what kind of procedure they got but it does not work ...
I think that this bank is manipulated a lot, lot of people - big fishes have got stocks in their pockets, bought roughly very cheap below 11 usd... they who knew that usa will help the bank, they became a rich men ...
right now, we know that fed is going to kick up the rates very sharply, 2023 is still negative year for spx... dolar is still being played hard long, yen down, all other minor currencies also. Everybody are right now playing bonds and rising costs of debts...
Please look on the chart. I think that we are moving 32 USD, and then level down can be 27 even. I think that scenario right now is 32 usd... it is going down, no signal for going up...
I wish you good luck.
My idea drinking coffee..
best regards for tradingview for their positive look on my work...
Is still the Energy a Good Bet in perspective of recessionEnergy sector it’s the best performing market sector in 2022 instead of the latest evolution of Oil. Evolution of energy sector its close correlated with war between Russia & Ukraine. But we need to recap last week’s events.
Russia shut down its Nord Stream 1 natural gas pipeline last week for “maintenance” and will thereby provide Europe with a preview of how will looks winter this year. Instead of opening terminal in Estonia from Norway and new delivery from Spain, or imports from Canada & Qatar Europe can’t replace completely Russian energy and Europeans will have higher bills for energy-related products. Its expected price caps but this will result in more shortage of Gas & Oil.
There is a growing possibility in the case of a regime change in Russia that could disrupt the crude oil and natural gas markets. We support this idea because of latest development of war, Ukrainian soldiers regain 6000 KM2. Also, six of Putin’s allies have been shot or blown up, so Putin’s inner circle is becoming increasingly isolated. “Special operation” support is lowering because of Europe sanctions from 85% to 68% according to Levada.ru press agency.
In the event that there is a ceasefire between Russia and Ukraine, post-Putin, the stock market could explode 40% to the upside. However, as long as Putin remains in power, the Ukrainian war is expected to persist in a long, and we will have high price of energy. We reduce our profitable positions this week in anticipation of pervious scenario.
After last days of Ukrainian Army advance we can see already a turning point of conflict.
We closed some energy positions like Alvopetro (Alvof) and Petroleo Brasil (PBA) +30% opened in March because we had important gains from price appreciation and large dividends, with higher risk of president Jair Bolsonaro intervention in companies’ administration.
We anticipate Corporate Earnings to decline except Energy. We remain skeptical that a new Iranian nuclear deal will be announced in the upcoming weeks because this will affect Bidden administration and relationship between USA and Israel.
What About US Inflation
U.S. inflation may have peaked, but at high levels thus forcing the Fed to remain restrictive. Strong dollar, high mortgage rates, lower commodity prices, lower demand, and reduced supply chain pressures are likely to help reduce inflation over the next year. The U.S. dollar should stabilize over the medium-term amid hawkishness from other central banks and slowing economic data this is positive for growth stocks in short term. Right now, CPI was published and is above expected values but market overreacted this bad news. Today’s CPI report wasn’t a game changer. A “better balance” in the labor market would be a game changer for CPI next months because higher vacancies-to-unemployment ratio fuels inflation.
Just read Societe Generale opinion below:
Societe Generale Research discusses the USD outlook and sees the currency rally close to its peak. "Aggressive fiscal reaction to higher energy prices encourages our belief that while the euro and pound won’t stage significant rallies until the we’re closer to the end of the energy crisis (and the end of the war in Ukraine), the dollar’s peak isn’t very far away," SocGen notes. "A period of EUR/USD and GBP/USD trading in low ranges is more likely than fresh 10% fall from here and it’s much more likely the next 10% move in USD/JPY is down, rather than up, too," SocGen adds.
We can see at the end of the year decline in USD and we acquired new positions on Gold, Silver and Banks European Index (EXX1), also new positions in Citi (C) Societe Generale Bank (GLE).
Right now, we have a late cycle development and we prefer equities instead of fixed income like bonds. Not all equities are good to own right now, we select just strong companies with large cash flow from sectors like Healthcare, Consumer Samples and Utilities, Renewable Energy. We favor commodity and companies that mine uranium and lithium for Green Energy Industry.
Good green Companies:
ENPH Enphase Energy, Inc.
SEDG SolarEdge Technologies, Inc.
VWS Vestas Wind Systems A/S
PLUG Plug Power Inc.
FSLR First Solar, Inc.
