The Commodities Feed: Russia-Ukraine Escalation

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Commodity

Economic

Russia-Ukraine Conflict

Summary:

Brent settled flat yesterday despite rising tension between Russia and Ukraine. Developments related to Iran’s nuclear program likely countered some of the geopolitical risk.

Energy – Iran counters Russia-Ukraine geopolitical risk

Despite an escalation in the Russia-Ukraine war, there has been limited impact on oil prices. ICE Brent settled almost flat yesterday, even after Ukraine fired a US-made long-range missile into Russia for the first time. At the same time, Russia also updated its nuclear doctrine, widening the scope for the use of atomic weapons.

Eating into some of the geopolitical risks related to Russia-Ukraine were reports that Iran offered to stop increasing its stockpiles of uranium enriched up to 60%. The International Atomic Energy Agency has said Iran has taken the first steps to cap production. If this occurs, it removes some supply risks related to Iranian oil when President-elect Trump enters office.

In the North Sea, the Johan Sverdrup field has resumed operations after a power outage led to a halt in production on Monday. The field produces around 755k b/d but will take some time to return to full capacity.

Numbers from the API overnight show that US crude oil inventories increased by 4.8m barrels over the last week, compared to expectations for a marginal draw. For refined products, gasoline and distillate stocks fell by 2.5m barrels and 700k barrels respectively. The more widely followed EIA report will be released today.

Metals – LME lead stocks surge

LME lead stockpiles surged to the highest level since 2013 yesterday after a second consecutive day of big inflows into the exchange’s sheds in Singapore. Singapore now accounts for 98% of LME lead inventories. Total LME inventories jumped by more than 49% in the last two days alone. Lead is one of the worst performers on the LME this year, with prices down around 3% year-to-date and weak auto sales weighing on demand for the battery metal. The global lead market is set to see another surplus this year. The global supply of refined lead will exceed demand by 40,000 tonnes in 2024, according to the International Lead and Zinc Study Group (ILZSG).

The latest LME COTR report released yesterday shows that investors decreased their net bullish position in copper by 10,315 lots to 58,398 lots for the week ending 15 November. This is the lowest net long since 19 January 2024. Similarly, net bullish bets for zinc fell by 2,737 lots to 27,072 lots, the lowest since the week ending 6 September 2024.

Agriculture – Wheat surges on Russia-Ukraine tensions

CBOT wheat futures extended their upward rally, settling 2% higher yesterday. This followed rising tension between Russia and Ukraine and renewed threats of supply disruptions.

Weekly data from the European Commission shows that EU soft-wheat exports for the 2024/25 season dropped to 8.8mt as of 17 November, down 31% YoY. Rising competition from Russia and a poor harvest in France has weighed on export volumes. Meanwhile, EU corn imports stand at 7.6mt, up 11% YoY and are due to weaker domestic supply this season.

To stay updated on all economic events of today, please check out our Economic calendar

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IC Markets

Economic

Stocks Rally Ahead of Nvidia – Nasdaq Up 1%

US tech stocks rallied once again yesterday as investors looked ahead optimistically to Nvidia’s earnings report tonight. The Nasdaq closed the day up 1.04%, the S&P gained 0.40%, while the Dow lost ground, finishing 0.28% down. Treasury yields edged lower, with the 2-year dropping 1.4 basis points to 4.270% and the benchmark 10-year falling 3.6 basis points to 4.379%. The dollar had a relatively flat day, with the DXY up just 0.03% to 106.25, but currencies traded choppily within recent ranges. Oil prices paused for breath, with Brent up 0.01% to $73.31 per barrel and WTI rising 0.30% to $69.39 per barrel. Gold continued its recent recovery, climbing 0.6% to $2,628.45.

