EU and US futures are stabilizing slightly below the recent highs. We see strong markets despite the bad news.
Citi said Wednesday that it expects global growth to slow next year and expects the United States to enter a recession during the second half of 2023.
In a note to investors, Citi pointed out that rising global inflation levels have hampered growth prospects as central bankers have had to implement restrictive monetary policies.
As a result, the financial institution has predicted that global growth will slow from 3% to 2% next year.
"We expect the cumulative effects of Fed rate hikes to push the economy into recession by the second half of 2023,'"Citi said.
Looking at Wall Street's current Fed policy assumptions, the market is assessing the likelihood of interest rates exceeding Citi's current baseline scenario.
Current activity suggests a 31% probability that the Fed will have a rate of 4.5% -4.75% at the end of the February meeting, and this is the most accepted hypothesis.
Nasdaq 100, Future S&P 500, DAX, FTSE MIB, IBEX 35 Outlook
Despite the negative news, I expect a rebound in the indices, with the recession already priced into current prices. Markets always price worst-case scenarios four months earlier.
For a rebound, I like the FTSE 100, where there is a clear boost from the Bank of England, which has announced further measures to ensure financial stability in the UK, strengthening its intervention in the long-term bond market.
As mentioned in previous articles, I expect a much stronger Europe than the United States simply because the energy crisis is now managed, with the price of TTF Gas in free fall.
I, therefore, expect a sharp decline in inflation in Europe in the short term, which, unlike the Fed, will lead the ECB to a less restrictive policy than the Fed.
This will strengthen the Dax and the FTSE MIB . I already have some excellent European stocks in my portfolio.
Natural gas
US gas suffered due to the collapse of European gas prices, which collapsed to 100 euros per MWh in the perspective of close measures capable of containing the price.
The inventory data was also negative, with a higher-than-expected reading. This, combined with the weather, is causing prices to drop.
My previous articles predicted the collapse, but now the prices are starting to be very attractive.
Europe will need even more LNG to replace Russian volumes next summer when the continent recharges storage. At the same time, Chinese demand will recover from the blockages and offset lower imports from other Asian buyers.
Soon I could make a buy on Natural Gas.
Unicredit (BIT:CRDI): The group has improved its forecasts for the year 2022, which is expected to close with a net profit of more than 4.8 billion, excluding Russia. The group closed the third quarter with 1.3 billion euros, down 9.9% on a quarterly basis and up 31% on an annual basis. The result is better than expected due to the low cost of risk.
Excellent result for Unicredit, with the shares now in a speculative phase that will surely bring the shares in the 13s. It is not a title with potential and, according to my model, is worth 11.50.
As written in previous articles, I do not recommend investing in the banking sector at this stage.
Banks are exposed to downside risks from overheating residential real estate markets, with over € 4 trillion in loans and advances secured by residential real estate. There is a risk of running into a large tide of non-performing loans.
Alphabet
Alphabet (NASDAQ:GOOGL) -6%, recorded an increase in advertising revenues of 2.5% to 54.5 billion dollars in the period July-September: the consensus expected 57 billion.
Nothing to worry about. The company remains very solid, with high margins leading to excellent profitability. According to my model, the stock is worth $ 186, with significant upside potential.
Alibaba (NYSE:BABA) and JD (NASDAQ:JD).com: Market crash in China with two tech stocks hit hard.
In China, the Congress ended with a replacement at the top of the party not accompanied by the announcement of measures to support growth, so these measures will not arrive in the period we expected.
Analyzing the financial statements, these two stocks are at an attractive price. The usual problems of China, with the ever-present threat of nationalization of many companies as a practice of the communist system, do not push me to make long-term purchases of these securities, which on the other hand, are at odds with the government, but to make only speculative purchases.
According to my model, Alibaba has a value of $75 Jd of $ 45. On the other hand, I have a portfolio of outstanding Chinese shares with management which is not at odds with the government.