Platinum portfolio

Portfolio composition

US and European stocks

Apple

 

 

Apple shares fell 20% from their all-time high in early September. The AAPL drawdown created interesting buying opportunities.

 

Factors in favor of buying

• A support zone passes in the region of $ 106-100, from where there will be a high probability of a new rebound. Quote for the first half of Wednesday trading, 09/23/2020 - $ 110.4.
• The forecast assumes a 17.1% increase in earnings per share (EPS) over the next 12 months. In the next five years, an average of 12.5% per year is expected. • New iPhone models will be presented in October. This time, it is possible to use 5G technology.
• The strength of the brand, in part, justifies the high cost of apple products. There is a whole "club" of Apple fans who buy new iPhones from year to year. Apple's complex ecosystem facilitates the purchase of not only basic but also non-essential products of the company. Due to this, the service segment is actively developing. In September, the company unveiled the Apple One suite, which brings together music, TV, games, news, fitness, and the cloud. Users will be able to pay by subscription for everything at once, rather than for individual options.
• Apple is actively generating free cash flows (FCF, operating flows minus capex). In the second quarter, FCF amounted to $ 14.7 billion, "cash and short-term investments" - $ 93 billion, debt - $ 113.4 billion. This indicates the financial strength of the company, allows it to invest in new technologies, pay dividends and carry out share buybacks. Apple shares have a dividend yield of 0.8% per annum.
• The median target for analysts is 12 months. - $ 125. Quote for the first half of Wednesday trading, 09/23/2020 - $ 110.4.

Trading plan:

 

purchase of AAPL in the region of $ 103 with a target of $ 115. The potential yield is about 10%.

 

Risks

 

1. In case of consolidation of securities below $ 100, a descent to $ 95 is possible.
2. High competition in the smartphone market, given the high cost of the iPhone. The problem is especially acute in China, where the majority of the population is still not able to pay.
3. With each new iPhone, the opportunities for revolutionary changes to the device are diminishing, which lengthens the smartphone update cycle for users.
4. Anti-monopoly attacks by regulators.

 

Microsoft

 

 

The company's chart shows significant growth over the past six months; in early September, there was an exit from the growing channel as a result of correction. However, we expect the quotes to return to it and continue the growing movement. Strong 3Q 2020 earnings forecasts remain valid

 

Cisco

 

 

Trading plan

 

Purchase from the level of $ 40.3 (on the SPB exchange) with the aim of $ 45 for a period of 6 months. Potential deal yield = 11.7% excluding dividends. Dividends over the set period could generate another $ 1.08-1.1, or about 2.7%. Factors behind:

• Dividends. The current annual dividend yield is 3.6%. The company is not a dividend aristocrat, since it has been paying dividends for less than 25 years, but throughout the history of payments since 2011, it has certainly increased them year after year.
• The paper has undergone a significant correction. Cisco stock quotes corrected sharply, first in August after the publication of the quarterly report, and later on the background of general market sales in the high-tech sector. In August, investors were disappointed by the company's forecast for a drop in revenue in the third quarter, which Cisco gave despite the fact that many of the largest corporations abandoned their forecasts, citing uncertainty about the impact of the pandemic.
• The buyback may resume. The company suspended buyback in the second quarter, which was difficult for the entire American economy, and this moment was taken into account in prices. If the uncertainty about the development of the situation with COVID-19 is removed as the vaccine is launched and social activity is fully restored, the buyback of shares may be resumed in the first half of next year.
• Strong financial position of the company. In fiscal 2020 (ended July), Cisco generated $ 14.7 billion in free cash flow, which is largely unchanged from fiscal 2019. Cisco ended the year with $ 29.4 billion in cash and cash equivalents and short-term investments. The weak forecast for revenue in August was accompanied by management's comments on upcoming operating cost cuts.
• 5G networks. An equipment maker could gain momentum as it gets closer to building 5G wireless networks. Consensus forecast. Analysts are generally moderately positive about Cisco shares, with consensus at $ 49.2, according to Reuters.

Risks:

1. Second wave of coronavirus and delay in mass vaccination. In the face of the coronavirus situation, companies have cut spending on information technology.
2. Cisco is committed to moving from on-premises data centers to hybrid cloud computing infrastructure. Lagging behind competitors in this process is a risk, but the company has the opportunity for transformation, the means for M&A deals.