Haven Trades in Focus as Ukrainian Conflict Escalates

Haven trades took centre stage yesterday after Russia announced it would lower its nuclear strike threshold following Ukrainian strikes on Russian soil using US missiles this week. The market reaction was relatively muted, with Gold rising 0.6% as part of its ongoing recovery and the Ruble falling 0.83% against the dollar. Meanwhile, other traditional haven currencies, such as the Swiss Franc (CHF) and Japanese Yen (JPY), remained steady. Traders are expected to monitor the situation closely over the coming sessions, anticipating potential sharp moves in these assets, alongside the usual dollar appreciation, if the long-running conflict escalates further.

Busier Event Calendar for Traders Today

The macroeconomic calendar is looking busier for traders today, with several key data releases ahead of Nvidia’s highly anticipated earnings report after the bell on Wall Street. Attention will turn to China midway through the Asian session as the People’s Bank of China (PBOC) announces any updates to the Loan Prime Rates. No change is expected, although China could still consider adding stimulus to markets, having surprised with rate cuts just a few months ago.

During the European session, sterling traders will focus on the UK’s CPI figures, due out shortly after market open. These will be followed by the European Central Bank’s Financial Stability Report and an update from President Christine Lagarde.

In the US, data releases remain light, but oil traders will eye the weekly US inventory numbers ahead of Nvidia’s critical earnings report, which is set to dominate the session’s close.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Stocks

Tesla shares climbed more than 5% on Monday following a Bloomberg report that President-elect Donald Trump's transition team plans to prioritise establishing a new federal framework for self-driving car regulation at the Transportation Department.

The proposed rules could significantly benefit Tesla, whose ambitions for autonomous ride-hailing services represent a critical next step in the company's growth strategy. Elon Musk, a staunch supporter of Trump during his campaign, has tied Tesla's future to its Full Self-Driving (FSD) technology and Robotaxi business.

Tesla's market capitalisation has surged past $1tn (€0.94tn) since Trump's election victory, with shares soaring 37% since election day and rallying 29% year-to-date. Before the election, Tesla had been the weakest performer among the "Magnificent Seven" US tech giants.

From EVs to AVs

Elon Musk, who became Tesla's CEO in 2008, is widely credited with kickstarting the electric vehicle revolution. While Tesla experienced meteoric growth over the past decade, recent years have seen weakened global demand and intense competition from Chinese rivals, prompting the company to seek new avenues for growth.

At the "We, Robot" event in October, Musk unveiled Tesla's Robotaxi, an autonomous Cybercab service with no steering wheels or pedals. The model, entirely reliant on cameras and artificial intelligence for navigation, is expected to cost less than €27,000 and operate with an average cost of €0.18 per mile. Musk outlined plans to launch the service in Texas and California, with expansion to other states by 2025, contingent on regulatory approval. Mass production of the Cybercab could begin as early as 2026.

Regulatory Challenges

Despite Musk's ambitious vision, Tesla's FSD system has faced scrutiny from regulators. In the United States, each car manufacturer can deploy up to 2,500 self-driving vehicles per year under exemptions granted by the National Highway Traffic Safety Administration (NHTSA).

Last month, the NHTSA launched a probe into Tesla following a fatal incident involving a pedestrian and a driver using Tesla's FSD system, which still requires driver monitoring. Tesla's fully autonomous models, which lack steering wheels and pedals, are expected to encounter significant regulatory hurdles.

Under Trump's administration, the Transportation Department may introduce relaxed rules for autonomous vehicles, potentially removing obstacles for Tesla's innovative technology. However, bipartisan approval in Congress will be necessary to pass any new framework, suggesting that regulatory challenges could persist in the near term. Clearing these hurdles would mark a significant milestone for Tesla, facilitating its transition from electric vehicles (EVs) to autonomous vehicles (AVs).

The EU Framework for Self-Driving Cars

A regulatory breakthrough in the US could prompt other regions to accelerate their adoption of autonomous driving regulations. In the European Union, Germany has taken a leadership role by developing level 3 and level 4 frameworks for autonomous driving. The EU has aligned its approach with Germany's, implementing similar regulatory standards to govern these advanced technologies.

