xChief Global

[xchief-global]

🔥 «The Big Short» believes in China again

The latest 13F filing shows that Scion Asset Management, led by Michael Burry, is refocusing its investments on China, holding significant stakes in JD.com and Alibaba. ⠀ Reminder: Burry's investment strategy centres on a rigorous application of Benjamin Graham's concept of margin of safety. By studying the fundamentals of companies, he selects undervalued stocks and does not hesitate to "short" stocks of overvalued companies. Over the past year, this tactic has paid off: the fund has nearly equalled the performance of the S&P 500, gaining more than 25%. ⠀ An analysis of the current Form 13F report shows that Burry is once again betting on China. ⠀ Michael Burry's portfolio is centred on a few key stocks, the largest of which are two Chinese retail giants: JD.com (NASDAQ: JD), followed closely by Alibaba Group Holdings (NYSE: BABA). This means that the legendary bull thinks that the long selloff in these stocks has likely bottomed out. ⠀ While the 13F report doesn't specify the exact date of the purchase, it can be assumed that successful investments in Chinese stocks brought the fund more than 10% in the first quarter alone. Alibaba in particular has performed exceptionally well, recording 18% growth over the past three months. Over this period, Michael has rotated the portfolio with a quarterly turnover rate of 54%. ⠀ China's economic recovery has been quite nerve-wracking, with manufacturing growing and retail sales lagging. But history has proven once again that Burry's market sense can be trusted, especially since the properties he has chosen are indeed showing stable profits. So maybe we should support the trend?

[xchief-global]

🚀 Insider time: silver is more expensive than gold

Silver is up more than 25% since the beginning of the year and is solidly outperforming other commodities in terms of growth and market performance. This glamorous precious metal is benefiting from robust financial and industrial demand. ⠀ The market is heading into the fourth year of a chronic shortage of industrial silver, which is a key component for the high-tech industry, such as solar panels. Inventories tracked by the LBMA fell to their lowest level on record in April, while volumes on exchanges in New York and Shanghai are near seasonal lows. ⠀ The two major metals moved in tandem, with gold hitting record highs amid central bank buying, retail interest in China and rising expectations of a US interest rate cut. ⠀ Silver joined the current rally rather late and remains undervalued: it now takes about 80 ounces of silver to buy 1 ounce of gold, although the average over the past 20 years has not risen above 68 ounces. Despite little investor interest in silver-backed exchange-traded funds, physical sales rose, including at Singapore dealer Silver Bullion Pte. ⠀ The sacred level of $30 has already been passed, although a technical correction to the $29.50-30.50 zone is very likely, most likely synchronously with gold. There are no fundamental reasons for a deeper decline. The first upward target is in the zone of $32.30-32.80, higher is unlikely. ⠀

[xchief-global]

EURUSD sets up a bearish trading week. Target 1.0900 📊

[xchief-global]

🔥 «Smart Money»: Why Buffett Won't Buy Tesla

Musk missed again: his media arrogance did not bring profit. After information about the sale of Apple’s shares, Berkshire Hathaway offered "old man Warren" to purchase Tesla shares, to which he received a polite but clear refusal from the fund’s managers. ⠀ "This is an obvious step!" Musk wrote in a post on X, suggesting that he combine his claims to technical leadership with the business wisdom of a market guru. "We only buy what we like," Buffett once again said. ⠀ Recall: Buffett is committed to a long-term strategy of investing in companies that he understands well and that have strong financial performance. Such shares must have:

low price-to-book ratio and positive beta tests,

high dividend payout ratios and profit growth rates. ⠀ Alas, Tesla, along with its growth potential, has an extremely high degree of risk, minimal stability, and meets only one of the necessary criteria. Additionally, Berkshire Hathaway prefers to invest in companies with low to moderate valuations, while Tesla shares have experienced significant growth in recent years and traded at fairly high multiples. ⠀ Finally, Buffett may simply not see the profit potential in Tesla or not share the global vision of the company's management. So it's unlikely that Tesla stock will be the "accidental big opportunity" that the guru mentioned at Berkshire Hathaway's last annual meeting. ⠀ By the way, only in 2014, instead of his old 2006 Cadillac DTS, Buffett bought a Cadillac XTS for $45,000. Moreover, according to his admission, he made this purchase under pressure from his daughter, who stated that it was simply a shame for the business tycoon to drive an old car. He still uses this traditional car and has no intention of changing anything. ⠀ I just don't like you, Elon Musk. And Tesla is yours too.

