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Crude Oil Eyes $90 by the End of the Year

Published 11/23/2022, 11:56 AM
Updated 05/27/2024, 01:10 PM

UE and US are futures stable after the record increases at the beginning of the month. There is no good news from China, The Chinese press has reported the first two deaths from COVID-19 since May: lockdowns have returned to some satellite cities of Beijing.

This week we will see the minutes of the latest meeting of the US Federal Reserve, which may sound aggressive, judging by the way officials have resisted market easing in recent days.

Atlanta Fed Chairman Raphael Bostic said on Saturday he was ready to ease to a half-point hike in December but also stressed that rates are likely to stay high longer than markets expected.

Bruce Kasman, head of research at JPMorgan (NYSE:JPM) said, 

“We are confident that the ongoing deceleration in US inflation and European growth will lead to a moderation in the pace of tightening starting next month,”

Nasdaq 100 Futures, S&P 500 Futures, DAX, FTSE MIB, IBEX 35: The rebound of the indices seems to have stopped. It is a physiological break due to recent record increases, the stock markets have risen too quickly.

I expect a restart soon, with COVID in China and any worsening of the Russia-Ukraine conflict, which could lead to a transfer in the short term.

In any case, in the long term, I am optimistic the greater-than-expected drop in inflation in Europe and the US will soon give a new boost to the markets thanks to the easing of the restrictive policies of the central banks.

Meanwhile, natural gas hovers near the $ 7.00 area. The rebound is due to the intense cold in the US, which has brought heating demand to a high level. Conflicting news coming regarding the reopening of the 2 export plants as volumes.

Freeport LNG's 2.1 bcm/d plant was said to be back at least partially in service in November, but at the moment, everything is on hold. This is bad for prices because it creates a domestic oversupply.

Furthermore, a general agreement would have been reached, which would ensure greater imports of liquid gas from the US and some allied countries at a discounted price, not exactly good news for prices.

This rise is an opportunity to be exploited to open bearish operations.

Telecom Italia (BIT:TLIT): Continued news and denials for Telecom. According to my model, the security is worth 0.16, but the security is now subject to a great appeal to be exploited from a speculative perspective.

The new element on the network is the hypothesis of a phased sale of NetCo by TIM to CDP mooted by La Repubblica and already partially denied by the government.

We recall that Netco is a new company where they will confer the fixed network assets, the domestic wholesale activities (b2b segment), and the international ones of Sparkle, which we recall will provide international routing for most of the telephone and data traffic generated by the user of Telecom Italia, as well as reselling services to third parties.

In practice, the CEO is trying to unbundle the activities to give the company a more streamlined structure and make it competitive, a complex plan that is a theory for now.

The company currently remains totally inefficient with a complex structure, a consideration that I have been making for years and which has in fact brought the stock to a minimum.

So what to do with the stock? It is a stock to keep in a portfolio only from a speculative point of view. For investors at a loss, a collective tender offer leading to the delisting of TIM, which could reach 0.45, would be ideal.

This is the most sensible choice to revive the company, avoiding the sale of parts that would not make much sense if not a reduction in debt with the usual problems that will always remain present.

Crude oil:: Bad news. In China, the 2nd oil-consuming country, Covid seems to have regained strength. OPEC has also cut demand forecasts due to inflationary pressures, which in much of the world risk bringing many economies into recession.

A mix of news is causing prices to plummet. Added to this is yesterday's fake news regarding an increase in production. I am updating my oil fair value to $90, prices we will see at the end of the year.

Tesla (NASDAQ:TSLA): In addition to the judicial troubles of Elon Musk, with the accusations of Richard Tornetta, who claims that Musk would have received $56 billion in compensation in 2018 for having achieved, as CEO of Tesla "easy performance goals", set ad hoc by the board of directors.

This would have led to unjust enrichment "without even requiring his full-time presence in the car company" and would have served to finance "the dream of colonizing Mars."

Added to this is the lowering of prices in China due to a weakening of demand and the increasingly threatening competition in Europe with Stellantis (NYSE:STLA).

According to my model, the stock is worth $170, we are facing extremely high prices in terms of multiples, so I don't recommend making long-term trades.

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