Week in a Glance: OPEC, FOMC Protocols, Branson in Space

12 июл. 2021 г.

The past week began with OPEC+ finally entering the Schrödinger states. On the one hand, so far there has been no increase since August, which means that oil should be bought without hesitation, because there is a deficit. On the other hand, the UAE says it will ramp up production and increase its market share. And this is no longer a reason for the collapse of OPEC+ (especially since its mission has been largely accomplished). The collapse of OPEC + and the transition to the "every man for himself" mode is definitely a bearish signal. Yes, we will not see minus $ 50 per barrel, but $ 40 per barrel is quite (they are such price wars).

As for the reaction of the markets, they were able to make up their minds and after a rather significant drop in prices at the start of the week, at the end of the day oil was able to win back a significant part of the losses. Our position is still unchanged - OPEC + will not fall apart, but oil production will increase, which means an oil correction is inevitable. So the medium-term sale of assets remains relevant.

As recently as last week, the markets were very much afraid of the publication of the minutes of the last meeting of the FOMC. Let us remind you that this is the meeting at which the chart of forecasts for the FRS rate (dot-plot diagram) was revised. Accordingly, the markets were afraid to see a heated discussion about rates in the text. But no, they didn't. The discussion is still going on about the scope and structure of the quantitative easing program. Markets took this as an excuse to relax - the Fed's monetary tightening remains a potential threat and is somewhere beyond the horizon.

However, we would not recommend relaxing. Already on this case, data on consumer inflation in the United States will be published. They may well remind the markets that the inflationary spiral is unwinding and the Fed will have to react to it. So buying the dollar this week will be our number 1 trading idea in the forex market.

The ECB unveiled a new monetary strategy last week. Its main innovation is that the inflation target is somewhat blurred. Now it is not just 2%, but 2% with deviations. But at the same time, the Central Bank assured that it would react promptly and notify market participants in advance about its actions.

Another landmark event is the flight of Virgin Galactic head Richard Branson into space. This event opens the era of space tourism. Well, for Virgin Galactic - a reason for the stocks growth and the bubble emergence. But this is the case when you can buy shares not at the peak of the bubble, but at the moment of the start of its formation. So we recommend buying Virgin Galactic for those who do not have enough money or adrenaline in their blood.