 

Google

 

 

TikTok may be blocked from downloading in the United States as early as September 20, and this is a positive moment for Alphabet. The company's video services business (especially Youtube) is seriously affected by the competition with the Chinese service.

 

At the same time, the company recently released a positive report for the 2nd quarter, and many investment banks raised their targets for securities to an average of $ 1700- $ 1800. Against the background of the general rally, there is a high probability of further growth in the stock.

 

Trading plan:

 

Buy from the level of $ 1415 with a target of $ 1499.4.

The loss limit is set at the price level of $ 1400

 

Facebook company

 

 

Facebook shares plummet 18% from their all-time high in August. The FB drawdown created interesting buying opportunities. We recommend buying around $ 240 with a potential return of about 12%.

 

Factors in favor of buying:

• The securities approached the support zone of $ 245-235. The probability of a rebound from this zone is quite high.
• The coronavirus pandemic has heightened audience interest in online communication and recreation. In the second quarter, the audience of all FB (MAU) platforms, including Instagram, Messenger and WhatsApp, reached 3.1 billion. The social network itself accounted for 2.7 billion. New habits and consumption patterns have formed, which not everyone will abandon.
• The forecast assumes a 19.3% increase in earnings per share (EPS) over the next 12 months. In the next five years, it is expected + 16.4% on average per year. The company's net debt is negative (debt minus cash, $ 57.8 billion), which makes the company financially stable and allows it to invest in new projects. • The digital advertising market is growing rapidly. EMarketer's forecast assumes an increase in spending in this direction by at least 10% annually from 2021 to 2023. In fact, a monopoly has formed on the global online advertising market - Facebook and Google. Targeted advertising in social networks is a special marketing promotion tool that differs from contextual and display advertising, and allows you to work with “warm” demand.
• Facebook is developing new services. Instagram is actively used as a direct selling tool, a shopping platform. In early August, the company announced the creation of a direct competitor to TikTok, launching the Reels feature for Instagram. It allows you to create short videos with audio overlay and additional effects.
• The median target for analysts is 12 months. - $ 297.5 Quote for the first half of trading on Tuesday, 09/22/2020 - $ 250.

Trading plan:

 

buying FB in the region of $ 240 with a goal of $ 269. The potential yield is about 12%.

 

Risks:

1. In case of consolidation of securities below $ 230, a descent to the region of $ 220-210 is possible.
2. Antitrust attacks by regulators, concerns about the safety of users' personal data, initiatives in the field of introducing a "digital" tax on the income of the largest tech corporations. This has already increased Facebook's costs of data security and content moderation.
3. At the end of June, major advertisers suspended their Facebook ad campaigns for a month, some of them until the end of the year. In their opinion, the social network poorly moderates messages that promote violence and racism. Small and medium businesses are not inclined to PR of this kind, but there is another problem - the weakening of the global economy due to the coronavirus pandemic

 

Disney Company

The Walt Disney Company operates in various areas of the media industry - owns a range of electronic, paper, radio and television broadcast media, which are part of the Disney / ABC Television and ESPN divisions, as well as a line of Walt Disney theme parks and resorts - Disneylands are located in the USA , Shanghai, Paris, Tokyo and Hong Kong. Walt Disney's best-known business for nearly a century has been in the studio producing films, music and theater productions. The conglomerate includes studios such as Walt Disney Studios Motion Pictures, Walt Disney Animation Studios, Pixar, Marvel, Touchstone Pictures, LucasFilm and others. Last year, the company launched the Disney + media streaming platform. In the second quarter, as we expected, the negative impact of the pandemic on the financial results of Disney was very pronounced due to idle parks and a slowdown in the studio business. However, we note that the Disney + streaming platform is able to recover some of the revenue lost due to quarantine measures, and otherwise we also saw no reason to refuse the investment in this blue chip. The media giant's stock has surpassed our target level since our last recommendation update in mid-June and yielded 13.3% in less than 2 months. We see moderate potential for further strengthening in Walt Disney stock over the medium term.

 

Technical picture DIS, W1:

 

Amazon

 

 

The Internet retailer's shares fell 17% from their all-time high. Quote at Friday close - $ 2955. There is a support zone in the region of $ 2900-2800. So the probability of a rebound to the $ 3100 region is growing. If consolidated below $ 2,800, the stock could fall to $ 2,600.