[xchief-global]

⚠️ Air salesman: Shell sells fake credits

Shell has sold millions of fake carbon credits to Canadian oil producers, supposedly for CO₂ removal. Is this new business or just plain fraud? ⠀ Recall: carbon credits are permits that give an entitlement holder the ability to emit a certain amount of greenhouse gases. Credits are measured in tons of CO2 equivalent. One carbon credit equates to a reduction of one ton of carbon dioxide or its equivalent, and in 2022 its "value" was approximately $50. ⠀ Under the subsidy program, the government of the Canadian province of Alberta allowed Shell to register and sell carbon credits equal to twice the actual emissions reductions at the Quest plant from 2015 to 2021. The Quest plant is operated by Shell Canada and owned by Canadian Natural Resources, Chevron and Shell Canada. It is part of the Scotford refinery complex. ⠀ Over the eight years of the scheme, Shell registered and received compensation for 5.7 million credits that did not correspond to real CO₂ reductions. Moreover, the oil giant sold these "carbon credits" to oil sands companies and some of its subsidiaries. Among the biggest buyers of the credits were the equally respected Chevron, Canadian Natural Resources, ConocoPhillips, Imperial Oil and Suncor Energy. ⠀ Both the seller and the buyers refuse to comment, but are actively trying to evade legal claims initiated by Greenpeace Canada. No one will apply any sanctions to Shell, the media are already losing interest in the situation and the scandal will gradually subside. ⠀ The only pity is that the air will not become cleaner. ⠀

[xchief-global]

GBPUSD deserves special attention

[xchief-global]

🔥 India is included in the index: we are waiting for profits

JPMorgan Chase & Co is set to include Indian government debt in its benchmark emerging markets index in June. Global funds are investing approximately $1 trillion ahead of this event, into Indian assets denominated in rupees. ⠀ The move also means JPMorgan can claim greater diversification after excluding Russia and amid ongoing concerns about geopolitical tensions between the US and China. Indian bonds offer some of the highest yields in emerging markets. ⠀ India began liberalizing its economy back in 1991, but it does all its borrowing in rupees, as it wants to avoid dependence on the dollar. But at the end of 2019, the country decided to reduce borrowing costs by creating additional demand. As COVID-19 devastated the economy and the government borrowed record amounts to finance a multibillion-dollar stimulus package, India risked opening up part of its debt market to foreign investors. ⠀ JPMorgan says it includes 23 Indian bonds in its index with a total par value of about $330 billion. Bloomberg Index Services Ltd. from January 2025, will also add Indian bonds to its Fully Accessible Route, then all that remains is to conquer the EM debt index from FTSE Russell. ⠀ By the way, Berkshire Hathaway previously invested in the Indian company One 97 Communications Ltd., which owns the payment company Paytm, but exited it last year through a blockchain deal worth $164 million. However, the legendary Buffett said that in India there are “mass opportunities,” but he leaves them to the discretion of future “more energetic” leadership. ⠀ Are you ready to invest in India? Think about it, it can be very profitable!

[xchief-global]

Solana could grow by 20%

[xchief-global]

🚀 Insider time: buying oil

Major players gradually lost enthusiasm after the US Federal Reserve left interest rates unchanged, which could lead to a slowdown in economic growth and limit oil demand growth. An unexpected increase in US crude oil inventories also put pressure on prices. But the market is now capitalizing on stronger factors. ⠀ The Biden administration has used up nearly 40% of the nation's oil reserves in two years. The US sold its reserves on the open market at high prices and at the same time increased production, while OPEC+ members, on the contrary, limited supply. These actions helped to reduce inflationary pressure in the U.S., but by June 2023, the U.S. strategic oil reserve was at its lowest level since 1983 - only 346.8 million barrels. ⠀ Before the elections it is urgent to save the situation, so rumours are actively spreading that the US is forced to buy oil at current prices to replenish SPR reserves. But there are no obvious factors of such purchases yet. ⠀ The Middle East oil supply catastrophe is getting closer, and the chances of a ceasefire agreement between Israel and Hamas are minimal. ⠀ Saudi Arabia is increasing the premium on all grades of its crude for delivery to Asia, Northwest Europe and the Mediterranean. The premium relative to the Oman/Dubai benchmark for the flagship Arab Light grade will rise 45% to $ 2.9 per barrel. ⠀ Usually, the Saudis raise prices when they feel the strength of demand, and the dynamics of China confirms this. Analysts at Citi Research expect OPEC+ to maintain production cuts until the second half of the year at its regular meeting on June 1, so prices above $90 are quite realistic. ⠀ Such an upward spurt requires a confident breakdown of the $80 level and the strong defence zone at $83.50, but judging by the dynamics of interest in buying on the part of major participants, this mission is quite feasible. You can start now.

