Weekly Roundup 2019 CW 04

It is finally Saturday and time for me to update my blog with a post. The markets have been volatile and its hard to predict a short time direction. The U.S. media has mostly been covering the government shutdown that seems to come to an end, at least for three weeks. We also hav had a lot of news about the presidential fight between Nicolás Maduro and Juan Guaidó.

Market Outlook

S&P 500 YTD CW 04

Markets had a volatile week, initially starting lower, seesawing back and forth intraday between negative and positive territory. I am convinced that markets are still in a bear trend, and we have seen some corrections since x-mas. (Remember in a bear market the corrections are upwards.) Both OMXS30 and S&P 500 have reached some resistance levels, and from here we could see some move downwards.

We are at the start of Q4 reporting season, and the investors will look carefully on results and the company’s outlook on future earnings. It seems that the Fed is considering aborting their QT plans and we can see the same tactics from other central banks. Aborting QT is signaling that we don’t have as a strong economy that stated earlier and that we could see some interest rates cut. Regarding me, this is one signal on an upcoming recession. A lot of people have talked about the Fed being “out of bullets.” Now that they have done so much already, they can’t do that much more. And, of course, starting with meager interest rates, it’s hard to reduce them very much.

Treasury yields (US10Y) ended the marginally lower at 2.762% as investors moved back remained cautious at the start of earnings season. Gold finished the week higher, pushing to around the $1,300 level into the weekend. The dollar was largely unchanged versus the euro and the Swedish krona.

We have some Macro “indicators” to be aware of: trade talks, slowing Chinese economy and Brexit. In Sweden retail signaled lower sales compared last year for x-mas sales.

The portfolio

The portfolio ended flat with a 0.09% gain, and SIXRX ended -0.26% during the week. Alpha is 1.10% calculated with a risk-free rate at 0.59% (SWE-SO-10Y). The volatility YTD is low at 1.70 %.

Transactions

I exited the remaining Largo Resources Ltd. (LGO) position locking in a 43.2 % gain (12,600 SEK). The thoughts behind this move are to lock in my profit and that I have a bearish outlook. I do not think we will see a high demand for vanadium since main economies are slowing down.

I ordered an incresed stake in my three funds that are investing in Emerging Markets. These transactions will report into the next weekly roundup.

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