Energy Transition | AI | Shifting World Order, Mint Finance

Pranay Yadav

Energy Transition | AI | Shifting World Order

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Commodities

<ul>
<li>Wheat prices are experiencing a significant resurgence due to extreme weather events and global supply-demand imbalances. Price is 22% higher over the past month. </li>
<li>May WASDE report indicates a positive outlook for global wheat production despite recent weather challenges, suggesting potential underestimations in global supply disruptions. </li>
<li>The anticipated shift to La Niña, coupled with historically low stocks-to-use ratios, threatens global wheat supply, heightening the potential for increased market volatility and price spikes.</li>
</ul>


Wheat prices are experiencing a significant resurgence due to extreme weather events and global supply-demand imbalances. Price is 22% higher over the past month. 
May WASDE report indicates a positive outlook for global wheat production despite recent weather challenges, suggesting potential underestimations in global supply disruptions. 
The anticipated shift to La Niña, coupled with historically low stocks-to-use ratios, threatens global wheat supply, heightening the potential for increased market volatility and price spikes.


Harvest Headwinds: Extreme Weather and Wheat's Price Surge

Macroeconomics

<ul>
<li>Fed's decision to taper its balance sheet runoff has provided support to long-term treasuries, particularly 10-year notes, signaling a potential rise in demand and a move towards yield curve normalization.</li>
<li>Recent treasury auction results reflect a divergence in demand across maturities; long-term 10-year treasuries show weaker performance compared to strong showings in shorter 3-year and 5-year maturities.</li>
<li>Data-Dependent Fed is likely to be influenced by improving economic indicators, supporting a normalization of the yield curve. During normalization, the 10Y-2Y spread is the superior instrument for exposure. </li>
</ul>


Fed's decision to taper its balance sheet runoff has provided support to long-term treasuries, particularly 10-year notes, signaling a potential rise in demand and a move towards yield curve normalization.
Recent treasury auction results reflect a divergence in demand across maturities; long-term 10-year treasuries show weaker performance compared to strong showings in shorter 3-year and 5-year maturities.
Data-Dependent Fed is likely to be influenced by improving economic indicators, supporting a normalization of the yield curve. During normalization, the 10Y-2Y spread is the superior instrument for exposure. 


Long 10Y, Short 2Y on Yield Curve Normalisation

Suhas Reddy

<ul>
<li>Although the Fed paused rate hikes in July 2023, the dollar remained strong buoyed by the US economy outperforming other advanced economies.  </li>
<li>A strong dollar usually benefits domestic businesses and small caps but hurts export-focused companies and large caps in the US.</li>
<li>The current account deficits of emerging nations have been worsening due to the strong dollar and rising energy prices.</li>
</ul>


Although the Fed paused rate hikes in July 2023, the dollar remained strong buoyed by the US economy outperforming other advanced economies.  
A strong dollar usually benefits domestic businesses and small caps but hurts export-focused companies and large caps in the US.
The current account deficits of emerging nations have been worsening due to the strong dollar and rising energy prices.


Dominant Dollar (Part 1): Strong Greenback Deters EM Equities

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals. It is a nonrenewable resource, also known as a fossil fuel, which means that it can't be replaced naturally at the rate we consume it and is therefore a limited resource.

<ul>
<li>US commercial crude oil inventory fell by 1.36 million barrels for the week ending on 3/May, after rising by 7.3 million barrels the week before.</li>
<li>EIA increased its global liquid fuels production for 2024 and 2025 by 110,000 bpd and 40,000 bpd, respectively.</li>
<li>EIA forecasts OPEC's spare production capacity around 4 million bpd through 2025.</li>
</ul>


US commercial crude oil inventory fell by 1.36 million barrels for the week ending on 3/May, after rising by 7.3 million barrels the week before.
EIA increased its global liquid fuels production for 2024 and 2025 by 110,000 bpd and 40,000 bpd, respectively.
EIA forecasts OPEC's spare production capacity around 4 million bpd through 2025.


Balanced Fundamentals To Soften Crude Oil Prices

Srinidhi Raghavendra

Cross Asset Strategy

<ul>
<li>Stock Trader's Almanac popularised Sell in May and go away. Repeated underperformance of the Dow Jones index during the six-month period from May to October lent credence to this.</li>
<li>Twenty four years of data (May 2000 to April 2024) confirms the continuation of Nov to Apr outperformance over May to Oct.</li>
<li>This outperformance gets exaggerated during election years. S&amp;P 500 generated outperformance of 7.27% with Dow Jones delivering 9.18% followed by Nasdaq at 0.52%.</li>
</ul>


Stock Trader's Almanac popularised Sell in May and go away. Repeated underperformance of the Dow Jones index during the six-month period from May to October lent credence to this.
Twenty four years of data (May 2000 to April 2024) confirms the continuation of Nov to Apr outperformance over May to Oct.
This outperformance gets exaggerated during election years. S&amp;P 500 generated outperformance of 7.27% with Dow Jones delivering 9.18% followed by Nasdaq at 0.52%.


Sell in May & Go Away. In 2024, Should You?