 

The Home Depot

The Home Depot is an American retail chain that is the world's largest selling repair tools and building materials. The company is headquartered in Wienings. The company employs 355 thousand people. The chain operates 2,144 stores in the USA, Canada, Mexico and China. Net income for the second fiscal quarter ended August 2 was $ 4.33 billion or $ 4.02 per share, compared with earnings of $ 3.48 billion or $ 3.17 per share a year earlier, while analysts had expected this figure to level of $ 3.68 per share. The company's revenue in the period under review increased from $ 30.84 billion a year earlier to $ 38.05 billion, which was higher than the average analysts 'forecast of $ 34.53 billion. At the same time, like-for-like sales grew by 23.4% y / y, exceeding analysts' expectations of 12 , 2% y / y. It should be noted that since the beginning of the year, Home Depot shares have risen in price by 32%. “Our business investment has significantly increased our agility, allowing us to respond quickly to change while continuing to provide a safe working environment,” said Craig Menier, Chief Executive Officer of Home Depot. The retailer is a good candidate for inclusion in a long-term portfolio even amid the COVID-19 situation and the escalating trade war between the United States and China. Quarterly dividends have risen 500% over the past decade, and a payout ratio of just 42% offers good potential for further growth.

 

Technical picture HD, W1:

 

Walmart

Walmart, Inc. Is an American company that operates the world's largest wholesale and retail chain operating under the Walmart brand. It is headquartered in Bentonville, Arkansas. Net income for the second fiscal quarter increased by 79.5% YoY and reached $ 6.48 billion or $ 2.27 per share, while adjusted earnings were at $ 1.56 per share, beating analysts' forecasts of $ 1.25 per share. per share. Cumulative sales rose 5.6% YoY to $ 137.74 billion, beating market expectations, while LFL sales in the US increased 9.3% YoY, which was also better than expected. It is worth noting that the sharp increase in demand for online purchases contributed to the improvement in financial results. In addition to food products, consumers purchased online appliances, electronics, toys and other products. As a consequence, Walmart's online sales soared 97% y / y. We forecast online sales to continue to grow as the coronavirus continues to spread. Notably, since our previous analysis (namely the end of June this year) Walmart has reached our target price of $ 135, bringing investors a 14% yield, and the company's long-term upside potential remains. The coronavirus pandemic has made changes in consumer preferences, and structural changes in shopping are likely to persist for the next few years, and hence Walmart's financial performance will continue to improve. Considering the above, we maintain our Buy recommendation for Walmart and set their target price for revision.

 

Technical picture WMT, W1:

 

Pfizer

It is noteworthy that, despite the coronavirus pandemic, Pfizer raised its forecasts for the current year - in terms of net earnings per share from $ 2.82-292 to $ 2.85-2.95, and in terms of revenue - from $ 48.5-50. 5 billion to $ 48.6-50.6 billion. Pfizer shares are among our recommendations with a Buy rating as a conservative long-term investment. Over the past month, in particular, the paper brought a yield of 11.5%. Pfizer's Q2 earnings were in line with our optimistic expectations despite the scale of the impact of the pandemic on the US economy. The COVID-19 situation had a minimal negative impact on the pharmaceutical giant's business - the net negative effect of the pandemic on the company's revenue in the second quarter was only $ 500 million, or 4%, and was mainly due to the refusal of Americans from routine medical examinations by pediatricians and therapists and a decrease in demand for certain types products in China. We highly appreciate Pfizer's resilience to the crisis in an unprecedented environment and believe that the stability of the company's financial results will be appreciated by investors as well, therefore we have no reason to cancel our “Buy” recommendation for Pfizer shares and set the target price for revision.