ED Consolidated Edison, Inc.
ORSTED Orsted
RUN Sunrun Inc.
EDP-Energias de Portugal SA
968 Xinyi Solar Holdings Ltd.
541450 Adani Green Energy Limited
9502 Chubu Electric Power Company,Incorporated
BE Bloom Energy Corporation Class A
SGRE Siemens Gamesa Renewable Energy, S.A.
DQ Daqo New Energy Corp Sponsored ADR
Best Lithium Producers
Albemarle Corporation (NYSE:ALB:US)
Jiangxi Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460)
Lithium America Corp (LAC)
Sociedad Quimica y Minera S.A. (NYSE:SQM:US)
Allkem (ASX:AKE, OTC Pink:OROCF)
Some of the problems that markets will have to face in the near future:
Increased food and energy prices are causing acute trade imbalances and civil disorder in the most vulnerable countries. Europe will enter to recession.
China, COVID pandemic continues, massively affecting its economy. Simultaneously, the Chinese property complex – key to Chinese economic growth – is now under dire stress.
Greatest fiscal tightening in history as governments withdraw COVID stimulus will impact companies’ margins and profitability.
Population decline will pose threats to economic growths. No single G7 country’s is producing new born at replacement rate.
Climate problems, higher temperatures, on all continents will have a major impact for agriculture next years.
We see now all vectors for an epic super-bubble because all of the assets, stocks, bonds, houses are overvalued. Right now we experience first stages with inflation and interest’s rates surge but will have sooner than later lower corporate margins and unemployment.
[8 Sep] Financials Rebound [Reversal Trade]How I idealised this trade: Woke up slightly later than usual and as I tried to catch up with the market happenings, I realised that whilst the S&P500 has had a great rebound, my portfolio (mainly SPY and blue chip tech stocks) was relatively flat. Digging in further I soon realised that the financials were leading the rebound for S&P 500.
I compared severable financial tickers before deciding that C has the best and most suitable setup that I'm comfortable with. I did consider an options play on this, but I'm still quite amateur at selecting strikes and expiry dates for swing plays (If anyone can kindly advise do let me know!)
Entry: 49.6
Stop: 47.5
TP: 53.9
Recall that the current economic climate remains hawkish as the Fed is determined to reduce overall demand (with the increase of interest rates) to combat inflation. The overall thesis behind this is that banks will stand to benefit from rising rates in the short run, therefore a bullish outlook for the financials.
Open to sharing ideas, do let me know if you have any thoughts in the comments section!
CITIGROUP - LONG TERM BULLISH SCENARIOInteresting week ahead for Citigroup
The company will report earnings on 07.15.2022 before the market opens, with strong expectations for the fiscal Quarter ending Jun 2022.
Also, the American multinational investment bank is near its major support level, and it is ready to test it. The $40 support was tested several times throughout the years, which formed the range of a six-year range channel. The long-term resistance is located at the $80 level.
In other words, the investors may expect a 100 % possible long-term return.
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LONG Citigroup, most undervalued US bankReasons to buy:
-one of warren buffet's recent buys
-Trading below 5 year avg p/b valuations (0.80) at 0.51
-Book value of 94USD per share, fair value = 75USD per share VS current price of 46USD (63% upside)
-4% dividend yield
-Cheapest out of all US banks
-Rising interest rates pushes up Net interest margins
While slowing economic growth will curtail near-term loan growth, expect that rising interest rates, robust economic growth, and moderating inflation will provide a good tailwind for banks. These factors will lead to rising interest income, maintaining low default rates, and lowering charge offs.
