EU and US futures are trying to rebound after the slide caused by the Fed's monetary policy. Initially, there was a strong market reaction to the Fed's monetary policy decision. Still, a hawkish press conference was enough to change everything and plunge the markets to near new lows. There will be more rate hikes, with a target in the 5% area.
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. This will strengthen the Dax and the FTSE MIB. Today's decline is an opportunity to buy.
I already have some excellent European stocks in my portfolio, and also a Chinese stock. The Chinese market offers incredible opportunities at these prices.
Natural Gas: US gas suffers 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. In the short term, however, I expect new lows due to seasonality. Any mini-rises caused by the weather or the reopening of export plants will be immediately reabsorbed.
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% annually. The result is better than expected due to the low cost of risk.
Excellent result for Unicredit, with the shares that are now in a speculative phase, that will surely bring the shares in area 14. It is not a stock 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.
Oil: Despite the impending recession and Chinese policy, one of the largest consumers of oil, with zero tolerance of Covid, oil is confirmed as strong thanks also to the recent cut in production by OPEC. The hypothesis of an armed conflict between Saudi Arabia, the second largest oil producer in the world, and Iran is increasingly concrete.
I expect prices in the area of $100 by the end of the year or immediately if the conflict breaks out.
Alibaba (NYSE:BABA), JD (NASDAQ:JD).com, Nio (NYSE:NIO): 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'.
Although these two companies, analyzing the financial statements, have a very 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 on these companies, which 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. Nio is also a stock that has no potential, and demand for electric cars in China is declining, with competitor Tesla (NASDAQ:TSLA) being forced to lower prices. According to my model, Nio is worth $10.
Instead, I have a portfolio of excellent Chinese companies with management that, in this case, is not in contrast with the government, with a potential of + 100%.