Future EU and the US recover after China said it would abandon its quarantine requirements for incoming visitors, further easing border controls to curb COVID-19, which have lasted for three years.
China will stop requiring incoming travelers to comply with quarantine starting Jan. 8, the National Health Commission said on Monday. It will also reduce the severity of COVID-19 as it has become less virulent and will gradually evolve into a common respiratory infection.
The United States 10-Year Treasury Note (ZN) recovers from 3.74%. The Fed's official interest rate could reach 5.25% to 5.50% by the end of 2023, based on expectations that the labor market will continue to add new jobs in early 2023, exerting further upward pressure on wages.
Crude Oil: Oil proves very solid despite the collapse of the indices. Two main reasons are behind the excellent performance.
1: The price cap, although not penalizing Russia, could lead to an increase in demand for American oil that is very positive for prices and to a collapse in Russian oil production.
2: Chinese demand for oil held back by Covid will restart in 2023, and we have the easing of restrictions as support today.
All this is combined with the fact that oil stocks are at their lowest in 20 years, with countries like Russia reporting sharply declining production, a factor that is good for prices as there is a shortage of oil.
I remain positive over the long term with a target of $85-90.
Nasdaq 100 Futures, S&P 500 Futures, DAX Futures, FTSE MIB, IBEX 35: As written in previous articles, the indices have exhausted their strength and are starting to go down.
The markets do not yet discount the recession that will lead to a fat decline in earnings. This means there is room to fall even if, in the short term, the Chinese move to loosen the containment rules could support the indices.
However, I expect a recession in the US and the EU. In these cases, markets always anticipate a recession three months in advance. In January, we will therefore see the real collapse of the market.
The ideal tool in these cases is the CBOE Volatility Index, which scores excellent returns with a global recession at the door.
I will shortly be doing a buy operation on this instrument with a $35-36 target.
Natural gas: As predicted in previous articles, the gas crash has arrived. There is a clear difference between the short run and the long run right now. In the long run, the situation is interesting.
Europe will need even more LNG to replace Russian volumes next summer as the continent reloads storage. Chinese demand recovers from lockdowns and offsets lower imports from other Asian buyers.
In the short term, one must be careful to avoid hasty purchases.
There are big doubts about the reopening of the export plants, which have been offline for some time now and are creating a negative internal excess supply for prices, and the seasonality of the period is negative for gas.
Furthermore, the price cap on the TTF, set at 180, even if quite high considering that four years ago, the TTF was quoted at 20, will certainly put a stop to speculation by lowering prices, exactly what we are seeing now.
This is also indirectly affecting American natural gas as it is very likely that next year American gas will be increasingly the protagonist in Europe with the exit of Russia.
I will evaluate a gas entry only in the $ 4.50-5 area, prices that I already expect at the end of December and the beginning of January.
Amazon (NASDAQ:AMZN): As written in previous articles where already at the beginning of 2022, I said that too high a share price would lead to a collapse in prices.
I'm still pessimistic, the profitability of the group has practically disappeared, and the prospects for 2023 are negative.
According to my model, the stock is worth $70, so it can go further down.
Tesla (NASDAQ:TSLA): Bad period for the title, destined to continue.
There are problems in China, with lower prices, due to weakening demand which means lower margins, and competition in Europe with Stellantis NV (NYSE:STLA)) increasingly threatening.
Also increasing the distractions the founder, Musk is increasingly distracted by Twitter.
The statements of CEO Musk, who says he will leave the post of CEO Twitter once a replacement has been found, were of no use.
As written at the beginning of the year, The stock, according to my model, was worth $170 and was very expensive at the beginning of the year.
Telecom Italia (BIT:TLIT): The split hypothesis is back in fashion by creating two entities, one for the network and one for services.
As written in previous articles, it is a complex operation that would not solve the debt problem and put the shareholders at risk, who would risk further losses.
In the demerger process, you would receive shares of new companies created by the demerger, which could eventually make the shareholders lose further by adding the values.
Only a total takeover bid by CDP, VIV, and funds will be able to save the shareholders.
When can it happen? The takeover bid consists in convincing the shareholders to be liquidated through a commercial premium.
It is, therefore, important for the functioning of the launch at the worst possible moment for the listing of stock to put shareholders in a corner, a moment which, in this case, could correspond to the market lows that I expect in 2023.
According to my model, the evaluation of the title is confirmed a 0.16, with the very high debt weighing heavily on the calculation.