David Fuller and Eoin Treacy’s
Comment of the Day
November – 162021
Commentary by Eoin Treacy
Some of the topics discussed include: Wall street steady but speculation in new companies continues to build, Europe and Japan gains eroded by weak currencies, China recovering, oil steady, gold weak, bitcoin and ethereum pull back.
Gold Erases Earlier Gains After Fed Officials Stir Policy Debate
This article from Bloomberg may be of interest to subscribers. Here is a section:
St. Louis Fed President James Bullard said Tuesday that the U.S. central bank should be more aggressive in managing risks from price pressures. Bullard participates in the Federal Open Market Committee, which sets direction of U.S. monetary policy, and will become a voting member next year.
“I think it behooves the committee to go in a more hawkish direction in the next couple of meetings so we are managing the risk of inflation appropriately,” Bullard said in a Bloomberg Television interview with Michael McKee, Lisa Abramowicz and Tom Keene.
Eoin Treacy’s view
James Bullard will be a voting member of the Fed’s Open Market Committee next year. His pronouncements tend to carry more weight than Neel Kaskari’s, who won’t be a voting member until 2023.
Gold eased back from a fresh recovery high on this news to form a small downside key day reversal. Some consolidation appears likely in order to unwind the short-term overbought condition. As the region of the May high was approached, it likely encouraged some shorts into the market to pressure stops. That suggests the $1800 area is a likely area of potential support.
It is extremely unlikely the Fed is going to come anywhere close to raising rates to 3% in this cycle. The 2y2y Swap rate is currently at 1.5% and still trending higher. A near doubling from here would be a significant event that implies runaway growth and economic expansion to tolerate that kind of tightening. It also ignores the interest rate sensitivity of the global economy following years of outsized bets on the promise of future cashflows.
Bitcoin’s drop back to test the lower side of its short-term range and the region of the psychological $60,000 is also noteworthy. The price will need to hold the $57000 level if a failed upside break and potential for a significant retracement are to be avoided.
European Gas (ASX:EPG) Prices Jump on Delay to New Russian Pipeline
This article from Bloomberg may be of interest to subscribers. Here is a section:
The German regulator said Tuesday it suspended the certification procedure for the Nord Stream 2 project because the operator of the pipeline decided to set up a German subsidiary, which will be the owner of the section of the pipeline in the country. The permitting process has been halted until assets and people are transferred to the new unit.
Benchmark European gas prices surged as much as 12% after the announcement as it adds to the uncertainty over how much gas the energy-hungry market will have this winter. Many in Europe expect Russia to significantly increase supplies only when the pipeline is approved.
“This is potentially a good thing for the project for the long term, as the changes could mean it would be eventually approved,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “But it’s not helping the short-term outlook for the market where a bad, cold winter could leave us short.”
Eoin Treacy’s view
There is no doubt the Nordstream 2 pipeline will eventually be permissioned. However, that is not going to happen until German regulators have had the opportunity to feign independence in making the decision. No one likes to admit they are beholden to a foreign power but unfortunately, Europe is completely dependent on Russian gas. They need that pipeline as much as Russia wants it and therefore it will be permissioned eventually.
In the meantime, the price of European gas experienced a deep pullback following completion of construction and is now bouncing ahead of the conclusion of permitting.
The big picture is natural gas prices have taken a significant step higher. These kinds of secular moves do not last forever but they don’t tend to be fully reversed either. It remains likely that the price will hold the breakout from the decades’ long base formation.
That represents a massive change for the price structure of everything natural gas is used to manufacture in Europe, particularly fertilisers. It also points to higher heating and cooling costs in future and will accelerate the drive towards energy independence.
Gazprom is currently unwinding its short-term overbought condition relative to the trend mean and will need to hold the $8 area if the benefit of the doubt is to continue to be given to the upside.
The set of graphics from the Financial Times displaying how Europe gets its gas may also be of interest.
