Everything goes according to plan

Earlier this month, we announced the two ideas. First, we suggested that poor macroeconomic data (which were published in late September) can positively influence the market, because the talk about the need to tighten monetary policy will cease. That's what happened: the past week none of the leaders of the Federal Reserve Banks are not allowed himself hard comments, but at the end of the week point in the discussion set B. Bernanke. Recall, he said that tightening of monetary policy will not be until long as economic growth becomes sustainable. Secondly, we predicted that accounting firms will be better than the average market expectations. Moreover, stock and commodity markets were to perceive this information unambiguously positive, since corporate data will not lead to tightening of monetary policy (monetary authorities are looking at the macroeconomic data). This projection also has justified.

As forecasts for the future, while there is every reason for continued growth in commodity prices. As recently confirmed by Bernanke, credit will be cheaper to stay as long as economic growth becomes sustainable. Such a policy in the future the next few years (although no one knows at what point) will lead either to the beginning of growth, or to the unwinding of inflationary processes. Both mean rising prices for raw materials. Therefore, sovereign funds, whose assets now contribute paltry 2-3% per annum, is a direct sense to buy commodities: prices for them are likely to exceed the current yield of first-rate bonds. Moreover, developing countries importing raw materials (sovereign funds that are just and are among the largest in the world) does not prevent to have stocks of commodities for future development of their economies. And in this race who will buy more raw materials to the sovereign funds, are likely to join and private financial institutions, which also accumulated huge liquidity cushion, almost barren.

As you know, inflation is diverse, but would like to mention two types: monetary (caused by the growth of money supply) and inflation costs (taking place under the influence of rising prices for raw materials and components). So, against the backdrop of a giant money supply, rising prices for raw materials (causing cost inflation) is able to unleash the flywheel of inflation in the near future. However, due to the weakness of the economy, tightening monetary policy the Fed can not. So, we get high inflation with low interest rates, which will positively affect the share prices of virtually all industries. But, first of all, prices will continue to grow assets in commodity-dependent countries.

We expect (to the end of the year) the increase in oil prices to $ 93 per barrel and increase the RTS index to the level of 1750 points. In addition, we expect the strengthening of the ruble to the level of 27 rubles. per dollar.

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