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Trading Journal

psaTrading
Dec 01 2016 at 15:28
891 posts
On the last day of November, the US market was trading higher, favored by higher oil prices. However, attention was also focused on the economic indicators released. According to the ADP employment report, 216,000 jobs were created in November, up from 165,000 expected. On the other hand, household consumption grew by 0.30% in October (vs. 0.40% estimated), while Household income increased 0.60%, the best reading since April and in line with the estimates. Inflation associated with consumption stood at 1.40%, slightly below the expected 1.50% but higher than the 1.20% registered in the previous month. On the other hand, the Chicago PMI index reached 57.6 in November, well above the 50.6 observed in October and the expected 52.5. Regarding the real estate market, real estate purchase and sale contracts increased by 0.10% in October compared to the previous month, and against 1.50% in September. Investors are now waiting for the disclosure of the Fed’s Beige Book.

psaTrading
Dec 02 2016 at 12:20
891 posts
In the pre-opening, the European equities traded with some losses. At the end of the session one should not exclude an increase in the trade volume in the various markets (equity, bond and currency), with investors positioning themselves for the referendum in Italy on Sunday. The latest polls (published on Nov 18 because of Italian law banning their disclosure in the two weeks leading up to the elections) gave an advantage of between 4% and 6% for No, although the undecided rate was high (around 25%). Since then, there has been a steep increase in Italian yields, an increase in the spread against German yields and a significant drop in the country’s banking shares. Therefore, it is possible that investors have already partially discounted a No victory. On Sunday, the presidential elections in Austria will take place. The elections in Austria and the referendum in Italy precede a year full of political events in Europe, with the elections in France, the Netherlands and Germany, in addition to Brexit. Mario Draghi said recently that “political uncertainty is a dominant factor” in the current situation and that the great unkonown is to know how this uncertainty will affect the economy of the Eurozone, however reassured investors by stating that European banks are better prepared to face Adverse events than before the crisis.

psaTrading
Dec 05 2016 at 12:04
891 posts
The best way to measure investors’ risk perception regarding Italy is through the evolution of the country’s banking shares, Italian credit default swaps and the differential between Italian and Spanish yields. While the spread between German and Italian yields not only measures the risk of Italy as well as Southern Europe as a whole, the differential between Italian and Spanish interest rates isolates the “southern Europe” or “periphery” effect and Focuses on country risk.

kieran (snapdragon1970)
Dec 05 2016 at 13:33
1945 posts
psaTrading posted:
The best way to measure investors’ risk perception regarding Italy is through the evolution of the country’s banking shares, Italian credit default swaps and the differential between Italian and Spanish yields. While the spread between German and Italian yields not only measures the risk of Italy as well as Southern Europe as a whole, the differential between Italian and Spanish interest rates isolates the “southern Europe” or “periphery” effect and Focuses on country risk.

I check the country ERP on aswath damodaran website.

"They mistook leverage with genius".
psaTrading
Dec 06 2016 at 16:23
891 posts
Yesterday, the negative reaction to the outcome of the referendum turned out to be quite limited in time. In fact, the Italian market opened with losses close to 2%, with banking shares accumulating devaluations of almost 5%. The fragility of the FTSEMIB index and its banking sector rapidly spread to other markets. In the debt market, the Euro has reached the lows of the last months and the peripheral yields have risen sharply. This trend, however, lasted less than 30 minutes, when a notable recovery boosted the Milan stock exchange (affecting their European counterparts) and the Euro, while yields in southern Europe eased the losses. On one hand, No’s victory (unlike Brexit and Donald Trump’s election) was the most anticipated scenario for investors. Thus institutional investors had time to prepare for the event. Many of them reduced exposure to Italian equities and debt, and some hedge funds constituted selling positions. After a strong negative response at an early stage, risk assets underwent notable recoveries, frustrating the intentions of many sellers who sold out at that early stage.

psaTrading
Dec 07 2016 at 22:38
891 posts
The main theme of Thursday’s meeting will be whether the ECB will extend its debt-buying plan and how it will done. This program, which focuses on the acquisition of debt instruments at 80,000 M. € / month, ends in March 2017. According to several declarations from members of the Central Bank, it is very likely that the debt acquisition program will extend Beyond that date. Since the publication of the latest economic forecasts in September, the Eurozone economy has reported a number of improvements, surpassing in some headings not only the economists’ projections but also those of the ECB.

psaTrading
Dec 08 2016 at 12:11
891 posts
Yesterday European stocks were boosted by the banking sector, notably Italian bonds. The Italian press has published a number of news reports concerning Monte dei Paschi di Siena. According to Reuters, citing an Italian source, the Italian State may acquire a stake of 2000 M. € in the capital of the oldest bank in the world. This news has not yet had an official confirmation. If confirmed, this transaction lowered the bank’s capital requirements to about 2000 M. €. The La Stampa newspaper said that the Italian State could use the European Stability Fund, calling for a plan to support its banking sector in a manner very similar to that required by Spain during the sovereign debt crisis. According to the same source, this program of aid to the transalpine banking would amount to 16000 M. €. The shares of Monte dei Paschi di Siena were valued at 11%.

psaTrading
Dec 09 2016 at 15:46
891 posts
The American indexes closed higher once again, prolonging the denominated Trump Rally. Last week, this upward movement seems to have entered a new phase. In the weeks following the US presidential election, stock indexes were favored by the positive expectations which investors drew from the measures that the Trump administration is willing to introduce. But more recently, equity markets seem to have entered into more of a dynamic, driven by more intrinsic factors. In an initial phase the Trump Rally was received with surprise and later with skepticism. However, as US indexes hit new highs in succession, many fund managers are forced to increase exposure to the stock market, otherwise they will underperform against their benchmark.

psaTrading
Dec 12 2016 at 12:19
891 posts
Political developments in Italy will dominate the attention of investors. Yesterday, the President of the Republic Sergio Mattarella appointed Paolo Gentiloni as the future Prime Minister. To justify this choice are, among other arguments, the fact that he had a prominent position in the previous executive and of being a person with good relations with the different institutions of the European Union. This latter quality is particularly important considering that the first dossier that the new government will have to solve is the Monte dei Paschi di Siena issue. The solution through public intervention is the most likely from the investors’ point of view.

psaTrading
Dec 13 2016 at 11:01
891 posts
Although investors are currently focused on the Italian political situation and on the economic prospects that the future Trump administration has created, China remains a relevant variable for the activity of several European companies. In the third quarter of this year, European companies saw a 6.10% drop in profits. However, most analysts estimate earnings growth in 2017 (between 6% and 14%). To this end, emerging markets are an important variable, accounting for 31% of their revenues (compared to 17% of their US counterparts).

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