Level 3 vehicles, which require a safety driver, are already permitted on public roads, while level 4 vehicles, allowing remote control with minimal human intervention, are expected by 2025. Musk plans to introduce Tesla's FSD cars with assistance features in Europe and China in early 2025, aligning with the EU's regulatory timeline.

Progress in China

China, a key market for Tesla, has been rapidly advancing its regulatory framework for autonomous vehicles. According to S&P Global, the Chinese government has selected 20 cities to participate in a pilot programme for smart-connected vehicles, with projections of approximately 250,000 level 4 autonomous vehicles being sold for mobility services by 2034.

The regulatory advancements in the US, EU, and China signify growing global momentum towards autonomous driving. If Tesla successfully navigates these frameworks, its ambitious Robotaxi programme could redefine the company's growth trajectory and reshape the global transportation industry.

Source: Euronews

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Warren Takunda

Economic

CAD is now the third best performing G10 currency when screened over the past month, with the lion's share of strength following the election of Donald Trump and the Republican 'red sweep' of congress.

"CAD outperformance on the crosses. We expect this playbook can continue so long as trade policy is concentrated in other regions (Europe, China)," says analyst Meera Chandan at JP Morgan.

She explains that the Canadian currency has benefitted from political developments in the USA as Canada is seen as being less at risk of a 'hawkish' trade policy by the new administration.

It was Trump who oversaw the USMCA trade agreement that tied trade policy between the three North American nations, and he has yet to show any desire to rip it up.

At the very minimum, USMCA is a low priority. Canada's main exports to the U.S. are basic commodities, notably energy, which will probably be exempt from new tariffs.

This means more risk premiums will be required on non-CAD currencies.

Valentin Marinov, head of FX research and strategy at Crédot Agricole, says the Canadian Dollar has been the G10 currency that has coped best with this month's USD push.

"Perhaps because Canada seems better sheltered than other developed economies to an eventual rise in tariffs from the new US administration, while at the same time being a potentially greater indirectbeneficiary of any US fiscal boost thanks to Canada’s closer ties to the US cycle," he explains.

Investment bank GBP/CAD consensus forecasts: The end-2024 and 2025 guide from Corpay has been released. Featuring the median, mean, high and low points forecasted by over 30 investment banks.

JP Morgan's Chandan says Canada may also derive some positive spillover from policy-induced firmer growth from the US.

Noah Buffam at Canada's CIBC says CAD is outperforming on the crosses amid the USD rally.

Although the Canadian Dollar is expected to maintain strength against its major peers, the U.S. Dollar is still king.

"USD/CAD has now sustainably broken the 1.4000 level, which opens the way for a test of 1.4100. This is the first time in over 2 decades that we have breached 1.4000 without a sustained period of risk-off, which highlights the divergence priced between the BoC and Fed, alongside the upside risks to USD/CAD that a Trump presidency implies," says Buffam.

CIBC is looking for further USD/CAD upside towards the 1.41 level in the medium term as Trump’s tariff plans are better understood and given that it sees the Bank of Canada easing to the bottom end of their neutral estimate in 2025.

Source: Poundsterlinglive

To stay updated on all economic events of today, please check out our Economic calendar

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Warren Takunda

Cryptocurrency

Bitcoin may see a “strong bull rally” if one classic BTC price metric repeats a historical breakout.

In one of its Quicktake blog posts on Nov. 18, onchain analytics platform CryptoQuant flagged a rare golden cross for Bitcoin’s BTC$91,748 Puell Multiple.

Puell Multiple nears BTC price breakout line

Bitcoin bulls will benefit from an average BTC price surge of 90% if the Puell Multiple stages a rare breakout.

Analyzing behavior over the past five years, CryptoQuant shows that the metric has crossed its 365-day moving average just three times. On each occasion, BTC/USD “experienced significant price surges.”

“Puell Multiple helps us understand market cycles from a mining perspective,” CryptoQuant contributor Burakkesmeci said.

