PRESENTATION
PRESENTATION
Oil: West Texas Intermediate Crude Oil Spot Contract with a 40% share of the portfolio. The oil is the most important commodity in the world economy. It is used as the main source of energy in the world to empower the transport of goods and people, electricity generation and the use of its physical derivatives for polymer manufacture. The oil has always been attached to geopolitical tensions in Latin America and the Middle East, a very important factor in the price of the commodity.
US Dollar: Dollar Index Spot with a 25% share of the portfolio. The US dollar is the most used currency in the world, thanks to the Petrodollar policy since 1970 were when the most important oil producers in the world agreed to set the price of oil in US dollars. More than 60% of financial operations in the world are negotiated in US dollars.
Deutsche Bank: DBK in Xetra Stock Exchange. With a 35% share of the portfolio. The Deutsche Bank is the most important bank in Europe and one of the most important banks in the world. It is considered a "too big to fail" company in Europe, similar to JP Morgan and Bank of America in the United States of America.
Each asset will be analyzed in three ways: fundamental, technical and hedging.
Oil – Fundamental analysis
There is an oversupply of 1.41 million barrels per day in 2016 in the world. That push the price in the long term to keep the price down or steady (Image 1).
Image 1: Global petroleum and other liquids
Oil – Fundamental analysis
The development of oil shale deposits in the United States of America increases the offer of oil (Image 1) with a breakeven price average of 50 USD.
Image 1: Eagle Ford and Bakken Shale (Oil Price, 2015)
■ China has 433 gigawatts of installed capacity in renewable energy sources (Bloomberg, 2015).
■ China added 56 gigawatts of capacity in renewable energy sources in 2014.
■ One of three operative wind turbines are in China.
Image 2: China Map of eolic energy generation (Bloomberg, 2015)
Oil – Technical analysis
Image 3: Price evolution of oil
The technical analysis of the oil recommends to BUY in the short term.
The prevision is the increase in the oil price to values between 45 USD and 50 USD.
Oil – Hedging analysis
The hedging analysis of oil depends on the spot price of oil and future price. According to the analyst consensus. The price will go up in the following three years.
A long position in oil will result in benefit to the investor.
US Dollar – Fundamental analysis
Unemployment Rate: 5.0% (March 2016)
GDP: 2.4% (4th Quarter of 2015)
Inflation: 0.9% (April 2016)
Trade Balance: $47.06 billion (February 2016)
Retail Sales: -0,3% (March 2016).
Industrial Production: -2,0% (March 2016)
Non-Farm Payrolls : 215,000 (March 2016)
DEBT
US National Debt: 19.26 trillion dollars (US Debt Clock, 2016)
US Government Budget Deficit: 499.82billion dollars
The debt represents a risk for the US economy in the long term
US Dollar – Technical analysis
The US Dollar Index is known in the New York Board of Trade as DXY
The technical analysis recommends to BUY in short term.
US Dollar – Hedging analysis
The gold is a commodity that works very well as a hedge strategy to protect against UD dollar volatility (Yahoo Finance, 2016).
The last bullish trend of the gold price corresponds to a bearish trend of US dollar (Stanley, 2016).
Deutsche Bank– Fundamental analysis
Balance Statement Summary
The liabilities to assets ratio is 95.44%. The number is higher than the minimum value of 3% but bellow the 5% required for big banks in the USA. Deutsche Bank complies with European regulations (Investing, 2016).
Income statement
The company has worsened their performance in the last three years reducing revenues and net income (Investor Guide, 2016).
Cash Flow
The cash flow of the company reduced in the last three years with a negative net income.
Competitors
The competitors of the bank are the rest of Top 5 Investment Banks of Europe.
HSBC: The bank has headquarters in London with worldwide operations. 2.74 trillion dollars in assets.
BNP Paribas: The bank has headquarters in Paris with worldwide operations. 2.58 trillion dollars in assets.
JP Morgan: The bank has headquarters in New York with worldwide operations. 2.58 trillion dollars in assets.
Barclays: The bank has headquarters in London NC with worldwide operations. 2.26 trillion dollars in assets.
Deutsche Bank – Technical analysis
The company has a short term bull trend that recommends a Buy position in the Deutsche Bank share.
Deutsche Bank– Hedging analysis
Deutsche Bank Commodity X2 Short (DEE) is a hedge asset that had in the last year a contrary trend to the Deutsche Bank equity share.
Reference List
Bloomberg. (2 November 2015). By the Numbers: China's Clean Energy Investments Show Big Strides. Retrieved 28 April 2016, from Bloomberg News: http://www.bloomberg.com/news/articles/2015-11-02/by-the-numbers-china-s-clean-energy-investments-show-big-strides
Investing. (2016). Deutsche Bank AG NA O.N. (DB). Retrieved 28 April 2016, from Investing: http://www.investing.com/equities/deutsche-bank?cid=22318
Investor Guide. (2016). Deutsche Bank AG (DB). Retrieved 28 April 2016, from Investor Guide: http://www.investorguide.com/stock-fundamentals.php?ticker=DB
Oil Price. (2015). Images Shale Play. Retrieved 28 April 2016, from Oil Price: http://oil-price.net/cartoons/north-dakota-bakken-shale.jpg
Stanley, J. (2016). Forex Strategy: The US Dollar Hedge. Retrieved 28 April 2016, from Daily FX: https://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2013/09/12/The_US_Dollar_Hedge.html
US Debt Clock. (2016). US National Debt. Retrieved 28 April 2016, from US Debt Clock: http://www.usdebtclock.org/
Yahoo Finance. (2016). US Dollar/USDX - Index - Cash (DX-Y.NYB). Retrieved 28 April 2016, from https://finance.yahoo.com/echarts?s=DX-Y.NYB+Interactive#{"range":"1mo","allowChartStacking":true}