 

Technical picture of PFE, W1:

Johnson & Johnson

Johnson & Johnson is an American holding company founded in 1886 and leads a group of 265 subsidiaries around the world manufacturing pharmaceuticals, cosmetics, sanitary and hygiene products, and medical equipment. Over the past several decades, the company has been actively expanding, adding more and more product lines to the list of manufactured products. This was done through acquisitions of various firms, and today J&J's market capitalization is about $ 390 billion. Over the past 12 months, the company's securities have brought investors a 13.3% return, and we believe that their attractiveness in the long term will remain. First, the company remains undervalued in relation to the sector as a whole. Second, after reporting higher sales and profits in the second quarter, J&J improved its forecasts for the entire current year. Thirdly, against the backdrop of the coronavirus pandemic, the company began assessing the existing portfolio of antiviral drugs, and also began developing a vaccine against COVID-19, which they began to test in humans last week. In early 2021, the company expects to obtain approval for the use of its vaccine and expects that by April next year it will be able to produce 600-900 million doses. We maintain our Buy recommendation for Johnson & Johnson shares and maintain our target level for the instrument at $ 170.00, which is equivalent to 14.8% upside potential for securities from current levels.

 

Technical picture of JNJ, W1:

 

Merck & Co

Merck & Co is an international pharmaceutical company. Develops, manufactures and distributes vaccines and medicines. Also publishes non-commercial medical journals, reference books. In all countries except the United States and Canada, the company's products are sold under the Merck Sharp & Dohme brand. The company operates in 120 countries: North America, Latin America, Europe, Africa, Asia and the Middle East. Merck & Co employs 76 thousand people. For 23 years, Fortune magazine has included the company in the Fortune Global 500 - the rating of the largest corporations in the world. Merck was ranked 246th in 2017. The company posted higher-than-expected quarterly profits and improved its full-year outlook amid strong demand for the cancer drug Keytruda during the COVID-19 pandemic. The company said it plans to begin human trials of an experimental coronavirus vaccine acquired through the purchase of Themis Bioscience in the third quarter. Keytruda's quarterly sales rose nearly 29% to $ 3.39 billion, beating the $ 3.13 billion average forecast, according to Refinitiv. The company said it expects annualized earnings in the range of $ 5.63 to $ 5.78 per share, up from the previous forecast of $ 5.17 to $ 5.37. Second-quarter earnings excluding certain balance sheet items were $ 1.37 per share, beating the analyst consensus of $ 1.04 per share, according to IBES from Refinitiv. Total sales fell 7.6% to $ 10.87 billion, but beat analysts' expectations of $ 10.39 billion. We highly value Merck & Co's risk tolerance in an unprecedented environment and believe that the company's financial outlook will be appreciated by investors as well, so we have no reason to revoke our Buy recommendation for Merck & Co shares and put our target price under review.

 

Technical picture of MRK, W1:

 

American Express

American Express is an American diversified financial sector company, the fourth largest payment system in the world. He specializes in financial services in the field of travel and tourism, issues credit and payment cards, travelers checks. American Express approached the crisis with a strong position in terms of capital adequacy and liquidity. The company has transferred its employees to remote work, has adopted a number of programs to financially support clients in the consumer sector and in the small business segment. We expect that the company will overcome the current crisis with reasonable losses, retaining its staff and customer base, and will be able to show a quick recovery from the victory over the coronavirus. American Express shares look inexpensive in terms of financial multiples, they look good in terms of technical analysis. We view American Express shares as an attractive investment after a strong decline earlier this year and recommend them to buy with a medium-term target of $ 110.

 

Technical picture of AXP, W1:

 

