Category: OUR BLOG

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USA

The U.S. is currently in the midst of an election campaign. As autumn approaches, the elections will increasingly influence Wall Street quotations, including currencies, commodities, and more. Geopolitics, it seems, currently dominates the financial market, with all eyes on when Powell will begin reducing rates. 

While Powell anticipates only one rate cut this year, analysts are calling for two from the Federal Reserve, but the Fed remains firm due to strong U.S. unemployment indicators. With inflation decreasing, analysts expect a rate cut. Thus, the market is factoring in cheaper money regardless. We witnessed the U.S. market rally continue: both NASDAQ and S&P500 hit new all-time highs in the Q2. We are now entering the Q3, which historically varies. July usually sees growth, showing about a 2% increase since 1978, while August and September are typically down months. Given the aggressive presidential race in the U.S., we might see both pleasant and unpleasant surprises. Nonetheless, we expect a muted quarter, keeping an eye on the major U.S. companies delivering top reports. The hype on AI, pharma, and biotech sets a high target for the upcoming quarter.  

ASIA

China continues a positive trend following a significant correction in the market after 2021-2022. We are witnessing the first year of growth and stabilization in the real estate market. The Chinese market has stopped falling, giving investors hope for a robust recovery. We saw this in the Q2 and expect China to deliver strong economic indicators (forecasted at 4.5% this year and 5% next year). Chinese indices will appear more frequently in our portfolios, with a growth potential significantly higher than that of the U.S. We will continue to monitor and add Asian securities to our portfolio.  

Our main concern is the falling yen in Japan, which regulators will need to address. We expect intervention from the Bank of Japan. In general, a weak dollar, expected after the rate cuts, might support the Japanese yen. Meanwhile, Japan is facing several challenges: currency devaluation, a declining real estate market, and lackluster economic performance. 

EUROPE

Europe also has many elections this year, with all eyes currently on France. Across Europe, more right-wing, conservative, and strict leaders are coming to power, leading us to expect some market instability. There are corrections in the DAX and Euro Stoxx, but the European economy remains highly diversified and strong. Despite high debt, shares of some European companies are growing significantly. We particularly see robust growth in Germany, which nearly mirrors the broad U.S. market (S&P500 index). The DAX resembles the S&P 500 market, so we anticipate increased volatility in Europe this quarter amid various country elections. 

GOALS

Our plan for the Q3 is to execute all ideas acquired last quarter. We expect growth in commodities, betting on oil, gold, silver, and sugar, as well as on the U.S. technology sectors. Having worked vigorously last quarter, we now anticipate realizing these efforts. Our goal remains to earn about 30% for the fund this year, and the first half has set us on this run-rate. We will strive to maintain this track and achieve around 30% in 2024.

The Federal Open Market Committee also indicated that, in its opinion, the long-term interest rate is higher than previously indicated.

Andrey Syrchin listened attentively to the speech of J.Powell and drew conclusions:

The decision on the rate was expected, the comments on it were much tougher than the market expected, so everyone wanted to hear the chairman’s speech.

According to Andrey, the head of the Fed made it clear harshly that inflation of 2% is a clear goal. The statistics are good, but they have not been studied carefully yet, and for this reason they will keep the bet high. The most important thing is that this year there is a maximum of one rise, but the market is still laying two rises. Andrey believes that there will not be a single rise if the markets and the economy remain in the same track!

While the market is digesting this, we see that Bitcoin has fallen a little, oil has fallen, gold and silver have fallen! The market is still being pulled by 5-6 companies.

The forecasts for business and the market are disappointing. We are watching what will happen next.

According to rankings compiled at the beginning of the year, the following cities lead in the number of billionaires:

New York (USA):
110 billionaires with a total net worth of $694 billion.
The wealthiest resident—Michael Bloomberg ($106 billion).
The ‘Big Apple’ has topped this list for 11 years in a row, except for 2021.
Among New York’s billionaires are 62 Wall Street magnates, as well as figures from the financial and investment sectors, 14 real estate tycoons, and a dozen moguls from the fashion and retail industries.

Moscow (Russia):
74 billionaires.
The wealthiest resident—Vagit Alekperov ($28.6 billion).
Moscow made an impressive leap from sixth to second place after the number of billionaires increased by 12.
The growth in the number of billionaires in the Russian capital is attributed to the economic recovery following the downturn in 2022. This includes the owner of Gloria Jeans, which benefited from the departure of foreign companies from the fast-fashion segment.

Sharing second place with Moscow is Hong Kong (China):
74 billionaires.
The wealthiest resident—Li Ka-Shing ($37.3 billion).
This year, Hong Kong saw an increase of four billionaires—newcomers to this ranking, such as Jean-Louis van der Velde, the CEO of Tether.