“It is a crucial indicator for evaluating mining profitability.” Bitcoin Metric Breakout Teases 'Inevitable' 90% BTC Price Rally Next_1

Bitcoin Puell Multiple chart. Source: CryptoQuant

Puell measures the daily value of mined Bitcoin to their 365-day moving average to provide an insight into miner stability. When the value crosses the moving average trend line, it tends to coincide with rapid BTC price gains.

In March 2019, a Puell golden cross was followed by an 83% rally. January 2020 sparked 113% upside, while the most recent cross in January 2024 offered 76% returns.

“This data shows that after Puell Multiple settles above its SMA365, an average increase of around 90% in Bitcoin’s price has historically followed,” the post said.

CryptoQuant said favorable macroeconomic conditions help boost the odds of an “inevitable” rally.

“All these data points and the macroeconomic framework suggest that a strong bull rally might be on the horizon,” it said.

RSI signals Bitcoin bull market just beginning

As Cointelegraph reported, various analysts now see Bitcoin’s most intense upside still lying ahead, despite BTC/USD gaining over 40% in Q4 so far.

The market’s “parabolic phase” has notionally begun, lasting for around 300 days before a new macro top sets in.

Locally, expectations of Bitcoin reaching six figures for the first time in history are increasing, tempered by concerns that retail “FOMO” may force a significant correction.

“Lots of people about to become intimately familiar with the phrase, Fear of Missing Out (FOMO), on this Bitcoin cycle,” commentator Preston Pysh, co-founder of The Investor’s Podcast, predicted on X this week.

Earlier this month, pseudonymous analyst PlanB, creator of the Stock-to-Flow family of BTC price models, foresaw the main FOMO wave hitting in early 2025.

PlanB referenced the relative strength index (RSI), which tends to stay above its “overbought” 70 level throughout Bitcoin bull runs. Monthly RSI measured 74.4 on Nov. 18, per data from Cointelegraph Markets Pro and TradingView. Bitcoin Metric Breakout Teases 'Inevitable' 90% BTC Price Rally Next_2

Bitcoin Metric Breakout Teases 'Inevitable' 90% BTC Price Rally Next_2

BTC/USD 1-month chart with RSI data. Source: TradingView

Source: Cointelegraph

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Warren Takunda

Stocks

December S&P 500 E-Mini futures are down -0.40%, and December Nasdaq 100 E-Mini futures are down -0.32% this morning as risk sentiment took a hit after Russian President Vladimir Putin updated the country’s nuclear doctrine, while investors awaited fresh data on the U.S. housing market and an earnings report from retail giant Walmart.

Markets were rattled by news that Russian President Vladimir Putin signed a decree allowing Russia to use nuclear weapons in response to a large-scale conventional attack on its territory, including by drones. Russia will consider aggression against itself or its allies by a non-nuclear state, supported by nuclear powers, as a collective attack, according to the document posted online. This follows U.S. President Joe Biden’s decision to allow Ukraine’s Volodymyr Zelenskiy to target military sites in Russia using U.S.-made long-range weapons. A report from RBC-Ukraine indicated that the first such strike has occurred.

In yesterday’s trading session, Wall Street’s major indexes ended mixed. Super Micro Computer surged over +15% and was the top percentage gainer on the S&P 500 and Nasdaq 100 as the company approached a deadline to either file its delayed 10-K annual report or submit a plan to file the form to Nasdaq to prevent delisting. Also, Tesla climbed more than +5% after Bloomberg reported that President-elect Donald Trump’s transition team will make a federal framework for self-driving cars one of the Transportation Department’s priorities. In addition, Advanced Micro Devices gained about +3% after International Business Machines announced it would deploy the company’s Instinct MI300X accelerators as a service on IBM Cloud. On the bearish side, Palantir Technologies slid over -6% after an SEC filing revealed that co-founder and CEO Alexander Karp sold shares worth about $399 million from last Wednesday to last Friday.

