Dantes Outlook Market Podcast

Today, we explore global energy through the lens of Russia, the world's largest exporter of oil and gas. And to the west is Europe, which is heavily reliant on Russian gas supplies. According to some estimates, Russia is earning roughly $500 million per day on oil and another $400 million on gas all together.But gas flows from Russia to Europe were already declining into the Q4 heating season last year. Flows flattened out earlier this year, and are  now ticking downward.To help us understand the Russia/EU gas market, we turn to Nadia Kazakova, an analyst at Renaissance Energy Advisors (REA). Nadia is an expert in this field with prior roles at JP Morgan and Saxo Bank. She also provides in depth analysis on operating stats from Gazprom, Russia's majority state-owned energy company.On this show, we discussed:Russia's importance in the global and EU oil and gas marketsThe buildup of gas fields and a vast pipeline network from Siberia and throughout Eastern EuropeGazprom's growing influence on EU gas supply, and its efforts to go downstream to capture additional marginThe significance of Gazprom's November export cut to the EU, stemming from the Nordstream pipeline debacleSupply mix from Norway, Algeria and US LNGExpectations for further export reductions from Gazprom, below its annual output targetThe new system of ruble payments – its complexity and implications for sanctions and long-term contractsNew evidence that Gazprom is already cutting back volumes to non-compliant customersFuture price stabilization or volatility, and what to monitor going forward 

Most price signals have extended into overbought territory, although pullbacks could be temporary over the next quarter. Elsewhere, metals have stabilized and  oversold signals could present buying opportunities. Trading performance was positive in Q1, built on the success of Q4. Short palladium and long soybean oil were the  best performing trades, while sharp moves in wheat and oil detracted from overall gains. At times, volatility can lead to frequent or contradictory signals. Evidently, returns across commodities are not equal. At times, there is wide divergence between sectors such as oil/gas, agriculture and metals. That means the risk of a core long position can be offset with tactical long/short positions in specific commodities.​For now, here is our base-case into Q2:The copper/gold ratio, a gauge for risk-on/risk-off, is stuck in a resistance range, similar to what occurred in 2017-2018 when market volatility increased.WTI Crude Oil broke above a decade-long resistance level at $105/bbl and faces stronger resistance near the 2008 price high at $147/bbl-$150/bbl.The recent decline in stocks relative to commodities is starting to stabilize, although failure to hold a decade-long uptrend indicates further downside in the ratio, especially if bond yields continue to rise.Visit www.danteesoutlook.com for more info.

In the December podcast, we warned that 2022 could resemble 2018 – a year when the Federal Reserve tried to taper, which triggered a mini stock market crash. And now, we start the year with great turbulence. This time, however, a mix of macroeconomic and geopolitical risk emanating from Russia and Ukraine have kept investors on edge.  And of course, the threat of rising inflation lingers. Supply chain disruptions and record low inventories contributed to a surge in prices. But fighting inflation by raising rates comes at the expense of slowing economic growth. To help us unpack these developments, we turn to Lev Borodovsky, the editor of The Daily Shot newsletter. Geopolitics​Topics discussed:Update on the Russia-Ukraine conflict, and its impact on marketsEuropean energy crisisECB response and inflation expectationsCommodity price outlookFed policy and inflation/growthExpected returns: equities and Treasury hedge--Feel free to reach out to learn more about Dantes Outlook and our investment strategies here.

Tim explains that carry trades (borrowing at low interest rates to finance higher-yield investments, and assuming market stability), are behind recurring booms and busts. Tim and his fellow authors argue that market crashes are not the result of economic recessions – rather, market crashes cause recessions. Currently, there is risk of another carry crash, which was in development before the Russia-Ukraine crisis.

Commodity rally appears overbought, expect some pullbacksThe commodity price rally appears to be slowing, which could point to lower returns this year. Several overbought signals were confirmed over the past few months, especially in natural gas, which declined more than 30% in Q4. As expected, the dispersion in commodity returns narrowed over the past quarter as earlier declines in metals and agriculture stabilized. The US dollar remains a wildcard, which has strengthened along with commodities over the past few months. Meanwhile, commodity currencies such as the Australian and Canadian dollar have lagged the upside in commodities. Trading performance was positive in Q4, which made up for some losses in Q3. Short natural gas was the best performing trade, while a short-term buy in soybean oil detracted from gains. Overall performance in 2021 was positive, although most of the strategy's gains were realized in the fourth quarter of 2020 around the start of the commodity rally. Recent volatility has led to choppy trading conditions, which means the strategy will be more selective with positions.Read the full report here

FM Capital Group websiteTwitter: faithmight Lydia's LinkedInShow notesWe discussed Lydia's background in computer science and how she pivoted into trading and investing.Lydia started blogging and engaged with a community of traders online.She eventually started her own investment advisory firm, FM Capital Group, to apply her analysis and make investment decisions on behalf of clients.We discussed the importance of investor suitability and how FM Capital Group blends private and public markets to build  client portfolios.Lydia talked about her hands-on process to align client expectations with portfolio performance over the long-term.Opportunities in Africa's expanding middle class and the robust secondary market, which is often misunderstood. "Go into private markets with the aim of making more than one investment in companies that can create tremendous value over the next 10 years," Lydia said. Local investors are already active, and global players are entering the ecosystem. 

Katie spent more than 20 years on Wall Street providing technical research and advice to institutional investors. She is the managing partner of Fairlead Strategies, a technical research firm. Here is a brief rundown of our conversation. Started with a strong affinity for mathematics given the need for concise analysis – a binary takeaway that can be applied to markets.Technical analysis provides a visual element to help understand the markets, driven solely by price action.Worked as an analyst under mentors who taught her about different indicators and tools, which she combined in order to provide value as a trader and then later as a researcher. Consistency is key.Fairlead uses a collection of indicators to provide buy and sell signals. The real upside is in the uptrend, although certain momentum gauges can determine when trends are accelerating or ending. Katie is monitoring initial signs of upside exhaustion in the S&P 500 despite positive seasonal influences at the moment. A higher volatility regime could unfold next year, similar to 2018, a rangebound year which benefitted investors with a more intermediate-term timeframe.  

João is a graduate of Babson College where he concentrated in finance. He also completed a venture capital program at the UC Berkeley Haas School of Business. João worked in investment banking at Itau BBA and worked in financial planning at Kraft Heinz. And before Z1, he co-founded Vereda, a start-up providing low-cost, high-quality K-12 education for Brazil's middle class.We discussed the origins of Z1 and the importance of financial inclusion, especially for young adults. João also talks about his growth plans for Z1 after a series of fundraising. WEBSITE: https://z1.app  

Access the commodity market report hereThe broad commodity complex continues to rally after breaking above a decade-long downtrend. However, underlying returns are mixed, with natural gas, oats, coffee, and cotton leading the way higher, while industrial commodities such as platinum and palladium sold off in the third quarter. Indicators suggest the divergence in returns could narrow in the months ahead as leaders appear significantly overbought relative to laggards. ​

Visit MarketDesk Research to find out more about their service.Connect with the MDR Team:Matt ClementsJon ClementsMatt discussed his roots in St.Louis, MO and what drew him to accounting.We unwrapped MDR's evidenced-based research process and how to filter out market noise.Matt walked us through how MDR uses tactical signals to construct model portfolios.Lastly, we discussed MDR's favorable outlook on Chinese equities relative to the EM basket and other ideas.Join the Dantes Outlook LinkedIn page!

For our global audience of traders and investors, I figured we take a step back and learn about the importance of looking at the world beyond your work screen. Beth is based in Hong Kong and is also a board advisor to the Women in Finance Asia Committee which provides networking and skills based events for men and women in the finance industry.  We discussed the importance of volunteer work, self improvement, and leadership lessons for the next generation of leaders in finance.Beth's fitness company: https://www.bfit-thewrightway.comPathfinders: https://www.pathfinders.org.hk/en/

A bounce in the U.S. dollar could reduce inflationary pressures into the second-half of the year. However, upside remains limited after breaking a decade long uptrend last year. Commodities, including oil and metals are testing initial resistance, while corn and soybeans suffered sharp declines recently. Pullbacks are expected to continue over the short-term, which could provide timely entry points along the broader commodity upcycle.The copper/gold ratio, an important gauge of risk-on vs. risk-off, is also testing resistance, but has broken above a decade long downtrend from last year.The stock/bond ratio appears stretched, which could trigger some Treasury shorts to unwind positions if volatility rises into Q3. For now, the S&P 500 is holding support above the 50-day moving average, led by tech and consumer discretionary stocks. The growth trade should continue as the CBOE Volatility Index (VIX) drifts towards support at 12.Full report here: https://www.dantesoutlook.com/reports.html 

Cedric and Phil discussed the story behind PTG, current services and types of clients they work with. We also covered technical analysis and how it is used to manage risk across portfolios. Learn more about our combined trading strategies here: https://www.dantesoutlook.com/trading-team.html Website: https://www.philthegap.co LinkedIn: https://www.linkedin.com/company/philthegap/ Instagram: https://www.instagram.com/philthegaptt/  

The copper/gold ratio is used as a barometer for risk-on versus risk-off. The ratio is now testing long-term resistance, which could signal a pull-back in the reflation trade.Equities are still preferred over bonds, especially given a series of relative breakouts in the SPY/TLT ratio. However, it appears that long-duration bonds are deeply oversold, which means Treasury yields could recede over the short-term. US growth stocks are oversold versus value stocks, but the broader uptrend is shifting downward. For now, upside appears limited for momentum stocks, particularly concentrated in the tech sector. Healthcare and biotech, although lagging in terms of relative strength, have held support on shorter time frames.The broad commodities complex has reached our initial upside target (similar to the late 1990s in the Dow Jones Commodities Index). Downside should be limited amid seasonal weakness, and we expect the global economic recovery to keep buyers active at lower support levels. Learn more about our managed account offerings at www.dantesoutlook.comAnd stay tuned for a special guest interview later this month.

GAVIN Group's website: https://gavingroup.ca --Topics discussedWhat happens during the post-athlete transition?The importance of maintaining a support network on and off the iceCurrent challenges facing athletes (salary caps, taxes, pay disparities, deferrals)Managing financial uncertaintyA glimpse into the hockey industry in Canada - its importance, culture, and what makes an athlete such a unique client? Matt's current market views (Canadian equities, cannabis industry), and how he balances risk and return--Visit DantesOutlook.com for updates on multi-asset trading strategies. 

Topics discussed:History of The Daily Shot newsletterLev's process for finding relevant info and scanning markets.Equity valuations and remaining opportunities.The reflation trade.Pros and cons of rising inflation from both a market and economic perspective. (level vs. speed)The Fed's strategy to get ahead of an inflation surprise.Implications for the credit market given high corporate bond issuance.Inflation outlook for Europe and Japan.Economic improvements in LatAm and other emerging markets.Benefits from export growth.Agriculture markets and other commodities starting the next up-cycle.The endgame for QE/MMT/gov debt binge."Forced to continue fiscal expansion in light of massive debt and low yields, but becoming too reliant on this could hammer the economic recovery."Speculative environment in cryptocurrencies.Subscribe to Lev's newsletter at www.thedailyshot.com

Bruce Powers is a trader and fellow chartered market technician (CMT) currently based in Florida. You can interact with him via Twitter or LinkedIn. He has been involved in the financial markets for over 25 years. Bruce has an active media presence, including a column for Wealth Monitor magazine, where he covered commodities, forex, and global markets, and a separate weekly column for Gulf News, plus many more. And we look forward to his updates on the Dantes Outlook podcast throughout the year.--Visit DantesOutlook.com for updates on multi-asset trading strategies.  

Ideas discussed, heading into 2021:TIPS approaching support (inflation protection)10-year Treasury yield in a bottoming processTech shows consistent leadership, but stellar gains are limitedEnergy remains a laggard, but could soon offer valueS&P 500 consolidating along an uptrendBitcoin is breaking out, similar to 2017About CedricCedric hails from the Caribbean islands, where he pursued a bachelor of science degree in actuarial science. He then completed the CMT designation while working in the Republic of Trinidad and Tobago. Afterwards, Cedric spent some time in England, where he completed an MBA at the Cass Business School. Back in Trinidad and Tobago, Cedric is currently a level 3 candidate for the chartered financial analyst (CFA) program. He spent his investment management years working at the largest mutual fund company in the English-speaking Caribbean with about $3bn equivalent in assets under management. There, Cedric performed various duties of investment management including market analysis and portfolio management. He also launched the first tradable passively managed fund in the English-speaking Caribbean.Cedric is now an investment management strategist at a mutual fund company. And he is also involved in a startup, Phil the Gap, which provides financial and investment advice and education to the people of the Caribbean. --Visit DantesOutlook.com for updates on multi-asset trading strategies. 

Dantes Outlook provides portfolio advisory and trading strategies. On this podcast, we'll interview investment professionals. Our goal is to help both individuals and institutions realize global market opportunities and the factors that drive them. --Learn more about Demand DerivativesOwn part of the exchange! Invest in Demand Derivatives