Bank of America

Bank of America, Bank of America, Bank of America is an American financial conglomerate that provides a wide range of financial services to individuals and legal entities. It is one of the four largest US banks, along with Citigroup, Wells Fargo and JPMorgan Chase. Net income of the second-largest US bank in the second quarter of 2020 fell 52%, or 2.1 times, to $ 3.5 billion, or $ 0.37 per share, compared to $ 7.3 billion, or $ 0.74 per share, for the same period last year. According to a press release from BofA, BofA's quarterly revenue fell 3.5% to $ 22.3 billion from $ 23.1 billion a year earlier. Financial performance declined on the back of an increase in loan loss provisions, but turned out to be better than market forecasts. Experts on average predicted the bank's net profit at $ 0.28 per share on revenue of $ 21.8 billion. The volume of provisions for covering possible losses on loans increased by $ 4 billion, mainly due to the worsening economic outlook due to the coronavirus pandemic COVID-19, the message says. Net interest income of BofA in the second quarter decreased by 11%, to $ 10.85 billion from $ 12.19 billion a year earlier. Non-interest income rose 5% to $ 11.48 billion from $ 10.9 billion. BofA's trading revenues rose 28% to $ 4.2 billion. At the same time, revenue from operations in fixed income assets, commodities and currencies jumped by 50%, to $ 3.2 billion, while revenue from operations with shares increased by 7%, to $ 1.2 billion. In general, excluding one-time factors in the form of accrual of provisions for credit losses, BAC showed solid results. It looks quite strong against the background of many other banks. Due to the presence of diversified sources of profit in the form of asset management, as well as investment banking in terms of market operations, the bank has demonstrated the ability to show decent results in a recession. At the same time, the bank's potential for growth in reserves is significant, including due to the high concentration on loans to individuals, which make up 44% of the total loan portfolio. The target price for BAC shares in the base case is $ 27.1, at the moment this stock looks undervalued. The bank has a solid capital reserve to cover losses, as well as the ability to continue to pay dividends. We believe the company's shares are worth holding. Over the next two quarters, the quotes will continue to demonstrate increased volatility, but the strong business model of Bank of America Corporation will remain one of the factors of its investment attractiveness.

 

Technical picture BAC, W1:

 

Honeywell

Honeywell is an American corporation that manufactures electronic control and automation systems. The main directions are aerospace equipment, technologies for the operation of buildings and industrial structures, automotive equipment, turbochargers. Founded in 1906 in Minneapolis. US industrial conglomerate Honeywell International released its second quarter financials, with above-average earnings on lower costs and increased demand for automated equipment. According to the company's report, net income fell from $ 1.54 billion or $ 2.10 per share a year earlier to $ 1.08 billion or $ 1.53 per share, and adjusted earnings were at $ 1.26 per share, which is 5 cents above the average. analysts' expectations. Total revenue in the period under review decreased by 19% y / y and amounted to $ 7.48 billion against $ 7.29 billion expected by analysts. The largest losses were incurred by the aerospace division, whose revenue fell by 28% y / y to $ 2.54 billion. Honeywell's diversified portfolio makes it a leader in many industries, including construction, aerospace and the military-industrial complex. With its strong balance sheet, low operational risks and the ability to generate cash flows, the company's sustainable competitive advantage is so great that its global dominance is hard to challenge. We believe that the combination of diversified operations, high order volume and length of financial cycles will allow Honeywell to outperform the market, which means that its stock remains attractive for investments. We recommend buying with a medium-term target of $ 167.

 

Technical picture of HON, W1:

 

Chevron

Chevron is one of the world's largest energy companies. The main lines of business of the company are "Extraction of crude oil and natural gas" and "Refining and sale of petroleum products". Chevron produces oil and gas in various regions of the world and operates in more than 180 countries. According to the study, Chevron's proven oil reserves at the end of 2019 are more than 11.5 billion barrels, more than 3 million barrels of oil are produced daily. In addition, the oil company owns an extensive network of gas stations around the world and facilities in the alternative energy sector. The company also deals with cash management and financing, insurance and real estate transactions. The energy sector, facing low oil prices and one of the worst demand collapses in recent history, is trying to overcome this recession by cutting costs and, in some cases, cutting dividends. Exxon (in its Q2 2020 reports disclosed the magnitude of the damage done by the fall in energy demand amid the pandemic. Chevron lost $ 8.3 billion in Q2, which has not been seen since 1998. By comparison, the company's profit for the same period last The company posted earnings per share of $ -4.44 and revenues of $ 15.93B. Analysts predicted earnings per share of $ -0.89 and total earnings of $ 21 , $ 71B This year, Chevron's share price fell 28%, performing worse than the S&P Global 100 average, rising 1% YTD. On the other hand, Chevron continues to maintain a low debt ratio. constituting 13.75%, while the industry average is more than 35%, which, in turn, speaks of the financial stability of the company, the analytical note says: “Debt / EBITDA is 0.76 (compared to 1.18 from the main competitor - Exxon Mobil) ". At the end of 2020, Chevron may record a loss of $ 1 billion, however, in our opinion, the issuer's stable financial position will help it overcome current difficulties: "In the first quarter, cash flow from operating activities amounted to $ 4.7 billion, free cash flow - $ 1.62 billion, and cash and cash equivalents in the reporting period - $ 8.49 billion compared to $ 5.686 billion a year earlier. " In addition, Chevron will continue to pay $ 1.29 in dividends. It is worth noting that the company's dividend yield is currently 5.6%, while the S&P 500 has a 2% dividend yield. Chevron shares are overvalued at key multiples, reflecting the company's leading position in the industry. Nevertheless, in terms of EV / S and EV / EBITDA, Chevron retains upside potential of at least 25% and 3%, respectively.