[xchief-global]

Target levels and forecast for the week 06.05.– 10.05.

The week begins with the failure of negotiations between Israel and Hamas, because Israel does not intend to abandon the attack on Rafah. We are waiting for a reaction on oil. ⠀ Britain's Conservative Party lost regional elections. British media are announcing new parliamentary elections in September. A Labor victory in the elections will lead to a rise in the pound due to strengthening ties with the EU, but the pound does not like moments of uncertainty and may be very stormy in the next 2-3 months. ⠀ The RBA and BOE meetings are interesting, but at the current stage, both rates will remain unchanged the market will only react to comments. ⠀ China's trade balance will have an impact on risk appetite. Fed members will appear on the air daily, markets will react to their rhetoric, but before the publication of US inflation for April on May 14-15, breakouts of the current price ranges are unlikely. ⠀ Recall the fundamental events that you need to pay attention to (GMT 0 time): ⠀ Tue, 07 Earnings Dates & Reports: Disney, BP, Ferrari AUD: Retail Sales (01:30); RBA Interest Rate Decision, Monetary Policy Statement (04:30) USD: EIA Short-Term Energy Outlook (16:00); API Weekly Crude Oil Stock (20:30) EUR: Eurogroup Meetings (10:00) ⠀ Wed, 08 Earnings Dates & Reports: Toyota, Uber, Airbnb, Shopify, BMW EUR: ECB Non-monetary Policy Meeting (07:00) USD: Crude Oil Inventories (+Cushing) (14:30) ⠀ Thu, 09 CNY: Exports, Imports, Trade Balance (03:00) GBP: BoE Interest Rate Decision (11:00); BoE Gov Bailey Speaks (11:30), (13:15) USD: Initial Jobless Claims (12:30) ⠀ Fri, 10 GBP: GDP, Manufacturing Production, Trade Balance (+Non-EU) (06:00) EUR: ECB Publishes Account of Monetary Policy Meeting (11:30) USD: WASDE Report (16:00)

[xchief-global]

The yen chooses a path: opinions and doubts

The risk of intervention is increasing ahead of the BOJ meeting. The regulator is unlikely to change its calm policy to an overly aggressive one, but the Japanese currency has been in the danger zone for a long time and requires decisive action. ⠀ U.S. Treasury Secretary Yellen met with the finance ministers of Japan and South Korea and agreed to the idea of supporting their currencies if necessary. Judging by the joint statement, Japan has managed to justify its currency policy stance to its G7 partners. ⠀ The public sentiment towards the weak yen has sharply deteriorated: another attempt at USD/JPY growth was accompanied by the fall of Japanese shares. In addition, a series of comments from business leaders have followed over the past two weeks, making it already politically costly for the yen to fall further. ⠀ Analysts are confident that the next BOJ rate hike is imminent in June and will be stronger than the market expects. And this time the Japanese monetary regulator will not limit itself to verbal interventions. ⠀ At the moment, the yen against the dollar is trading at the weakest levels since June 1990. The probability of a test of the key resistance at 156.50-157.50 is estimated at 85-90%, which may trigger a series of hidden but regular currency interventions to strengthen the national currency. ⠀ There is also the possibility of one major intervention that would first bring the dollar down to almost ¥150, followed by smaller manipulations to further depreciate the exchange rate. ⠀ So opening new positions in yen and other Japanese assets is not recommended yet - the market should analyze the BOJ comments, especially since large options in the 153.50-150 zone close only tomorrow. Let speculators work out their targets, and we will start selling next week. ⠀ Profits to y’all!

[xchief-global]

🔥 "New" Trump and virtual billions

Shares of Trump Media & Technology Group Corp. surged nearly 60% yesterday and briefly triggered a trading halt due to volatility. At the moment, Trump's stake is worth nearly $6 billion, but alas, only virtually. ⠀ A merger with Digital World Acquisition Corp. to rescue the loss-making company behind Truth Social promises much-needed profits for Trump as he faces a growing series of legal and financial problems. The new company is already being hailed as the leader of all meme stocks: appreciate the cheekiness of the new ticker - DJT (Trump's initials), although a similar one has long been used by the famous Dow Jones Transportation (NYSE: DJT). ⠀ According to reports filed with the SEC, the Nasdaq-listed company is valued at about $9.5 billion, and analysts at Bloomberg believe that Trump Media going public could bring Trump another $2 billion if the stock price hits its targets. ⠀ Trump is now paying millions of dollars a month to settle his ongoing legal problems. By the way, the next criminal trial of the former president is scheduled for April 15. ⠀ Donald can't sell the stake yet because of a six-month stock lock-up agreement, which prevents him from monetizing at least some of this "paper wealth" and easing his current cash crunch. He can, however, try to renegotiate the founding agreement or get a loan secured by the "new" shares. ⠀ With the Trump Media deal being heavily publicized as a political demarche, retail investors have supported the company and its stated mission to compete with other tech monsters. The stock's results will test Donnie's ability to attract the attention of big investors who are using the purchase of these shares as a way to bet on his re-election. ⠀ We'll see what happens.

[xchief-global]

𝐈𝐧𝐬𝐢𝐝𝐞𝐫 𝐭𝐢𝐦𝐞: 𝐠𝐨𝐥𝐝 𝐚𝐰𝐚𝐢𝐭𝐬 𝐟𝐫𝐞𝐬𝐡 𝐢𝐦𝐩𝐞𝐭𝐮𝐬 🤑

Despite the outward pessimism of speculators who believe that gold has become "too expensive" 🤔, there are no signs of a confident downward reversal yet. Both the fundamental background and technical analysis continue to support the bulls 💪🐮. Last week, the Fed's comments caused a new wave of growth in all assets involving gold (by almost 3%), but the recovery of the dollar's position reduced this gain to just 0.5%. 👎 In early trading on Thursday, the price of gold slipped to $2,222/40 due to low liquidity and triggered stop orders that destroyed short positions. 🐻🚫 In our opinion, this failure is the result of standard speculation: big capital is confident that other central banks will also maintain a "mild" policy and behave even more democratically than the Fed. 🙏 This is a favourable environment for risk assets , but now the gold market is overheated and needs to stabilize. 🔥🥵 The strong level of $2150 prevented a correction lower, so there is time to identify new targets. 😎🎯 Buyers are counting on gold’s ability to update highs strictly according to the classic Fibonacci model, so the level of 2300 (161.8% of the rally in the last days of February) and above is quite realistic. 📈 But for a more confident signal, you should wait for the breakout of the $2180-2200 zone. 🚀 You should sell only after breaking through the resistance of $2120-2100, and even then with a clear shift in volume dynamics to the red. 🛑🚫 The bears have little chance yet. 🐻💔 We remind you that the current week is short, large players will prefer not to open new positions, and liquidity will be unstable. 🗓️💰

[xchief-global]

Right?

[xchief-global]

⚠️ How Americans' credit card debt became Biden's problem

The Fed kept rates at least until June, but ordinary citizens, as a rule, do not see the connection between monetary policy and the lack of money in their own pockets. Nevertheless, the “cost of living” crisis raises valid complaints about the financial figures in the White House. ⠀ Over the past three years, Americans have racked up billions of dollars in credit card debt, making it increasingly difficult to keep up with spending as prices rise on everything from food to airline tickets. ⠀ The typical American consumer paid nearly 50% more on credit cards last year than in 2020, the year before Joe Biden took office. According to the Federal Deposit Insurance Corporation, interest and fees on credit cards have increased over 4 years by $51 billion and at the beginning of this year amounted to $157 billion. Delinquencies and fines reached the highest level in the last 13 years. ⠀ The rise in debt servicing costs comes as the Fed keeps rates at a 20-year high, but lenders have increased rates on consumer loans even further. Now Republicans are using the rising debt as an example of how Biden's economic policies have transformed the lives of low-income citizens income under constant stress. Interestingly, rising inflation - a real problem for the economy - worries consumers much less. ⠀ The US administration has enacted rules that reduce the maximum late penalties by approximately 75%. But despite a rising stock market, buoyant GDP and low unemployment, Americans remain gloomy about Biden's economy, posing a major threat to his re-election. ⠀ There is still no effective solution to the problem: the consumer always wants to spend more but work less. So living on credit is a normal state. ⠀ And what do you think?

[xchief-global]

💱 Target levels and forecast for the week 04.03. – 08.03.

We are in for a challenging week. ⠀ NFP: signs of continued strength in the labor market are inevitable, and a strong economy could lead to a resurgence in inflation. The unemployment rate is expected to remain at 3.7% and wage growth is expected to slow. ⠀ Powell testimony: before NFP, it is worth listening to the semi-annual monetary policy report before the House committee on Wednesday and the Senate committee on Thursday. ⠀ ECB meeting: no change in policy is expected, investors will wait for the magic mantra to be repeated that it is too early to discuss rate cuts. ⠀ Oil prices: OPEC+ extended oil production cuts for Q2 in an attempt to prevent a global surplus and support prices. Commentary on this topic has garnered speculation on major benchmarks, but within reasonable limits. ⠀ Fans of Asian assets are advised not to miss the publication of China's CPI and PPI tomorrow morning, we are waiting for the market reaction on Monday. ⠀ Recall the fundamental events that you need to pay attention to (GMT 0 time): ⠀ Tue, 05 USD: Services, composite PMI (14:45); ISM Non-Manufacturing PMI, Employment, Prices (15:00); API Weekly Crude Oil Stock (21:30) GBP: Services, composite, PMI (09:30) ⠀ Wed, 06 AUD: GDP, Retail Sales (00:30) USD: ADP Nonfarm Employment Change (13:15); Fed Chair Powell Testifies; JOLTs Job Openings (15:00); Crude Oil Inventories (+Cushing) (15:30); Beige Book (19:00) ⠀ Thu, 07 AUD: Trade Balance (00:30) CNY: Exports, Imports, Trade Balance (03:00) EUR: ECB Monetary Policy Statement, Interest Rate Decision (13:15); Press Conference (13:45); President Lagarde Speaks (15:00) USD: Initial Jobless Claims, Exports, Imports, Nonfarm Productivity, Trade Balance (13:30); Fed Chair Powell Testifies (15:00); ⠀ Fri, 08 USD: Nonfarm Payrolls (13:30); WASDE Report (17:00)

[xchief-global]

🔥 Speed is outlawed: China bans high-frequency trading

A hedge fund has received a one-year ban for abusing high-speed trading. This punishment means an escalation of the fight against quantitative trading, as the regulator tries to resuscitate the Chinese stock market after three years of losses.⠀ ⠀ High Frequency Trading technology is an algorithmic, very aggressive trading method in which the execution of a huge number of deals is realized in a matter of milliseconds. Such deals allow to open at the most favorable price, trade large volumes and maximize arbitrage opportunities.⠀ ⠀ The Shanghai Futures Exchange banned Shanghai Weiwan Fund Management from opening positions for 12 months, while confiscating 8.9 million yuan ($1.2 million) in illegal (according to the regulator) profits. Traders at the fund used HFT-deals to circumvent restrictions on deals in several stock index futures, and the fund did not disclose personal connections between its controller's accounts with stock speculation accounts.⠀ ⠀ In early February, the Shanghai and Shenzhen stock exchanges blocked the accounts of a large quant fund, Ningbo Lingjun Investment Management Partnership, for three days after it sold 2.57 billion yuan worth of shares in less than a minute, exacerbating a falling market.⠀ ⠀ This player speculated using its "Direct Market Access" ("DMA") software, which typically use swap contracts and have high levels of leverage. Previously, some DMA funds were prohibited from taking short positions altogether.⠀ ⠀ These measures helped support the market, with the benchmark CSI 300 index up about 10% from its five-year low, but traders saw the ban as an impediment to a free market.⠀ ⠀ What do you think?⠀