Rotation - After gyrationsINVESTMENT CONTEXT
S&P 500 Energy Sector has registered 10-trading day decline dropping by 23.7% as fears of recession and lower demand pushed traders to liquidate longer-dated positions
On June 23, all 33 of the U.S. biggest banks, some of which considered as systemically important, successfully passed the Fed's annual stress tests, confirming their ability to lend and maintain capital levels during severe economic breakdown
During the summit in Brussel on June 23, Ukraine and Moldova formally received the symbolic status of "candidates" to join the European Union
JPMorgan does not expect a recession to materialize over the next 12 month; according to the Bank, global growth will accelerate from 1.3% in the first half of 2022 to 3.1% in the second part of the year thanks to recovery of Chinese economy
On a different note, Germany warned that Russia's move to curb natural gas deliveries to Europe could trigger an economic downfall similar to that caused by Lehman Brothers at the onset of the Great Financial Crisis
Copper prices recorded 16-month low on June 23 because of growing worries about rising COVID-19 cases in China and stoking worries of a global economy recession
PROFZERO'S TAKE
As the world finally takes notice that there won't be a solution to the current industrial crisis unless a global strategy on energy emerges, ProfZero has witnessed the steep correction faced already by commodities just on fears of a recession. Brent crude has plunged to USD 110/boe after some bull analysts forecasted it could top its all time high at USD 147.50/boe (July 2008); iron and copper are down 30% and 17%, respectively, on a monthly basis, while also wheat prices retraced 25% from the all-time high touched on May 17. Albeit encouraging under an inflation perspective, these signs may be indicative of greater distress in commodities - hence more stringent need to quickly restructure global supply chains, particularly as soft commodities are exposed to extreme conditions (Italy drought)
Growth stocks roared back on June 24, as traders unloaded Value and commodity-driven stocks repositioning in favor of the battered tech segments. ProfZero argues the move comes as investors reassess the likelihood of a recession, which would undoubtedly punish cyclical players, starting from big-ticket items (automotive, leisure operators) down to non-core consumer goods (non-food retail, handheld devices). As Growth trades still at record lows, it might be a good chance to start fishing for opportunities before the next cycle kicks-in - yet bearing in mind that within the next 2 weeks markets will still likely face volatility spikes due to June inflation reading in the U.S. (ProfZero does not expect a major slowdown yet from May's 8.6%) and Q2 earning season
After Citi and Deutsche Bank located the probability of a recession in the U.S. at 50%, JP Morgan historical bull Marko Kolanovic reiterated his positive stance for a soft landing in the second half of the year, thanks to solid Chinese recovery and stabilizing geo-political conditions, including the conflict in Ukraine . As much as in May, ProfZero fails to share Mr. Kolanovic constructive tone. Although fully persuaded the war in Ukraine shall end, any tangible sign of relief for the world economy will take months to materialize. In China, President Xi has confirmed the country will achieve the 5.50% GDP growth target it set; yet, it remains to be seen then how the country will cope with its internal hurdles in real estate and rampant industrial overcapacity (steel)
Don't fear the capitulationINVESTMENT CONTEXT
Fed Chair Jerome Powell confirmed the key priority of the Fed is bringing down inflation, even while acknowledging that monetary policy can't address critical components like food and energy. Powell also a stated a recession is “certainly possible,” but not in the near term as the U.S. economy remains “in good shape.”
Turkey's central bank is expected to hold its benchmark rate steady at 14% on June 23, after it kept interest rates deeply below zero when adjusted for inflation. Norway's Norges Bank is instead set to hike its key rate 25bps to 0.75%
Russia is facing three interest payment transfers totaling almost USD 400mln on June 23-24, but more pressing is a Sunday-night deadline on previous missed payments from late May. If the country fails to make those payment - ca. USD 100mln of bond coupons - it will effectively be declared in default
Global bank Citi said the probability of a recession is now approaching 50%. The Bank expects 3% growth for the world economy this year and 2.8% in 2023
U.S. President Joe Biden called for a gasoline tax holiday, in an effort to relief households from pump gasoline prices, which briefly surpassed USD 5/gallon
BTC trades have entered a dangerous (4) channel with trading range set between 19-21k as volumes fail to return to the blockchain space
PROFZERO'S TAKE
Value investing has been the key theme across Q1 and most part of Q2 this year, as investors unloaded Growth assets whose bulk of profits are located deep into the future, hence more exposed to higher interest/discount rates. That trend is set to reverse should a recession materialize. In particular, the undisputed champions of the past 150 days, namely Oil & Gas stocks, may steeply retrace as energy demand is threatened by slowing pace of industrial expansion, particularly in China. ProfZero warned back in April that the fat dividends paid this year may dwindle in 2023 as a protracted bear market triggers a recession; consistent with that, ProfZero maintains faith in Value-like Growth stocks, which enjoy state-of the-art balance sheets; top cash generation; and most importantly excel at intangible assets and services - natural price deflators for the economy
