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Commodities Market Strategy Oil

Market focus: How tight is the US oil market?

Overall, crude oil inventories have moved back to their pre-COVID levels but gasoline inventories are still at the higher end of the 2015-2019 range. This has happened despite US refinery intake of crude oil still being below the pre-COVID 5-years range and after a severe production disruption in February 2021 as a result of an exceptional cold wave. Bottom line: the current level of oil prices is far from guaranteed. The reality check could be sobering, especially if the delta variant proves to be disruptive for the global recovery and if OPEC/OPEC+ does not manage to keep to its 2020 playbook

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Commodities Market Strategy

Market Focus: Making sense of the Commodities rally

Over the last few months, commodity prices have surged across the board. The S&P GSCI index and related subindexes have been soaring whether you look at Energy commodities, Grains and other Agricultural commodities, Industrial Metals or Precious Metals. While oil prices and the broader energy commodities basket have rebounded from their Covid-19 slump, the price surge has been particularly impressive for agricultural commodities and precious metals.

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Business & Geopolitics Business Intelligence Commodities MENA ENG Oil

Business & Geopolitics: The China-Iran strategic partnership

As summed up by the New York Times, “China agreed to invest $400 billion in Iran over 25 years in exchange for a steady supply of oil to fuel its growing economy under a sweeping economic and security agreement signed on Saturday.” The partnership was signed by China’s Foreign Minister Wang Yi and his Iranian […]

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Business Intelligence China Commodities ENG Future of Energy & Mobility G20 / Global GCC Hydrogen Japan MENA ENG Oil United States

Business Intelligence: Is the Hydrogen Economy ready to take-off?

Hydrogen as a feedstock for the petrochemical industry Since the first demonstrations of water electrolysis some two hundred years ago, Hydrogen has witnessed many false dawns. As recorded by the International Energy Agency (IEA) in its landmark report on the Future of Hydrogen, commissioned by the Japanese Presidency of the G20 in June 2019, hydrogen […]

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Currencies Emerging markets Market Strategy Markets

Market Focus (EM): Turkish Lira’s fallout resumes

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Commodities Gold Market Strategy Markets

Market focus: Gold above $2000/oz

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ENG Equities Market Strategy Markets United States

Market focus: How smart is smart beta?

Professional Investors are familial with the Fama-French Factor model developed by Nobel Prize Laureate Eugene Fama with his colleague Kenneth French in the 1990s. According to this model, the expected return on a stock is the combination of the general equity market premium – the so-called beta of the single risk factor model – to which they added a “size premium” – on the premise that small cap stocks are expected to generate higher returns than large caps – and the value premium which is a reflection of a stock’s lower valuation compared to other stocks which trade higher on the basis of their expected earnings. This academic theory is at the heart of the so-called “smart beta” strategy based on ETFs – Exchange Traded Funds – which seek to replicate an exposure to the risk factors identified by Fama-French and by other pundits. However, since the beginning of the year, here have been a puzzling disconnect between “Growth stocks” and “Value stocks”.

Categories
Commodities Market Strategy Oil

Macro flash: US Crude oil inventories at record level

US Crude oil inventories stood around 80 million barrels above their average level for the same week over the 2015-2019 period.

Categories
ENG Market Strategy Markets

Market focus: Deciphering the gold puzzle

Most of the conventional theses developed over the last fifty years failed to provide a satisfying framework to explain the dynamics of gold prices. Gold looks increasingly like an asset that is exposed to a complex set of systematic and idiosyncratic risk drivers. It is important to acknowledge all these factors before rushing to conclusions.

Categories
Economy ENG Equities G20 / Global Market Strategy Markets

Market Focus: How long can the market rally last?

Despite all the macro projections that tend to discard a V-shaped recovery, the markets seem for now to price in such a scenario, perceiving the profile of the current recession to be more similarities with the 1991 and the 2001 recession than with the more severe recession associated with the GFC in 2007-2008. The probability of a sudden reversal in market sentiment following some unexpected bad news looks increasingly high. An abrupt end to the ongoing euphoria should not be dismissed. Hedging this potential outcome by buying equity puts or VIX calls might be a good way to prepare for this eventuality while preserving the gains achieved during this unprecedented rally.