What to invest in the second quarter. Strategy and forecasts
Our traditional collection of quarterly forecasts is in the abbreviated version: We tell about oil, ruble, gold and the American market. The work strategy on the Russian stock market includes a lot of uncertainty factors – the situation changes quickly, and our experts publish actual analytical reviews every day.
How many barrel of oil will cost in the second quarter of
Oil market faced an unprecedented level of uncertainty, but you can try to estimate possible Event development scenarios. Global trend is a global energy crisis. The world seriously collided with the deficit of energy resources. Prices for oil, gas and coal began to grow in another 2021 in the oil market, the imbalance was due to two key factors: a lack of investment in new production and the lag of OPEC + from the schedule. Therefore, high oil prices can be maintained throughout 2022.
oil supplies from Russia. Currently, only the United States and Canada refused from Russia. United Kingdom plans Refuse imports by the end of the year. Calls to the embargo regularly sound in the political space of the EU, where Russia’s share in oil imports is about 25%. This volume is not so easy to refuse, so at least in 2022, at least in 2022, is not at least in 2022. The closer truce, the lower the likelihood of harsh sanctions. Nuclear Transaction with Iran. In the event of a transaction, Iran can increase production by 1.3 million b / s, of which about 0.9 million b / c can come to the market until the end of this year. This will add about 0.3-0.4 million b / s to the average level of world supplies in 2022 and will significantly reduce the intensity associated with the availability of fuel. Saudi Arabia does not support the United States. USA attempted to negotiate with the kingdom of additional supplies, but were ignored. British Prime Minister Boris Johnson left with the same result. In mid-March, it became known that Saudites are discussing the supply of oil in the yuan that in the future can undermine the monopoly Dollar in the oil market. At the moment, the chances of the fact that Saudi Arabia will deviate from the conditions of OPEC +, look low. Venezuela also wants attention. Earlier, oil exports from Venezuela, as in the case of Iran, was under American sanctions. If sanctions are weakened, Venezuela can add 0.4 million b / s.
Possible scenario for the II quarter 2022. High oil prices can have a negative effect on demand, which will limit consumption in April-May, but in June seasonal Factor will translate. In numbers it may look like this (EIA predictions):
Prey Quotas from OPEC + will continue to increase by 400 thousand b / s monthly. The actual mining of the alliance can grow on average by 300 thousand b / s per month due to the lag from the schedule of a number of manufacturers, including Russia. American oil producing, judging by the dynamics of drilling records, will provide stable production, but there is no significant growth of speech yet. Probably aggregate mining in the United States will reach 11.8-11.9 million b / s By the end of the second quarter, only a little compensating for the seasonal growth in demand. Export deliveries from Russia remain key factor in uncertainty. Buyers on oil will have, but quickly redirect streams from Europe to Asia can be problematic. The more severe sanctions, the harder will transform exports.
If you take the point of the statement of the participants in negotiations that the truce can be achieved in late April – early May, the greatest export drawing can come For April, after which exports will begin to gradually come back to normal.
In this case, oil prices in April can remain in the range of $ 115-130 per barrel. It is possible that a speculative jump may occur at the moment on futures. Low world stocks, supply imbalances and vague forecasts make the market sensitive to the slightest reduction of supply. Any force majeure can also instantly breed oil prices.
In May, oil prices can go down to the area of $ 100-105 per barrel Against the background of stabilization of supplies, growth in the production of OPEC + and point cooling demand. However, in June, Brent quotes have every chance to return to the area of $ 120, if the international community cannot come to consensus.
Gold Market: Forecast for II Quarter
Gold Quotes in the first quarter grew due to exacerbation of geopolitical tensions. We will analyze the main factors and we estimate what to expect from the precious metal in the future. Inflation in the United States is at the maximum levels in 40 years. Inflation growth historic Speakers a good driver for gold. The precious metal uses a reputation as a protective asset, which on the long-term horizon is able to protect against impairment of money.
Fed rhetoric tightening and increment growth. According to the results of the March meeting, the Fed increased the interest rate by 0.25 pp, to 0.25-0.5%. The increase in interest rates is negative for gold, as it helps to reduce inflation and the growth of real interest rates. At high real interest rates justified to keep money in conditionally risk-free US government bonds than invested in gold.
Geopolitics. This factor at the beginning of 2021 was one of the most significant for gold prices. It is now difficult to predict how the geopolitical situation will develop, however, in the long run, all the same gradual declarations are most likely. Increased demand for gold can gradually go on no. Expectations from the second quarter. The marked factors will remain relevant, but the effect of their impact on the price may change.
can be said that expectations Gold on the II quarter neutral-negative. The growth of quotations in the first quarter largely played current drivers. In the basic scenarios of price fluctuations can be laid in the range of $ 1880-2000. In this forecast, the geopolitical factor is gradually digested, but if the situation is aggravated, the growth impulses to $ 2080 per ounce are not excluded.
