The stock exchanges live on expectations. And now the expectation that guides them is the return to a normality that does not really exist. In fact, the expectation of returning to normal will soon be replaced by the expectation of how much damage Covid has created to the economy, and this is not an attractive expectation like the previous one. Italy will face the problem of public debt and this will be a drama that will condition our lives for the years to come.
Forecasts are coming out on how the economic cycle will go in the coming months: for residential real estate, the recovery of prices and transactions is postponed to 2023 with a maximum loss in terms of prices of around -10%. For GDP, the most daring see a return to pre-Covid levels at the end of 2022 but we all know that in reality many analysts prefer to sweeten their forecasts. In an interview with Yanis Varoufakis, a former Greek finance minister during the 2015 crisis, which has millions of enemies in the establishment, he said openly that Italy’s debt / GDP will almost reach 200% like the Greek one. And our former hair language minister has very few.
European Union funds will come when perhaps the damage will be done because they are included in the 2021-2027 budget and they are still peanuts compared to the size of the problem, mainly because they are partly debt and partly it is true they are grants.
The following chart is interesting with the breakdown of the funds of the Eu Next Generation plan, from which it is clear that Italy will not be the lion’s share:
The Nasdaq flies driven by an increase in M3 (liquid currency and “almost” liquid currency or the broader definition of liquid currency that includes M2 and M1) which has no equal in the history of the post-war period in the USA, Trump wants to be re-elected and with that painful elasticity of the American economy is pushing on the accelerator. But it is also true that Nasdaq USA is the future of the world, there are innovations, there are men who change the way we act daily with their technological discoveries. So there is that even the next historical highs are broken. If you think about the future you have to think about NASAQ.
Below is the chart of M3 in the USA, even without having won the Nobel prize for economics, it is clear that we are in an unprecedented situation in terms of monetary policy:
Below I publish an image that gives you the pulse of the US stock market.
Here is the demand for mortgages for the purchase of houses in the USA: we are on a historic maximum driven by an increase in M3 that has no equal in history. With interest rates close to zero, if you have to buy a house, now is the time.
But let’s get to the shares to buy in Italy.
Let’s say immediately that our market is really asphyxiated with the Ftse All Share which after the rebound has positioned itself in a horizontal congestion consisting of a significant number of inverted Vs, a sign that our market has unclear ideas.
The upside / downward number of stocks McClellan has returned to normal but at the sectoral level what is missing is the recovery of the price of bank stocks. If you notice from the beginning of the crisis the relative price of the banks on the index has sunk and only in the last week has gone above all the previous 6 weeks. The latest attempt to breakout the index congestion belt could therefore be the good one.
Unfortunately, the list of titles to follow is really limited, unlike the Nasdaq where each title is eligible for a buy.
Among the stocks that appreciated the most on the 4-week moving average, we find in descending order:
ITAL WINE BRANDS
Among these actions, we highlight Falk Renewables, Zignago and Reply as fundamental and as technical analysis.