Asset Allocation for November 2018

Oil prices collapsed by 20% during one month and set a record 12-days slowdown at the start of November. US sanctions against Iran didn’t stop oil shipping from the top 6th exporter in the world.

Sharp growth in oil prices in September switched to powerful downfall in October. Excessive oil production volumes in Saudi Arabia, Russia and surprisingly high volumes in the USA caused supply and demand misbalances on the market. The oil market becomes extremely speculative area for traders.

American corporates in whole showed strong results during earnings season but only 65% of them have beaten revenue levels expectations. These figures are down from 76% resulted in the 2nd quarter that caused revaluation of assets prices – stock indexes fell by 10% in October.

It is very risky to bet on Christmas rally and post-election optimism in the US In November. Strong dollar and tightening FED’s monetary policy will hold back the crowd of “bulls” from aggressive buying. We see that the selling on the local maximums would be the best trade strategy on the current market.

Threat and challenges in world markets:

  • The trade war between the US and China with EU
  • Monetary policy tightening by the US FED
  • Italy euro exit and the collapse of the European debt market


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