Mumbai (India):
66 billionaires.
The wealthiest resident—Mukesh Ambani ($116 billion).
Mumbai also made a significant jump, moving up from seventh place, adding 11 billionaires from the engineering and construction business.

Beijing (China):
63 billionaires.
The wealthiest resident—Zhang Yiming ($43.4 billion).
Beijing, which held the top spot in 2021, has dropped to fifth. The fall in the rankings is related to the country’s economic difficulties.

Other cities in the top ten include:

Los Angeles (USA).
San Francisco (USA).
Shanghai (China).
London (United Kingdom).
Abu Dhabi (UAE).

It is worth noting that the number of billionaires worldwide continues to grow. In 2024, the number of people with a net worth of over $1 billion reached a record 3,200. Almost a quarter of them (750 people) reside in just 10 megacities, and the list of cities with the most billionaires is constantly changing, reflecting shifts in the global economy.

The data on the number of billionaires in different cities may vary depending on the sources.

This information is based on data from Forbes, Hurun, and other authoritative rating agencies.

They are accessible even to those who have never been interested in the field!

Nassim Taleb: ‘The Black Swan: The Impact of the Highly Improbable’.
A Black Swan is a rare event characterized by unpredictability, significant impact, and post-event rationalization that makes it appear less random. Nassim Nicholas Taleb argues that Black Swans underpin nearly everything about our world, from the rise of religions to personal life events.

Steven Levitt and Stephen Dubner: ‘Freakonomics: A Rogue Economist Explores the Hidden Side of Everything’.
Freakonomics will change how you view the modern world. Through compelling narrative and insight, Levitt and his co-author Dubner show that economics is essentially the study of incentives—how people get what they want or need, especially when others want or need the same thing.

Edward Miguel and Raymond Fisman: ‘Economic Gangsters: Corruption, Violence, and the Poverty of Nations’.
The authors introduce readers to the hidden, chaotic, and violent worlds populated by lawless bandits. The book joins two detective economists as they trace how foreign aid money flows into the hands of corrupt governments and criminal underworld figures.

Daniel Kahneman: ‘Thinking, Fast and Slow’.
Engaging readers in a lively discussion about how we think, Kahneman reveals when we can trust our intuition and when we cannot, and how we can benefit from slow thinking. He offers practical and enlightening insights on how decisions are made in both business and personal life, and how to guard against the mental glitches that often get us into trouble.

Joshua Gans, Ajay Agrawal, and Avi Goldfarb: ‘Prediction Machines: The Simple Economics of Artificial Intelligence’.
Three distinguished economists interpret the development of artificial intelligence as reducing the cost of predictions. With masterful insight, they lift the veil on the AI myth and show how basic economic tools can provide insights into the AI revolution and serve as a foundation for actions by executives, managers, politicians, investors, and entrepreneurs.

What books would you recommend?

Currently, our fund is focusing on several sub-strategies.

The primary component of our engaged assets consists of a long position in securities that are attractive from both a fundamental and technical analysis standpoint. We also capitalize on movement moments.

Asset rotation occurs quite frequently. We strive to secure positions in quality securities, gradually increasing our stake as they grow, thus managing our position effectively. Currently, the long share in securities under this sub-strategy (Global Value) exceeds 60%.

We are also actively engaged in event-driven trading. Currently, we have several targeted positions from which we expect to see a percentage gain in the near term, contributing to the overall quarterly result.

One of the successful trades related to event-driven trading took place the day before yesterday. We purchased AMC shares during another meme stock surge. We managed to secure a position strategically and have already partially locked in profits, contributing positively to the fund.

Speculative trading in futures and options is also quite active at present. A few weeks ago, we closed a large volatility position that we had been holding since the beginning of the quarter. It added 2% to our returns. We are continuously searching for new speculative patterns for reversals or trend continuations in futures on oil, gold, silver, currency pairs, and S&P futures. Currently, this is our main focus.

We anticipate a significant revitalization in the stock market and IPO market shortly. It’s possible that we will see much more activity in this sub-strategy than in the last quarter, which saw only two such trades.

We also have a Fixed Income sub-strategy, which is currently inactive as we do not see any dynamics in these assets at the moment. There are no indications of growth in the “bodies” of these instruments. Naturally, if we hear a clear stance from the Federal Reserve System that rates will be lowered soon, and see the market beginning to price this in—particularly in how bonds and bond funds start moving—we will also begin to actively rebuild this position and increase it as the market moves. However, we believe that this play is not for this quarter or the next, but by the end of the year, we will find good entry points.