Solid EU and US futures are recovering from the lows of October. In the past two days, the US press has been reporting on movements in Washington diplomacy concerning the Russia-Ukraine conflict.
Yesterday the Washington Post reported Washington's pressure on the government in Kyiv to agree to enter into negotiations with Moscow.
This morning the Wall Street Journal wrote that the head of security advisers, Jake Sullivan, has been in contact for a few weeks with his direct Russian counterpart and with a senior adviser of Vladimir Putin: it seems that in the talks, there is the possibility of avoiding an escalation into the conflict.
Attention is also focused on the mid-term elections in the USA. Trump's Republicans are in the lead, and their eventual rebound will strengthen the indices' rebound.
Despite the negative news, I expect a rebound in the indices, with the recession already priced into current prices. The probable end of the Ukraine conflict will be a strong driver that will push the stock markets even more.
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, and with the possible end of the conflict, which will be pure oxygen for the economies most affected, such as Italy and Germany.
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 proved strong after the October crashes. The factors triggering the rebound are colder-than-expected weather and the reopening of major export facilities. In the long run, the situation is interesting.
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.
In the short term, however, I expect new lows due to seasonality. The cold weather will go away very soon, and the reopening of the plants is already discounted in the prices. Any mini-rises due to weather conditions or the reopening of export plants will be immediately reabsorbed.
I opened an excellent bearish position on gas just yesterday, visible in my group and already in profit.
Telecom Italia (BIT:TLIT): As written in previous articles, with the right-wing government, the title would certainly have benefited from the plan to launch a takeover bid through cash deposits and loans. It is useless to focus on Telecom's value now, which is 0.16.
The takeover bid will take place at a much higher price. According to my models that include the commercial premium, the takeover price should be 0.45.
Beware, however, that this will subsequently lead to a delisting. It will be appropriate to liquidate the stock at the right time to avoid a long time of collection of the equivalent value in the event of delisting.
Oil: Despite the impending recession and China's zero-tolerance Covid policy, oil is confirmed as strong thanks to OPEC's recent cut in production. 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 of $100 by the end of the year or immediately if the conflict breaks out.