 

Technical picture CVX, W1:

 

Shares of Russian companies

Gazprom (GAZP)

Overfilled European UGS facilities, warm winters and an oversupply of LNG put pressure on gas prices on the spot market last year. This year, there has been a drop in energy consumption due to the COVID-19 pandemic. The decline in export volumes and export prices diminishes the hope for an early recovery in stocks. PJSC "Gazprom" is a global energy company with the world's largest gas transmission system. It accounts for 16% of reserves and about 11% of the world's natural gas production. In Russia, Gazprom controls 68% of production, half of processing and 100% of gas exports. Due to the drop in export earnings and the revaluation of foreign exchange obligations, Gazprom posted a quarterly loss for the first time in many years. Excluding revaluation, quarterly normalized profit fell to RUB 288 billion. According to the Federal Customs Service, in January-May 2020, the volume of pipeline gas exports fell 23% y / y, while Gazprom's revenues from gas exports fell 52.6%. Against the backdrop of declining EBITDA, Gazprom's total debt continues to grow to record levels. So far, the ratio of net debt to EBITDA remains at a comfortable level, but taking into account the expected failure in the second quarter, this ratio may increase significantly. At the end of 2019, Gazprom changed its dividend policy: at the end of last year, 30% of the adjusted profit went to dividends, at the end of 2020 at least 40% was promised, at the end of 2021 and beyond - at least 50%. However, the drop in profits is keeping this positive to a minimum. We are revising our targets based on the new forecasts and reiterating our HOLD recommendation for Gazprom common shares.

 

Technical picture of GAZP, W1:

 

Sberbank (SBER)

Sberbank is the largest Russian bank in terms of assets. The share in the SME lending market is 35%, in the retail deposits market - 44%, credit cards - 45%, mortgages - 54%. We upgrade our recommendation for Sberbank shares to BUY and target price to RUB 252. for ordinary shares and 227 rubles. by privileged. Potential profitability including dividends in the future 11 months. is 25% and 24%, respectively. We believe that the bank has passed the crisis levels in terms of profit, and forecast improvement in terms of profitability in the second half of the year. The monthly RAS reports reflect a downward trend in reserves and commissions recovery. Stable capital adequacy ratios allow paying dividends for 2019 ~ 420 billion rubles. We also consider it possible that the annual profit will be higher than the current Reuters consensus of RUB 606 bln. and will amount to about 633 billion rubles. Support will be provided by reducing interest costs and optimizing costs. Dividend forecast for 2020 - RUB 14 Thus, taking into account DPS 2019E 18.7 rubles. investors can receive a total of ~ 33 rubles. in the fall of 2020 and May-June 2021, which means a yield of 14.4% on common shares and 15.6% on preferred shares. Sberbank benefits from a large customer base, high level of business digitalization, capital safety margin and low cost of interest obligations. The issuer remains our top pick in the banking industry. The downturn will provide an opportunity to increase market share.

 

Technical picture SBER, W1:

 

Stock indices

As you know from statistics, stock markets grow 80% of the time, therefore, to diversify risks, the main stock indices of the USA and European countries are included in the investment portfolio.

 

US Broad Market Index S&P 500

The S&P 500 is a stock index basket of which includes the top 500 selected US stock companies. The list is owned and compiled by Standard & Poor's. The index has been published since March 4, 1957. 1941-1943 is taken as the base period for the calculation, the base value is 10. The shares of all companies from the S&P 500 list are traded on the largest American stock exchanges, such as the New York Stock Exchange and NASDAQ. The S&P 500 index value reflects their total capitalization. Fundamentally, the picture remains unchanged: cheap money continues to awaken greed, pushing the indices higher and higher, while inflation is still "sleeping" and so far you can not worry about the regulator's curtailment of stimulus measures.