Introducing the First AI Model That Translates 100 Languages Without Relying on English
This article from Meta Platforms (Facebook) may be of interest to subscribers. Here is a section:
oFacebook AI is introducing M2M-100, the first multilingual machine translation (MMT) model that can translate between any pair of 100 languages without relying on English data. It’s open sourced here.
oWhen translating, say, Chinese to French, most English-centric multilingual models train on Chinese to English and English to French, because English training data is the most widely available. Our model directly trains on Chinese to French data to better preserve meaning. It outperforms English-centric systems by 10 points on the widely used BLEU metric for evaluating machine translations.
oM2M-100 is trained on a total of 2,200 language directions — or 10x more than previous best, English-centric multilingual models. Deploying M2M-100 will improve the quality of translations for billions of people, especially those that speak low-resource languages.
oThis milestone is a culmination of years of Facebook AI’s foundational work in machine translation. Today, we’re sharing details on how we built a more diverse MMT training data set and model for 100 languages. We’re also releasing the model, training, and evaluation setup to help other researchers reproduce and further advance multilingual models.
Eoin Treacy’s view
The trend of artificial intelligence away from iterative learning to free associative learning is a major innovation which has also been used to by Google’s DeepMind to make substantial progress in a range of medical questions.
Facebook continues to rebound from the region of the trend mean.
Investment pitches often overstate the benefits of artificial intelligence, but progress is tangible in a number of fields. There is a massive shortage of translators for streaming services as they move into international markets. Automatic subtitling removes a roadblock for growth from companies like Netflix or Disney.
Netflix successfully broke out of its most recent range and continues to trend higher.
Disney broke downwards last week on lower streaming revenues. It will need to demonstrate support in the region of the trend mean if the benefit of the doubt is to be given to the upside.
Drug discovery and selecting candidates for additional study is also significantly improved by deep learning and artificial intelligence. Results don’t happen all at once but the pace at which they can be reached accelerates.
The challenge for investors at present is the biotech sector is dominated by vaccine producers. The Nasdaq Biotechnology Index’s largest constituents are AstraZeneca, Sanofi, Amgen, Moderna, Gilead Sciences, Regeneron Pharmaceuticals (NASDAQ:REGN) and Biontech SE. Together they represent 46.5% of the Index’s market cap.
The future of the healthcare sector lies beyond the near-term focus on a winner takes all approach to COVID vaccines. That’s is the primary reason the Index is struggling to perform at present.
Eoin’s personal portfolio: leveraged profits taken September 7th
Eoin Treacy’s view
One of the most commonly asked questions by subscribers is how to find details of my open traders. To make it easier I will simply repost the latest summary daily until there is a change.
I bought back into both bitcoin and ethereum last on August 6th. I took the profit in both positions today at $47,935 and $3,477 against my purchases at $42,427 and $2,866 respectively. I’ve been happy to buy back on weakness but remain of the view that the risk in the sector is substantially higher since the peak in March. Therefore, my policy was to sell on the first sign of trouble. That was delivered today with large downward dynamics.
I increased my platinum long on August 27th paying $1002 for another position. My existing platinum longs were purchased at $1072 and $885. I remain of the view that precious metals are still cheap and are to be bought on significant dips.
I also continue to hold my silver trading position, initiated at $23.7. I will buy more if the current reaction deepens.
I have been saying for months that I have purchase orders below the market in gold and silver. The first of these was triggered on August 9th. I was filled at $1702.3 including spread-bet dealing costs. My original positions were opened in Q4 2020 at $1879.2 and $1818.6. That reduces by average purchase price to $1800.
I still have additional bids in the market below prevailing prices in gold and silver and will leave them in place to take advantage of any possible additional volatility. These are leveraged trading positions rather than medium to long-term investments.
With baby steps trading one has to have high conviction prices will recover and the patience to buy on weakness before eventually being proved right; hopefully.
Among my investments, my original position in the VanEck Vectors Gold Miners ETF was purchased on March 25th at $20.12. I bought another unit at $35.79 on December 1st. I continue to shop for opportunities in the gold sector.
My two investment positions in Rolls Royce were purchased at 154.75 and 105p respectively. I also took up the rights issue which has resulted in an average purchase price of 54.63p. Rolls Royce has not participated in the stock market rebound of late and continues to form a first step above the Type-2 base formation.
The Chart Seminar 2022
Eoin Treacy’s view
With global vaccination rates rising, the prospect of anti-COVID pills on the horizon and the promise of travel restrictions being dropped, it is time to start thinking about venues for The Chart Seminar in 2022. Please drop [email protected] a line if you would be interested in attending an event next year, as well as your preferred location. At present the two locations with greatest demand are London and Dubai.
