The EU and US futures are in red during London hours. NASDAQ -0.70%, S&P 500 -0.60%, DAX -0.20%, FTSE MIB -0.40%, at writing. The winds of war between Russia and Ukraine are still blowing.
NATO has not noticed any clear signs of de-escalation on the ground. Indeed, Russian troops have increased, not decreased. Secretary-General of the Alliance Jens Stoltenberg said,
"What we see is that the number of troops has increased and many more are on the way. We are monitoring very closely what happens. At the same time, we record Moscow's openings to diplomatic dialogue and we are ready to do so. But we are still waiting for Russia's reaction to our written replies sent on Jan. 26."
Looking at US macro data, US retail sales rose 3.8% in January, much more than the consensus estimated (+ 2%). The decline was 2.5% in December, revised from -1.9%. Excluding cars and oil, the increase is 3.8%, from -3.2% in December: consensus + 1%.
In Europe, an alarm was raised by the hawks of the ECB that it is giving strength to the euro. In an interview with the Financial Times, Isabel Schnabel, a 'hawk' member of the ECB executive committee, signaled the possibility of a squeeze on interest rates concerning the expected timing and a stop of purchases of the QE program. She said,
"The risk of acting too late has increased, therefore we need a careful assessment of the inflation outlook."
Hot Stocks and Instruments
Gold +0.9%. The winds of war are back, Russian state media reports that the Ukrainian armed forces have fired on the Donbas.
Crude Oil -2.2%. Negative on inventories data which increased by 1,121M, against an expected reduction of 1,500M.
Shopify (NYSE:SHOP) -16% after the presentation of the earnings of the last quarter and the forecast for the beginning of 2022.
Tenaris (NYSE:TS): In 2021, Tenaris' earnings recovered strongly from the worst effects of the pandemic. The company wrote in a note,
"The recovery was supported by the recovery in oil and gas drilling in the Americas and by the structural measures we have taken to improve our long-term profitability."
Conclusions
As written in my previous articles, even if the breaking news goes against my operations, I still expect an easing of tensions between Russia and Ukraine, followed by a significant downward reversal in the short term for Gold.
The Fed’s rate hike is imminent, and with the end of tensions in Europe, we could see a sell-off of the safe-haven asset with $1750 within reach. Even today, I might open a sell position.
Regarding oil, yesterday's data was not positive, with inventories growing more than expected. This brought prices back to the $90 area in the short term. My long-term projections remain intact: the $100 handle before summer is well within reach.
On Shopify, with the end of the pandemic, the commercial premium of the e-commerce sector is over, and that weighs on the estimates of profit growth. Shopify is an exciting stock, but it could go under $700 in the short term.
Regarding Tenaris, like many companies in the sector, the data are excellent. The stock will soon arrive in the $13.30 area, its fair value.
The earnings release of Norwegian Air Shuttle (OTC:NWARF) is scheduled for tomorrow. I expect strong data and an encouraging outlook. Today I will increase my exposure in the stock.