“Traders appear to be gauging the potential impact of a new Trump administration’s policies on the economy, and the possibility that the Fed may slow down its rate-cutting campaign,” said Chris Larkin at E*Trade from Morgan Stanley. “With a relatively light economic calendar this week, the focus will shift to earnings - especially Nvidia’s, which have the potential to dictate the market’s short-term momentum.”

U.S. rate futures have priced in a 64.9% chance of a 25 basis point rate cut and a 35.1% chance of no rate change at the next FOMC meeting in December.

Meanwhile, market participants are awaiting an earnings report from AI-darling Nvidia on Wednesday to gauge future demand for its new Blackwell AI chips, particularly after The Information reported on Sunday that these chips were experiencing overheating issues when connected to server racks designed to hold up to 72 chips.

Today, retailers such as Walmart and Lowe’s , as well as notable companies like Medtronic and Keysight Technologies, are slated to release their quarterly results.

On the economic data front, investors will focus on U.S. Building Permits (preliminary) and Housing Starts data. Economists forecast October Building Permits to be 1.440M and Housing Starts to be 1.340M, compared to the prior figures of 1.425M and 1.354M, respectively.

In addition, investors are looking forward to a speech from Kansas City Fed President Jeffrey Schmid.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.359%, down -1.27%.

The Euro Stoxx 50 futures are down -1.29% this morning as concerns over a potential escalation of the war in Ukraine weighed on sentiment. Automobile and bank stocks led the declines on Tuesday, while utilities stocks outperformed. Final data from Eurostat released on Tuesday confirmed that the Eurozone’s annual inflation rate was 2.0% in October, up from 1.7% in September. Meanwhile, Goldman Sachs lowered its 12-month forecast for Europe’s benchmark equity index, the STOXX 600, from 540 to 530 on Tuesday, citing ongoing weak economic performance and modest EPS growth. In corporate news, Thyssenkrupp Ag surged over +6% after reporting a narrowed net loss and a 1 billion euro ($1.06 billion) impairment on its troubled steel division. Also, Imperial Brands Plc (IMB.LN) rose more than +1% after posting a 4.6% increase in adjusted operating profit for the fiscal year ending September 30th.

Eurozone’s CPI, Eurozone’s Core CPI, and Eurozone’s Current Account data were released today.

Eurozone October CPI has been reported at +0.3% m/m and +2.0% y/y, in line with expectations.

Eurozone October Core CPI came in at +0.2% m/m and +2.7% y/y, in line with expectations.

Eurozone September Current Account arrived at 37.0B euros, stronger than expectations of 27.0B euros.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.67%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.51%.

China’s Shanghai Composite Index closed higher today, snapping a three-day losing streak. Semiconductor and software stocks led the gains on Tuesday. China’s top economic planner said that the nation’s economy is expected to maintain the positive momentum experienced in October through the last two months of 2024, following a series of stimulus measures. The National Development and Reform Commission stated that there is significant potential to support economic growth in 2025. Meanwhile, China may expand the Connect program to include commodity trading, which currently allows overseas investors to access yuan-denominated stocks, bonds, and wealth-management products through Hong Kong, said Wu Qing, chairman of the China Securities Regulatory Commission, at a financial summit on Tuesday. He added that more options and futures will also be included in the cross-border investment scheme. On the negative side, UBS Group stated on Tuesday that China’s growth is expected to slow to 4% next year due to the likelihood of higher tariffs. In corporate news, Trip.com Group climbed over +5% in Hong Kong after the travel platform posted better-than-expected Q3 revenue. Investors are now looking forward to China’s upcoming Loan Prime Rate decision.

