MM 16 November 2020

Quotes

Investing wisdom

Buy companies and managers who understand optionality

Text & Context

Most investors are focused on their little corners of a pluri dimensional dynamic financial puzzle. Often it pays to take a broader view to see the big picture. The reverse is true, when the big picture is blurry, it’s often useful to get more granularity from the bottom up.

Markets & Macro news

As Europe is breaking up

Asia is looking at building closer ties around China

Meanwhile in the US

The end of capitalism illustrated

In the Fed we trust? Don’t bet on it. Elliott Wave pattern suggests peak Fed. Government prints more than the Fed is buying right now

Yields are going up because economy is consuming more cash, but also because Fed has paused its asset purchase.

Buy the rumour, sell the news ?

Merrill says sell into strength as investors are already all in and money will come out of financial assets once the economy recovers. PIMCO agrees

The template could be like this

With limited upside on PE, earnings will be the key

Indeed, retail investors are in charge of the rally, while corporations are buying shares in the absence of economic expenditures and as CEO feels downbeat about their earnings prospects

Themes, Sectors & Corporate news

Nasdaq peaking vs Dow + turning long vol?

Can banks turn the corner on rising rates?

Less car usage in the US during Covid

But more trucks on the road

Time to buy oil?

IPOs, IPOs, IPOs

Deals, deals, deals

Electric Car theme

According to BCG, the market for car batteries could reach USD 45bn by 2027. Batteries account for 40% of the value of an electrical vehicle. Europe planning to grow investments in the space 10x by 2028 as a clear attempt to reduce its reliance on China, which controls half of the world’s market, but also as a clear sign of government’s sense of urgency with regards to the climate crisis.