Lockdown in England, OPEC + decision and Georgia elections

2021年1月5日

We have already noted that this week is not an easy one. In fact, it turned out to be so. This is confirmed by the roller coaster of the pound, bitcoin, oil and stock markets. However, it should be noted once again that we are not dealing with several different movements (assets belong to fundamentally different markets), but with one general movement tied to the market sentiments.

Markets opened on the usual positive, which later changed to negative. Price trends have changed accordingly. For example, after rising by 2.5%, oil lost more than 1% by the end of the day. Bitcoin, losing 20%, eventually came out by only -6%, etc.

At the same time, in reality, nothing has changed. Only the perception of reality has changed. The hopes for vaccines and quick herd immunity were replaced by the idea that lockdowns have not gone anywhere and, on the contrary, they are becoming tougher, which means that in the foreseeable future, there is no need to expect positive from the economy. Direct evidence in this favor is a third national lockdown for England until mid-February.

And then there's the Senate elections in Georgia, which will determine the balance of power in the key legislative body and, by and large, the overall political balance in the United States.

But at the same time, Tesla shares showed new all-time highs amid information that the company's mega-goal for 2020 in terms of production and sales of cars in 2020 has been achieved. We are talking about 500K cars per year. The growth relative to last year is really impressive, but Tesla fans forget that single Volkswagen, with capitalization 8 (!) times less, for some reason, produces 20+ times more cars.

However, the rise in Tesla shares is part of the general frenzy around the electric car industry, since Nio, with even more miserable results in terms of production and sales (less than 50K cars per year), has a capitalization almost comparable to Volkswagen (50 billion versus 80 billion of the German giant). And only Nikola continues to demonstrate quite clearly what is waiting for Tesla and Nio in the foreseeable future.

But let’s get back to the yesterday news. OPEC + meeting ended without a recommendation for February. In general, they can be understood, because there were two options: to say that since February OPEC+ will increase production by another 0.5 million bbl / d (Russia’s position) and to start selloff in the oil market, or to say that OPEC+ will not increase production, because demand will collapse due to pandemics and to start selloff in the oil market. As a result, they decided to do nothing and started selloff in the oil market.