Japan’s Nikkei 225 Stock Index closed higher today. Bank stocks led the gains on Tuesday amid expectations that the Bank of Japan could raise rates as early as next month. Chip-related and automobile stocks also gained ground. Meanwhile, BOJ Governor Kazuo Ueda stated on Monday that the timing of the central bank’s next policy adjustment would hinge on the economy and prices. The yen strengthened against the greenback on Tuesday. Japanese Finance Minister Katsunobu Kato stated that the government’s stance on taking appropriate action against excessive currency movements remains unchanged. In other news, the BOJ will publish its findings next month on the advantages and disadvantages of the various unconventional monetary easing tools it has employed during its 25-year fight against deflation, marking another symbolic step toward ending its extensive stimulus. In corporate news, Kadokawa soared about +23% after a Reuters report indicated that Sony is in talks to acquire the parent company of FromSoftware. Investors are now focusing on Japanese trade data, set for release on Wednesday, and inflation data, due on Friday, which are anticipated to offer additional insight into the outlook for the economy and monetary policy. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -5.63% to 24.65.

Pre-Market U.S. Stock Movers

Super Micro Computer jumped over +31% in pre-market trading after the server maker appointed an independent auditor and submitted a compliance plan to Nasdaq.

Symbotic surged more than +26% in pre-market trading after the AI-enabled robotics technology company swung to a profit in FQ4 and provided solid FQ1 revenue guidance.

QuantumScape rose over +1% in pre-market trading after HSBC upgraded the stock to Hold from Reduce with a $5.30 price target.

Source: Barchart

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UBS

Economic

Harry Markowitz, the father of modern portfolio theory, is credited with saying that the only free lunch in investing is diversification.

Diversification is an extremely old concept, older than the Old Testament. King Solomon – the wisest and richest investor of the ancient text – wisely balanced his investments across commodities, agricultural land and infrastructure.

Yet the benefits of diversification might be lost on the new generation of investors; big winners in equity markets have gotten bigger and simply riding the wave has been an extremely successful strategy. This is one of the best years for momentum investing on record. So why diversify away your portfolio returns when all you need to own is Nvidia and bitcoin?

Diversification has become more elusive in a world where owners of broad market indexes are taking on concentrated risk that resemble the risk profile of highly active portfolios.

In the S&P 500, three stocks (Nvidia, Apple, Microsoft) now account for around 20% of the index weight and more than one quarter of the risk (as measured by the Barra US Long Term Risk). This is in an index with 497 other holdings. The situation is more extreme in popular indexes like the Russell 1000 Growth that barely pass regulator definitions of diversification such as the 5/10/40 rule of UCITS funds in the EU.

For most of history, active global equity portfolio managers didn’t need to pay too much attention to what they didn’t own.

For most of history, active global equity portfolio managers didn’t need to pay too much attention to what they didn’t own in the MSCI World Index. If you built a diversified portfolio with 50 holdings out of the 2000 or so names in the index, your top active risk contributors were likely large overweights. With the rise of the Magnificent 7, this has changed. Errors of omission are now costly. Not owning the two largest index weight names this year wiped out the alpha target of most active managers.

In this environment, the best class of long only active equity strategies have been ’index huggers’ – systematic strategies where small tilts and deviations from the benchmark have meant that errors of omissions are limited. Low ’active share’, once derided, has helped to limit the damage. An index hugger must own a large index weight like Nvidia. Are these strategies well diversified? By definition, they are only as diversified as the index they embrace.

The concept of active share became popularized after being coined in the 2009 paper How Active Is your Fund Manager? A new Measure that Predicts Performance (Martihn Cremers, Antti Petajisto). Regulators started to pay attention to active funds that had low active share, low tracking error to benchmark, while charging active fees – with 50% being a commonly used threshold that is a warning of low activeness.

To illustrate how a concentrated benchmark can present a challenge for an active portfolio manager, consider the following thought experiment. Imagine 1000 portfolios each with 50 holdings, chosen at random from the S&P 500, with the portfolios built to be equal active weighted, meaning the weight of each holding relative to the benchmark weight is the same. This weighting approach is selected as a simple proxy for the approach of the average active portfolio manager; larger index weighted names tend to have higher portfolio weights as it is the active weight that drives relative performance. Each of the 1000 portfolios is ‘buy and hold’, meaning the holdings are not traded for the duration of the evaluation period.

