Element ONE
Issuer: ELEMENT ONE LTD
ISIN Number: VGG299771086
Issue Description: USD CL B SHS
ISO CFI: CICXXX
SP500
In May, optimistic mood prevailed in the markets against the backdrop of the incentive measures taken and the gradual release from quarantine. The SP500 index continued to grow, rising 6.35%. At the end of the month, the price of the index was $3061 - this corresponds to the level of November 1st, 2019. The index without correction rose from the March low, showing a V-shaped recovery.
Global demand for the dollar in May continued to decline. The US Dollar Index Futures was down 0.8% and closed at $98.34.
The Russian Ruble strengthened. The USD/RUB currency pair decreased by 5.70%.
Central Bank Rates:
Fed: 0.25% (PRE 0 - 0.25%). At the meeting on 10.06.2020, the regulator left the key rate unchanged. ECB: 0% (PRED 0 - 0%). The next meeting was on July 16, 2020. The Central Bank of the Russian Federation: 5.50% (PRED 6%). The Central Bank of the Russian Federation admits a reduction of the key rate at the next meetings. Next meeting 06/19/2020
GDP
USA (q/q): -5%.
Eurozone (q/q): -3,6%.
Labour market
USA, unemployment rate (May): 13,3%.
Russia, unemployment rate (May): 5,8%.
Crisis
• Japan approved a $1.1 trillion economic support package;• The EU plans to create a €300 billion bankruptcy protection fund for companies;
• The authorities of the Russian Federation are preparing a package of economic support of 8 trillion rubles;
Wars
• Trade wars are on the escalation stage. The United States may introduce new duties on goods from China, but Trump does not plan to exit phase 1 on a trade deal. On top of that, the United States does not plan to accept the new status of Hong Kong. China, in turn, is considering the possibility of trade diversification due to unfriendly US behavior.
• The US plans to end all relations with the WHO.
The oil market showed strong growth, increasing by 86.24% - from $19.04 to $35.46.
World oil reserves (including oil in transit) began to decline.
In May, the price of yellow metal rose 3.44%, rising from $1,693.5 to $1,751.7.
The total commodity market, represented by the ETF DBC (Invesco DB Commodity Index Tracking Fund), grew by 8.97%, increasing from 10.81 to 11.78.
• Williams: measures taken by world Central Banks helped. Need more fiscal stimulation.
• Bullard (Fed): longer quarantine restrictions can cause long-term and deep damage to the US economy.
• Kudlow: we see many signs of economic recovery, Q3 2020 may show the fastest growth in US GDP in history.
• SI: China will increase readiness for military clashes.
• Kuroda: The Central Bank of Japan is ready to mitigate monetary policy in all possible ways: to reduce the rate, increase the purchase of ETFs, increase lending programs, and come up with new support measures.
• Merkel: sanctions against the Russian Federation must be respected.
• The US plans to end all relations with the WHO.
World trade is setting anti-records.
Oil
The oil market showed strong growth, increasing by 86.24% - from $19.04 to $35.46.World oil reserves (including oil in transit) began to decline.Gold
In May, the price of yellow metal rose 3.44%, rising from $1,693.5 to $1,751.7.The total commodity market, represented by the ETF DBC (Invesco DB Commodity Index Tracking Fund), grew by 8.97%, increasing from 10.81 to 11.78.
Comments from officials
• Powell: the current balance of the Fed is not dangerous (recall, in May, the balance exceeded $7 trillion).• Williams: measures taken by world Central Banks helped. Need more fiscal stimulation.
• Bullard (Fed): longer quarantine restrictions can cause long-term and deep damage to the US economy.
• Kudlow: we see many signs of economic recovery, Q3 2020 may show the fastest growth in US GDP in history.
• SI: China will increase readiness for military clashes.
• Kuroda: The Central Bank of Japan is ready to mitigate monetary policy in all possible ways: to reduce the rate, increase the purchase of ETFs, increase lending programs, and come up with new support measures.
• Merkel: sanctions against the Russian Federation must be respected.
Change in portfolio positions
The value of the fund's stock increased by $104.17 (+ 6.79%) and amounted to $ 1637.35. In May, we added VEON LTD (NASDAQ: VEON) at a price of 1.53 to the portfolio of a communications company, mainly operating under the brand Beeline. In the near future, we will publish a review of the company on our website. Disney (NYSE:DIS) and Restaurant Brands International (NYSE:QSR) showed positive dynamics in May and closed in early June with a result of + 23.76% and + 30.67%. In addition, on June 5th, with a small increase, a position was closed on the shares of Salmar (OSL:SALM). The company canceled the payment of dividends in March this year, which forced us to revise the prospects of profitability for this asset.