AKG weekly charts - Issue #114
This newsletter is a weekly selection of 10 charts hand-picked across the internet which pertains to our investment strategy and bring an updated insight and perspective.
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[1] Europe’s blast furnaces were ruling the roost as electric arc furnaces or EAFs were uncompetitive there. EAFs had two headwinds during and after the Covid19 pandemic such as 1) high power prices, and 2) lower scrap collection (because of the pandemic-led lockdown), leading to higher scrap prices as well. Hence, EAFs were unprofitable, which led to increased pricing power for BFs. The situation has completely reversed now. Look out for Electrode companies in India!
[2] Saudi Arabia is the latest country to offload a massive amount of their US Treasury holdings. In February 2020, their holdings peaked at $184 billion and are now down 41%, to $108 billion. Meanwhile, China's US Treasury holdings just fell to $835 billion, a fresh 14-year low. Chinese holdings of US Treasuries are also down 40% from their highs and quickly dropping. The global flight out of US Treasuries is concerning.
[3] If markets are efficient, why are people still holding huge sums in bank accounts that yield 0.63% when money market funds pay 5.08%?
[4] Nasdaq/Russell 2000 is back to the level seen at the peak of the Dot Com bubble
[5] One of the reasons we are not in recession yet. Despite rate hikes US corporate net interest payments are going down
[6] The China/US decoupling is gaining steam. A good reflection of that dynamic is that Chinese share of US imports is on track to fall in half within a year. The decoupling is rewriting global supply chains.
[7] Markets heated in Small and Mid cap space. Pays to be cautious and not necessarily bearish.
Source : Elara securities
[8] Mutual funds in Small and mid cap categories have been very strong over the last few months.
Source : Elara Securities
[9] The last 4 times the 10Y Minus 3M Treasury Yield Curve inverted, it led to the 1990s recession, the Dotcom Bust, the Global Financial Crisis, and the 2020 Recession.
[10] Oil at 10-month highs while inventories at are at 40-year lows. Probably fine. Read more here
Disclaimer:
This newsletter is for information and educational purposes only. In this material, Amit Kumar Gupta (SEBI registered Research Analyst, INH100009327) has used information that is publicly available and is believed to be from reliable sources. While utmost care has been exercised, the author does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers, before acting on any information herein should make their own investigation & seek appropriate professional advice. Any sector(s)/ stock(s)/ issuer(s) mentioned do not constitute any recommendation and the RA may or may not have any future or existing position in these. All opinions/ figures/ charts/ graphs are as on date of publishing (or as at mentioned date) and are subject to change without notice. Any logos used may be trademarks™ or registered® trademarks of their respective holders, our usage does not imply any affiliation with or endorsement by them. Past performance on charts may or may not be sustained in the future and should not be used as a basis for comparison to infer any investment ideas