The Price of Oil.

Dear Reader,


Currently West Texas Intermediate(WTI) and Brent Crude Oil trade at 60.14 USD and 67.58 USD. Global oil prices, along with the rest of the stock markets, have staged a remarkable recovery since 24 December 2018.

How high will the price of oil go? I forecast the price of WTI will reach 80-82 USD and the price of Brent will touch 90 USD by the end of 2019?

Why? Because, global growth as average as it may seem, can support WTI Oil price of 80 USD and Brent oil of 90 USD. What is more, OPEC is intent on keeping to the announced production cuts which will further support prices. Sanctions on Venezuela, Iran and likely future sanctions on Russia will keep a firm lid on oil supply in the world.

Global oil majors like Exxon Mobil, Chevron, BP, Shell, Total, Rosneft stand to benefit from the continuing rise of the price of oil. But, the biggest beneficiaries will be companies that extract oil through hydraulic fracturing in the United States like Marathon Oil Corporation and Chesapeake energy corporation. Emerging markets oil giants like Petroleo Brasileiro and Rosneft will also see their market capitalization swell significantly. Actually, the pending further rise of the price of oil will drive higher global stock markets by supporting petrol and chemical producing companies.

The stock markets of Russia, Brazil and Mexico will rise significantly driven by higher oil prices. All in all, if oil prices remain below 90 USD, which they will, barring a supply shock, the global economy will benefit significantly.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

The US Yield Curve Inverted. When Will the Next Recession and Large Stock Market Fall Come?

Dear Reader,


The US Treasury yield curve inverted, that is the yield on 3 month bills become larger than the yield on 10 year Treasury notes.

Many economists and financial market participants consider the US treasury yield curve inversion as a harbinger of an upcoming recession. The problem is that the yield curve inversion is an accurate indicator, but its timing is not so great. In the past US yield curve recession has predicted correctly that there has been a recession 6 months ago or a recession will come in the next 2 years.

So when will the next recession and large stock market fall come? I stick with my prognosis that the US and global economy will lapse into a recession and a stock bear market, a fall of more than 20% for the major stock market indices, will come in 2021.

Why? First, because Donald Trump, The President of the United States  and his administration will make every effort to support the economy until the US Presidential elections in 2020. Once the Donald Trump Administration is reelected the stimuli for the US and as proximity the global economy will be tapered.

Second, historically we have had a recession after 5-7 years. The recovery that started in 2009 is one of the longest on record, so it is time we had an economic downturn. The credit expansion has gathered speed and soon fear will overcome greed.

Third, China's economic growth which has largely supported the global economy is about to fall below 6% which could cause social unrest and China could lapse into a severe recession, which will drag down with it Asia and the world's economy into a recession. Combined, US and China are responsible for circa 40% of world's GDP or global economic output produced every year.

What about stocks? The coming recession will be mild and prolonged, just like the recovery. So the cumulative loss of global GDP could well turn out to be larger than the Great Recession in 2008-2009. Stocks will fall into a prolonged bear market or the main stock indices will lose 20% or more of their value. How to navigate the coming stock market fall? By actively trading defensive, high devidiend stocks like healthcare, consumer staples, partly real estate. I also expect during the coming economic downturn large and midsized global emerging countries and their stock markets like India, Russia, Brazil, Indonesia, Mexico and Turkey to outperform their major developed Western peers and China.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

US Technology Stocks. Is it Time to Invest Intensively Again? Snapchat. Snap Inc.

Dear Reader,


There are signals that the time is ripe to invest again in US technology stocks.

US technology stocks, those with the largest capitalization(Microsoft, Apple, Alphabet, Amazon and Facebook) and those with smaller market capitalization have corrected quite a bit. The recovery that started on 24 December 2018 has erased some of the losses in market capitalization these companies suffered.

The largest US technology companies are still gowing their revenue with double digits, which is nothing short of remarkable given the size of these companies, both in market capitalization, revenue and profits in most cases. Some of the smaller technology stocks like Snapchat, GroupOn, Zynga, GoPro, FitBit are actually trading as value stocks by Price/Sales Ratios. This, however, does not mean that all of them will recover.