Gold in Briefcase
Gold is interesting primarily from the point of diversification of the portfolio and reducing the risk. Earlier in Russia canceled VAT on operations with physical gold, it did The purchase of gold in the ingots is more economically justified. However, if you look from the point of view of profitability, the purchase of shares of gold mining companies is more interesting. The difference here is that stocks, besides what is playing the dynamics of gold prices, bring income in the form of dividends. In the Russian market in the gold mining sector are interesting paper poles.
Which course of the ruble wait in the first quarter
The beginning of the year for the ruble and all Russian assets turned out to be stormy. Ruble volatility jumped to historically High values, and short-term depreciation was comparable to the period of devaluation of 2014-2016. True, the worst concerns did not justify the ruble. Moreover, at the end of March, there was no less rapid strengthening, surprisingly many. However, in the ranking of 36 major world currencies on changing their course to the US dollar from the beginning of the year, the ruble ranks recently with a loss of 14.5%. However, they reached almost 40% on the historical minimum of the ruble, when the dollar went slightly higher than 121.5 rubles.
raw material factor. The current level of the ruble cost Brent Brent still reflects the undervaluation of the Russian currency to oil prices, which will be for it one of the main fundamental support factors. Regulatory factor. The Bank of Russia and the authorities implemented a number of emergency measures to stabilize markets and the financial and economic system, which made one of the key drivers of the rapid restoration of the ruble. Weakening of these restrictions or phased cancellation will prevent further Strengthening the ruble or even causes his weakening. Most likely, on April 29 at the next meeting of the Central Bank significantly reduce the bid, which is capable of providing local pressure on the ruble. debt market. At the end of February, the RGBI State Blinking Index updated the seven-year minimum. But the start of trading after forced closure was far from so negative, as many feared. Following the short-term sales of OFZ began to raise quickly. Stabilization and restoration of the Russian debt market have made a significant contribution In the strengthening of the ruble. However, in a longer-term perspective, the dynamics of bonds will lose its impact on the Russian currency rate.
Prospects for the II Quarter. Most likely, the volatility of the Russian currency market in the next three months will decrease if we do not see new geopolitical shocks. In the basic scenario, it is assumed that the situation will not change significantly, as well as the situation in world markets. In this case, most likely, the dollar will return to the range of 85-95 rubles.
American Economy: Key Factors and risks of the II quarter
Basic look at the US economy in the second quarter – wary. A sufficient number of catalysts and risks have accumulated. Let’s look at key factors in the economy for the second quarter.
Coronavirus. The next pandemic wave passed. The likelihood of the transition COVID-19 is high in the list of standard diseases, by analogy with the flu. Geopolitics and inflation. The United States and the EU introduced new sanctions against Russia, in particular with regard to state banks. Some companies are completely Or partially left Russia. The price of commodity markets, including sugar and corn, took off. In the US, government spending on the defense sector may grow. In combination with imbalances in the labor market and failures in supply chains, this may contribute to the preservation of high inflation. In February, consumer inflation amounted to 6.4% per annum – this is a maximum of 40 years. By the end of the year, it can drop to 4-5% per annum. According to the data segment, in the nearest five-year period, inflation may amount to 2.3% average per year. Monetary Policy. According to the results of the meeting, the Fed increased the interest rate on 0.25 pp, to 0.25-0.5%, as expected. QE will be completed in March. The Fed can declare the beginning of the balance of the balance during one of the nearest meetings. The yield of 10-year-old treasuries since the beginning of March has grown from 1.7% to 2.4%. The growth of market interest rates negatively affects consumer spending, and therefore threatens the overall state of the economy. Fiscal policy. in March for the remaining 6 months. Fiscal year agreed on the plan of government spending $ 1.5 trillion. The likelihood of increasing the level of federal debt in 2022 from $ 28.5 trillion to $ 29.5 trillion is high. The infrastructure cost plan is designed for $ 3 trillion ($ 1.85 trillion and $ 1.2 trillion) and for 8 years. It includes investment in human capital, public health obligations, roads, resources, agribusiness. Costs will compensate for tax raising. The total amount is $ 2 trillion. It is planned to increase corporate tax from 21% to 28%, an increase in the global minimum tax on transnational corporations from 10.5% up to 21%. Chinese risks. While trade disagreements with China are not settled. The issues of the protectionism of China, the protection of intellectual property, the normal functioning of trading chains remain open. The restrictive policy of Chinese regulators interferes with the normal functioning of international companies, providing pressure on supply chains and the activities of technological companies. The most significant risk factors: the fall in shares of developers and banks, which may indicate the liquidity crisis, The risks of the Delivery of Chinese Paper with American US Exchange, New Wave COVID-19 in China.
According to the GDP NOW service forecast, the first quarter of the US GDP may increase by 0.9%. The coming deterioration in the economy also indicates the “yield curve” Treasuries. The spread of the profitability of 10- and 2-year US government bonds is 0.15%. This indicates the possible ambiguous state of the American economy in the first half of the year.
Model of New York’s FRB estimates the spread between 10-year and 3-month-old government bonds. While on the horizon 12 months, the probability of recession is quite low – about 6%. By the end of the year, the rise of the Fed rates, with other things being equal, can invert the curve and on the model of the FRB of New York. According to the forecast of GDP, in 2022, GDP growth may amount to 2.8%, the unemployment rate is 3.5%, inflation (PCE index) is 4.3%.
Forecast for S & P 500 for the II quarter
Since the beginning of the year, the S & P 500 has decreased by 5%. Growth passes wave-like – volatility intensified. Let’s look at waiting for the S & P 500 dynamics before the end of the year. Positive Factors: economic recovery, government plan for $ 1.5 trillion, high probability of increasing the level of federal debt in 2022 from $ 28.5 trillion to $ 29.5 trillion, positive expectations from the reporting season.
Risks: Inflation, hard monetary policy Fed, “Chinese problem” and seasonal effect. In the second quarter, volatility may be preserved due to the slowdown in the economy, the shares with a high beta may be in the outsider.
The S & P 500 index is consolidated under resistance level (4550 p. At 25.03.22). His passage May mark movement to new landmarks. The target level by the end of the year – 4800-4850 p.
American stocks: promising branches of the II quarter
Last year, the world economy after the recession caused by a pandemic began to recover. Increased consumption of raw materials and materials caused an increase in demand for oil and gas, black and non-ferrous metallurgy. At the end of February 2022, against the background of geopolitis, an anomalous increase in prices for hydrocarbons and metals, as well as grain crops, began. Consider based on the current Situations which industries will be promising in the second quarter of the current year and which shares can win from this.
Traditional energy. The imbalance of the demand and supply of hydrocarbons causes rise to prices and beneficiaries of the current situation – the shares of the representatives of the oil and gas sector.
Chevron (CVX) is an energy giant, manufacturing, recycling, oil and gas transportation. Consensus price – $ 166.7. ConocoPhillips (COP) is engaged in reconnaissance, mining, transportation and sale of crude oil, liquefied natural gas (LNG) worldwide. Consensus price – $ 110.5. Shell (SHEL) – British oil and gas company, which is one of the largest in the world. Since 2000, he is among the top ten in the Fortune Global 500 list. Consensus price – $ 67.2.
Green energy. At high oil prices, the cost of automotive fuels also increases. This causes an increase in demand for electric cars. As opposed to the traditional energy based on fossil hydrocarbons, the demand for green energy and shares of it representatives.
TESLA (TSLA) is a company operating in two segments: the production of electrocars and the production and storage of solar electricity. Consensus price – $ 956.8. SOLAREDGE TECHNOLOGIES (SEDG) designs, develops and sells optimized DC inverter systems for solar photovoltaic installations around the world. Consensus price – $ 339.5. Nextera Energy (NEE) is an American company that produces electricity due to wind, solar, atomic, coal and gas installations. Consensus price – $ 92.3.
Metals. Black and non-ferrous metallurgy, as well as precious metals, experienced a colossal increase in prices. The London Metal Exchange (LME) has repeatedly stopped trading on nickel contracts, actively used for the production of electric transport batteries.
Vale S.A. (Vale) – a Brazilian company that produces iron ore, manganese, nickel, gold, silver, cobalt, and copper. Consensus price – $ 20.6. NUCOR (NUE) – the largest and most diversified steel and Metal products in North America. Consensus price – $ 120.2. Lithium Americas (LAC) is a Canadian company that is engaged in exploration of lithium deposits. The consensus price is $ 35.8.
Wheat. Grain crops grown in the Black Sea region, sunflower and wheat, also experienced an imbalance of supply and demand. Wheat prices are at a record level. Closing ports and blocking of shipping in the Black Sea led to interruptions with grain supplies.
Archer-Daniels-Midland (ADM) is an American company that Harvested, stores, purifies and transports agricultural raw materials: oilseeds, corn, wheat, millet, oats and barley. Consensus price – $ 74.5. MGP Ingredients (MGPI) is a supplier of special wheat proteins and starch, as well as premium alcoholic beverages. Consensus price – $ 98.8. The Andersons (Ande) is an American agricultural company whose grain division provides storage and delivery services. Consensus price – $ 45.8.