How many of the 1000 portfolios would be expected to outperform the S&P 500 in a given year? For a year chosen at random, the intuitive answer is 50% – a coin flip. How many of the 1000 portfolios would have outperformed the S&P 500 from 1 July 2023 to 30 June 2024? Instinctively you will likely appreciate the number is low, given this was a period dominated by the ascendancy of Nvidia, Apple, and a narrow band of megacaps. How low, though? There is a 10% chance the portfolio is overweight Nvidia, so that might seem to be a reasonable floor. Run the simulation, and the answer is approximately three out of the 1000 portfolios. The median simulated portfolio underperformed the index by a whopping -12.2% (before fees).

Of course, an active portfolio manager is paid to perform better than a random one. But the result illustrates the challenge active managers had during this period as they are in effect searching for the active portfolio in the distribution of possible portfolios that is going to outperform. This search equates to looking for a needle in a haystack.

How could an investor improve on the simulated results? By adding constraints, such a sector constraint (e.g., to limit the underweight to technology), or factor constraints, (e.g., to limit the underweight to the size factor)? Or perhaps by holding large index weight positions – albeit at an underweight – to mitigate the risk of omission. In other words, to start hugging the benchmark more, or in more technical speak to reduce the active share of the portfolio – the measure of ‘activeness’ in the portfolio.

Is this extreme result in favor of the cap weighted index expected to be repeated in future? Will the search for the outperforming active portfolio always be this challenging? Let’s put this result in historical context (see Figure 1). Over the past 25 years, the average hit rate has indeed been about 50%, roughly in line with intuition. The last 10 years have been challenging for active managers, as the chart shows.

The last time the S&P 500 was extremely hard to beat, with less than 80 out of 1000 simulated portfolios outperforming, was back in 1998 in the lead up to the tech bubble. 1999, the last full year before the tech bubble burst, was also challenging with 200 out of 1000. However, this was followed by six years where the outcome flipped; where an active manager was best to stay away from the inflated index weights that were deflating post bubble. In an opportunity rich environment like this, the search for an outperforming active portfolio was easier.

Is this extreme result in favor of the cap weighted index expected to be repeated in future? Will the search for the outperforming active portfolio always be this challenging?

There are some stark differences between the market today and the tech bubble. The largest index names of today are highly free cash-flow generative, unlike their tech bubble counterparts. However, the dominance of cap weighted indexes is not pre-ordained, and like every regime that came before, this one shall end. We believe in setting up for a multi-year period when hugging broad-based cap weighted benchmarks that merely offer the illusion of diversification could be foolish.

To stay updated on all economic events of today, please check out our Economic calendar

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The Commodities Feed: Russia-Ukraine Escalation

Energy – Iran counters Russia-Ukraine geopolitical risk

Metals – LME lead stocks surge

Agriculture – Wheat surges on Russia-Ukraine tensions

General Market Analysis – 20/11/24

Stocks Rally Ahead of Nvidia – Nasdaq Up 1%

Haven Trades in Focus as Ukrainian Conflict Escalates

Busier Event Calendar for Traders Today

Tesla Shares Surge on Hopes for Self-Driving Rules Relaxation

From EVs to AVs

Regulatory Challenges

The EU Framework for Self-Driving Cars

Progress in China

Source: Euronews

Canadian Dollar Outperformance Can Continue

Source: Poundsterlinglive

Bitcoin Metric Breakout Teases 'Inevitable' 90% BTC Price Rally Next

Puell Multiple nears BTC price breakout line

Bitcoin Puell Multiple chart. Source: CryptoQuant

RSI signals Bitcoin bull market just beginning

BTC/USD 1-month chart with RSI data. Source: TradingView

Source: Cointelegraph

Stock Index Futures Slip on Worries Over Russia-Ukraine Escalation, U.S. Housing Data and Walmart Earnings on Tap

Source: Barchart

Needles in haystacks

Risk Disclosure