ProfZero concurs with ProfThree thinking one step ahead - demand for industrial commodities is by definition pre-cyclical, and any slowdown in the near-term should be taken as an early sign of a cooling global economy. Seeing Brent crude tumbling more than 2% just on recession concerns confirms in ProfZero a sense of unease while looking forward on Energy equities; thinking even further though, the feeling of concern permeates the post-recession recovery, whose seeds do not look planted as of yet
PROFTHREE'S TAKE
One of the commodities to watch this week is iron ore, which has seen a slump to USD 110/ton on June 20 after topping USD 150/ton just two weeks ago. Profs’ eyes are obviously on China (ca. 60% of global steel output), where demand seems to be under threat following the news that steel mills are cutting production in response to weakening real estate sector. ProfThree contends iron ore quotes are finally close to their fundamentally justified levels after a long period of speculation-driven pricing. Yet, a further dramatic correction could still happen since the second half of this year is expected to bring an increase in steel output from China, compensating for the 10% y-o-y output reduction in Q1 due to the Olympics-related emission restrictions. ProfThree also sees infrastructure spending and targeted fiscal as well as monetary stimulus also to prove supportive to supply, thus boosting prices
Real economy beating expectations yet markets trading in red 🤔INVESTMENT CONTEXT
President Vladimir Putin said that Russia was not blocking Ukrainian wheat from being exported, and that the grain could be dispatched via ports controlled either by Russia or Ukraine. Before the war, Russia and Ukraine accounted for ca. 29% of international annual wheat sales
U.S. economy added 390,000 jobs in May, beating analyst expectations (325,000) and showing resilient real economy in the face of rampant inflation and higher interest rates
Crude oil inventories in the U.S. fell to 414.7 million barrels in the wake of strong demand, yet limiting chances of further releases to cool domestic energy prices
Goldman Sachs COO John Waldron followed JPMorgan's CEO Jamie Dimon saying “This is among if not the most complex, dynamic environment I’ve ever seen in my career". On a similar tone, in a leaked Tesla email, Elon Musk cited having a "super bad feeling" about the economy as the main reason for shedding 10% of the company's workforce
PROFZERO'S TAKE
When good news are met with S&P 500 dropping more than 1.50%, and Nasdaq doing even worse at 2.47% in the red, we know something is off. That's what happens when bears are in control, and policy makers are desperate to understand how far can they move with tightening before the backlash. A remarkably strong U.S. economy just added 390,000 jobs in May, beating analyst expectations and reassuring the Fed it could maintain the trajectory of 50bps rate hikes in July and August. ProfZero clearly welcomes Main Street's resilience and rising wages - yet, as anticipated in Step99 podcast, it cautions against the forward-looking effects of monetary policy vs. the actual state of the economy. As pointed out by The Economist, "A recession in America by 2024 looks likely" - today's strength of the real economy may at best soften its blow
Citigroup CEO Jane Fraser sees "three R" whiplashing EU economy - rates, Russia and recession, this latter happening in Europe ahead of the U.S. because of "the energy side (...) really having an impact". ProfZero has made energy a key theme of this Parlay, with potentially more decisive effects on the real economy than monetary policy. With Brent testing again USD 120/boe and fading cushion inventories from the U.S., it is hard to imagine how the EU will cope with the next cold season without rationing output, hence slashing GDP growth. Regasification plants and last-generation nuclear are definitely tools of the future; but by then, are seaborne imports going to be enough?
Equities are definitely off the lows witnessed in April and early May - perhaps Musk's "super bad feeling" and Mr. Dimon's "hurricane" are rather looming on the real economy? Not an inch less worrying...
BTC once again confidently breaking up the mid-term triangle pattern and trying to regain 32k after trading below 30k on June 4-5 - and yet ProfZero's eyes are set on the lurking death cross on 200MA
PROFONE'S TAKE
After sharing about lithium and nickel, ProfOne completes the overview of rare minerals that are crucial for the production of batteries setting its eyes are on cobalt. Cobalt prices soared from USD 30k/ton in January to USD 52k in May - on top of the 2x surge in 2021 vs. 2020. According to the Cobalt Institute, in the next five years cobalt demand is expected to hit 320k/ton, up from 175k/ton in 2021. ProfOne argues that meeting such demand won’t be operatively easy. For once, cobalt is yet another highly concentrated resource: about 70% of world’s cobalt comes from the Democratic Republic of Congo, where production is dominated by Chinese companies and commodities trader Glencore (GLEN). Adding to it that world's second supplier of cobalt is Russia, the metals puzzle turns out to be a fairly intricate one