Technical picture of S & P500, W1:

 

German stock index DAX30

DAX30 - DAX (German derivative Deutscher Aktienindex) is the most important stock index in Germany. The index is calculated as the average capitalization-weighted value of the stock prices of the largest joint-stock companies in Germany (while the capitalization is calculated only on the basis of free-float shares). The index also takes into account dividend income received on shares, assuming that the dividend is reinvested in the share for which the dividend was received. Thus, the index reflects the total return on capital.

 

Technical picture of DAX30, W1:

 

Russian stock index RTS

The RTS Index (RTSI, RTS Index) is a stock index, the main indicator of the Russian stock market, the calculation of which began on September 1, 1995 from 100 points. Currently calculated by the Moscow Exchange. A portion of information about the movement towards the development of therapies for coronavirus in different countries, primarily the United States, weakening the threat of severe quarantines, helped to maintain a high risk appetite and, along with reports of the closure of most of the production facilities in the Gulf of Mexico due to storm warnings to strengthen prices for raw materials, giving additional impetus to the growth of stock markets. In view of the favorable external background and the prospects for the growth of oil prices, in our opinion, the RTS index will try to overcome the mark of 1416 in the near future.

 

Technical picture of RTSI, W1:

 

Energy assets

The second quarter of 2020 proved to be disastrous for oil companies. Industry giants such as Exxon Mobil and Chevron have suffered multibillion-dollar losses. Even Saudi Aramco, the world's most profitable oil company, reported a 73% y / y drop in profits. However, this was to be expected, since the April “overproduction” of oil by Saudi Arabia led to a sharp increase in the supply of raw materials, while prices fell. Also, the situation was aggravated by the economic consequences of the coronavirus pandemic, which undermined global demand for oil. Nevertheless, in August, the raw materials sector retains positive dynamics: the growth of the current month is broad, with energy carriers and industrial metals leading the way. Two main supporting themes continue to attract attention - the risk of rising inflation and the weakening of the US dollar. The improvement in US economic data earlier this month and the lukewarm attitude to control of the yield curve, outlined in the minutes of the last FOMC meeting, led to a slight increase in bond yields. Oil is a global commodity, and Asian demand is not the most important factor in its pricing. Even amid growing demand from China in recent months, oil prices have remained surprisingly stable, showing only minor fluctuations in the $ 40-45 range. The United States remains the largest consumer of oil and the first economy in the world, so the country's macro-statistics and dynamics of its demand, as a rule, play a larger role in shaping world oil prices than data on China. The outlook for oil demand growth in the US and Europe remains mixed. There are indeed signs of improvement, but the pace is not impressive. The loading of US refineries last week rose to 80% In the current environment, there are only two factors that can cause price increases: a sharp decline in supply, or a phenomenal jump in demand. However, major oil consumers have just begun to seriously tackle the economic fallout from the pandemic, while the coronavirus itself has not yet been defeated. In such a difficult environment, one should not expect a strong growth in demand in the near future. In the second half of the year, the position of oil companies will definitely be better than in March and April, so long positions in oil with small volumes will be an excellent addition to the portfolio.

 

Technical picture Oil WTI (Western Texas Intermediate Crude Oil), W1:

 

Technical picture of Brent Oil (Brent Crude, Brent Blend, London Brent), W1:

 

Oil has been trading in a sideways trend since June, and during this time neither WTI nor Brent reacted particularly to economic data and specific news from the oil market. While the OPEC + group turned on the taps, this stability was considered favorable by some, but others considered it alarming that oil was not rising in price in response to a weakening US dollar and a steady rise in the stock market.

Currency market

 

EUR / USD

The USD is heavily oversold against high beta currencies such as the Euro, Pound, and Australian, New Zealand and Canadian dollars. The unemployment supplement program has expired, making it difficult for the US to recover, as evidenced by the slowdown in manufacturing in the New York and Philadelphia regions. The S&P 500 and the Nasdaq hit new all-time highs amid news of progress in vaccine and coronavirus treatment. The yield on US government bonds also rose, reflecting the general optimism of market participants. It can be assumed that the upcoming IFO release could also reflect the deteriorating situation, thereby turning the EUR / USD pullback into a deeper correction. At the same time, the epidemiological situation in Europe is also deteriorating: on Friday, the authorities in Germany, Italy and Spain recorded the strongest increase in the number of infected since April. Schools are starting to open, and autumn is approaching, which, as a rule, is characterized by a surge in the incidence of ARVI. Thus, the dynamics of the single currency can be largely determined by concerns about the second wave of the pandemic.