I actually like Snapchat. Snap Inc., its owner, is the only social network that has the largest chance of challenging Facebook. Why? Just look at what Facebook does? Facebook looks quite scared it could drive off users, if it does not offer more security and privacy. It literally copied the story feature of Snapchat and now even Mark Zuckerberg is openly betting  Facebook's future on the stories feature and more privacy, which are... milestones of Snapchat, the ephemeral, disappearing messaging conmpany. What is more, Facebook in the not so distant future tried to buy Snapchat for 3 billion USD. So if Mark Zuckerberg tacitly acknowledges Snapchat is the biggest existential threat to Facebook, there is certainly something special in Snap Inc. Snap Inc., Snapchat's owner, is growing its revenue in excess of 30% year on year, even though its user growth has stalled. But there is certainly place for a third major player in the internet advertising market. It is true that Amazon seems to have occupied the third place in internet advertising with 10 bln. USD from advertisements revenue, but Snap Inc. has all the ingredients to become the fourth large player in the internet advertisement market.

Zynga seems to be another not so bad technology value play in the gaming market, given its valuation.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

Emerging Countries Stock Markets. Will the Capital Inflows Return?

Dear Reader,


Many of the major emerging markets like Brazil, Russia, India, China and South Africa are below their 2008 peaks when the capital inflows were mainly directed at emerging and frontier markets, not so much in information technology as they are nowadays.

Are emerging markets ready to take the baton and lead the world to growth again? Are their stock markets going to grow strongly again?

Yes, but only partly. What do I mean? China has reached peak growth. I think the gowth of the GDP of China will fall below 5% in the coming 2-3 years which would easily cause social unrest and China's stock market could tank even more heavily than in recent months.

Brazil, Russia and India, however, are another story. Their stock markets, Russia's especially are grossly undervalued. India is going to be the next China, so to say. India's human capital and technological advancement potential is enormous. What is more, India's economy starts from a very low GDP per capita and with the base effect as tailwind the potential is for even double digit GDP growth in the next 5-10 years.

Russia's economy and its stockmarket, due to the fall in oil prices and the US sanctions are grossly undervalued. Oil majors like Gazprom and Lukoil trade at ridiculous Price/Earnings ratios of 5-6 as well as the other major Russian companies listed on the Moscow Stock Exchange. The Russian economy has huge base effects, starts from a lower base, and its population is highly educated and technologically advanced even by Western standards. Now, as the price of oil rises, Russia's major listed companies stand to benefit to a large extent.

Brazil is also a case in point of undervalued emerging market. Brazil has issues with political and corporate mismanagement, but the country is rich in natural resources and starts also from a low GDP per capita base. But Brazil is already a regional power in South America and sooner rather than later the major Brazilian stocks listed in Brazil and the USA will reach their full valuation potential.

Mexico, Indonesia and Nigeria are already economic growth stars which will inevitably benefit their local stock markets. Mexico, Indonesia and Nigeria benefit from their growing population and rising sophistication.

All in all, I think in the next 5 to 10 years capital will return massively to the major emerging and frontier markets.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich

The Federal Reserve. What Next? End of the Balance Sheet Reduction?

Dear Reader,


The Federal Reserve recently announced it may curtail its Balance sheet reduction program.

Many analysts state the Federal Reserve Balance Sheet Reduction actions as the main reason for the end of 2018 fall in stock markets.

I disagree. I think stocks were temporarily overvalued and they needed a correction.

The Federal Reserve is important, though.

I think that at its pending March meeting or later in 2019 the Federal Reserve will announce that its balance sheet reduction program will proceed at a slower pace. What is more, I believe the Federal Reserve will hike the Federal Funds Rate once more in 2019.

I thnk the Federal Reserve, the Central Bank of the United States, will take the decisions above to show SOME independence from the President of the United States of America Donald Trump. The Federal Reserve will not end entirely its balance sheet reduction program, precisely to show it retains at least operational independence. With one more hike the Federal Funds rate will reach 2.75% which is close to the long-run neutral rate of 3.00% envisaged by the Federal Reserve's Board itself.

I think such policy will provide some support to the US stock market and the main indices DJIA, S&P 500 and Nasdaq will finish the year with gains of about 20% or more, which are quite healthy results, indeed.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich