Brazilian Real May Face Another Spiral

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


A little more than a week ago, Brazil marked a historic milestone in its governance. After a lengthy process, and with a landslide vote, the Brazilian Parliament decided to impeach President Dilma Rousseff amid charges of corruption and breach of trust. For the record, Ms. Rousseff is widely held responsible for Brazil’s worst recession in a hundred years.

During the impeachment proceedings, which lasted some eight months, the Brazilian Vice President, Michel Temer, assumed the helm and took Rousseff’s place. Now, with the proceedings finally concluded, Michel Temer is officially Brazil’s president. Mr. Temer’s pro-business approach had been well rewarded with a period of grace from investors. Under Mr. Temer, the Brazilian Real rallied by 7% against the dollar, bond yields on Brazilian bonds fell and Credit Default Swaps, an important gauge for risk, fell as well. That made it easier for Mr. Temer to navigate and encouraged investors’ hopes for more pro-business reforms. But now, as Mr. Temer has turned from merely the acting president to the incumbent, the political climate is on the verge of change. The “grace period” afforded Mr. Temer during the impeachment proceedings has expired, and with the shift in sentiment the Brazilian economy and, consequently, the Brazilian Real, could fall into a tailspin.

The Brazilian economic crisis has three notable dimensions; a collapse in commodity prices, a weak monetary system, and an ugly fiscal picture. Continue reading "Brazilian Real May Face Another Spiral" →

INO Health & Biotech Stock Guide - Coming Soon

Posted on by lindsay

We're working with INO Contributor, Noah Kiedrowski, on a new and exciting complimentary service and we wanted to give you a sneak peek. Twice a month, Noah will bring you a comprehensive analysis of the health, biotech, and pharmaceutical industry.

Noah is a biotechnology professional with a diverse scientific background and detailed knowledge in many therapeutic areas. This newsletter will highlight sector trends, merger and acquisition activity, noteworthy current events, political developments and drug approvals. Noah will focus on well-established mid-cap and large-cap companies as well appropriate ETFs as proxies for sector trends.

The health, biotech, and pharmaceutical industries are massive and with this newsletter, we hope that you will find new opportunities to explore and knowledge from an industry professional with a passion for financial analysis.

Please keep an eye out to subscribe to our new, complimentary INO Health & Biotech Stock Guide! Continue reading "INO Health & Biotech Stock Guide - Coming Soon" →

Copper Waits If Oil Keeps Upside; China Is In Focus

Posted on by Aibek Burabayev

Aibek Burabayev - INO.com Contributor - Metals


Chart 1. Crude Oil-Copper Correlation: Gap Widened

Crude Oil-Copper Correlation
Chart courtesy of tradingview.com

Another attempt by oil to close above the psychologically important $50 level (black dashed horizontal line) has failed. This was the third and a good try, and it was after a good correction in July, which makes bulls nervous as they lose their patience. Copper couldn’t keep the correlation gains achieved in July as it didn’t follow the rising crude last month and on the contrary, it moved the opposite way below the $2.2 level. The gap between them widened.

It’s not all bad news. There are at least two positive factors: Continue reading "Copper Waits If Oil Keeps Upside; China Is In Focus" →

Why This September Could Be Unlike Any Other September

Posted on by The INO.com Team

Hello MarketClub members everywhere. I think we can all agree that this year's presidential election is something we have never seen before. It doesn't matter if you're a Republican, Democrat or an independent in the days leading up to the final vote, be prepared for the unexpected. That is why I say September is going to be unlike any other September.

MarketClub's Mid-day Market Report

Coming back from Labor Day the index markets bounced back and resumed their upward trend based on the long-term monthly Trade Triangles. Sometimes as traders we get caught up in the minutia of trading and fail to see the bigger picture. I'm waiting for the index markets to accelerate on the upside. This may not happen, as the weekly Trade Triangles are red indicating a sidelines position in all of the indexes. This will likely will change in the very near future. Continue reading "Why This September Could Be Unlike Any Other September" →

Energy-Focused Master Limited Partnerships (MLPs) Require Risk Management

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Energy-focused master limited partnerships (MLPs) have provided investors good returns over time, much better than owning crude oil futures. For example, from January 200 through July 2016, the Alerian Total Return Index (PACF:AMZX), a leading gauge of energy MLPs, provided a return of 867%, far exceeded the return from crude futures of about 63%.

However, there is reasonably strong correlation between AMZX and crude futures prices. As a result, AMZX has suffered some large drawdowns. It maximum drop from peak-to-valley (P2V) was 58% over the period mentioned above. I use P2V as my primary risk measurement because it shows how large a loss one may experience in a buy-and-hold strategy.

I tested hedging AMZX by maintaining a short position in crude futures. The risk-minimizing hedge ratio for crude futures was -17% but it only reduced the maximum P2V to 50% (see Hedged return in graph below).

Chart of AMZX, Crude Futures and Hedged

I therefore applied the risk management process I developed to determine when to be invested in AMZX and when to go to cash. I provide the citations for the mathematical formulae and back-tested results for anyone interested in utilizing this process below. Continue reading "Energy-Focused Master Limited Partnerships (MLPs) Require Risk Management" →