Technical picture of EUR / USD, W1:

 

US Dollar Index

We recommend paying attention to the American currency. USD Index (DXY) which retains the potential to update multi-year lows below 92.00. The positive effect that the minutes of the last meeting of the US Federal Reserve System had on the dollar has practically disappeared. Traders came to the conclusion that the lack of specifics regarding the future plans of the regulator to stimulate the economy does not mean that the economy no longer needs incentives. Moreover, falling consumer confidence, a downturn in the labor market, and declining incomes due to declining federal unemployment benefits clearly indicate that a second round of fiscal stimulus ahead of the presidential election is vital to the American economy. Otherwise, there is a high probability that the situation will worsen. Given the economic problems already mentioned, most experts agree that the recovery of the American economy may take longer than predicted. The final dates will directly depend on the situation with the coronavirus and the measures taken by the monetary authorities.

 

Technical picture of the US Dollar Index, W1:

 

Hedging assets

Precious metals are traditionally sought-after assets in times of heightened economic and political uncertainty. This year, the coronavirus pandemic and its dire economic consequences are forcing players to think about alternatives to investing in stocks. The Fed and other central banks are pursuing ultra-soft monetary policies, with the US government debt at an all-time high of over $ 26 trillion. During the years of Obama's presidency, the country's debt almost doubled, but under Trump, the US government's debt continued to grow, and given the need for large-scale stimulus measures due to the coronavirus epidemic, the situation with the national debt will only worsen in the foreseeable future. In light of this investment in precious metals is more interesting than ever. Gold and silver, some of the fastest growing assets in 2020, hit a long-overdue correction following a three-week surge that pushed gold to a new all-time high above $ 2,000 an ounce, while silver (during a panic selloff in March, almost touched $ 12) at $ 30. Both metals will now be caught up in a battle between short-term technical traders looking to sell and long-term buyers looking for protection from worrying economic forecasts and impending inflation. So far, this market has been hit by two bouts of profit taking. The first followed a rebound in real US bond yields in response to improved US economic data. The second happened last week, when the minutes of the last FOMC meeting showed that the Fed was in no hurry to launch control of the yield curve (YCC). Overall, we maintain an upward trend for gold and silver; the soft monetary and fiscal policies of many states support not only these metals, but also other mining products. As already mentioned, real yields remain the main factor for gold, and the possible introduction of KKD (together with the risk of inflation growth due to excessive stimulation of the US economy) will keep them at record lows, boosting demand for metals. There may also be additional demand for a "safe haven" due to the escalation of the US election campaign and the current friction between the US and China. The potential for further decline in real yields should also further weaken the US dollar, thus creating three factors that support investment in precious metals. Nevertheless, in the near future the market needs to consolidate the large gains achieved. Therefore, we consider the possibility of gold movement above $ 2,000 to be limited until the market gets used to such price levels. Given the distance traveled this year, the correction could be quite deep. Fibonacci support levels: $ 1920 (this is also a record high in 2011), followed by $ 1873 and $ 1825 an ounce.

 

Gold (XAU / USD)

The stock market rally from its March lows has become one of the most powerful in history, but in fact the shares are trading at about the level of the beginning of the year. At the same time, gold rose by as much as 30%, and is not going to stop there. The yellow metal usually strengthens amid low interest rates, exacerbating inflationary risks. Gold is also the oldest known defense against heightened uncertainty, which explains the demand for it in the midst of the worst pandemic ever faced.

Technical picture Gold, W1:

 

Silver (XAG / USD)

Should institutional investors begin to abandon Gold in search of alternative opportunities that can provide a higher return on investment, the ratio of silver to gold prices will continue to shift in favor of the "white" metal. In addition to fundamental factors, the growth of industrial demand for this metal used in the automotive industry will play in favor of the rise in silver prices in the long term - electric and hybrid motors are produced using silver, and silver is an integral element in solar energy - it is used in photovoltaic cells ... We have every reason to maintain our “Buy” recommendation for Silver, and set the target level to be revised upward.

 

Technical picture Silver, W1: