US Reporting Season and Crisis of China's Technological Sector

13 Jul 2021

This week starts the reporting season in the United States. If you believe the forecasts of analysts, it can be the best since 2009. As expected, the quarterly profit of companies from the SP500 index will increase by 64% (it was better only in the fourth quarter of 2009 - then the growth was 109%). It is not surprising that against the background of such expectations, buyers in the US stock market continued to buy and drive stock indexes to new vertices.

What sectors will be height leaders? It is enough to remember the schedule of any of the product indexes to understand - the energy sector and the sectors of the materials. It is here that experts are waiting for the maximum increase in prices for stocks.

As for this week, the banks are reported on the start of the season. Those of them who have serious trading departments almost certainly demonstrate rapid growth (Goldman, Bank of America, etc.). But more banks focused on traditional deposit and credit services will feel less comfortable: the ultra-naughty monetary policy is eating margin and does not give financial results to excavation. However, the removal of funds from reserves will allow, albeit artificially, but to increase profits. So the positive attitude of the markets as a whole is justified.

But where recently there is a very positive attitude, so it is in the technology sector of China's stock market. After the authorities of the Middle Kingdom began betraying the DIDI for their listing in the United States, alone became the other IT giants. As a result, according to the Bloomberg calculations, an equilibrous basket of three Chinese Internet giants (Bat - Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd.) over the past 12 months fell by about 2%. For comparison: briefcase of similar companies in the US - Facebook Inc., Amazon.com Inc., Apple Inc., Microsoft Corp. and AlphaBet Inc. (FAAMG) grew by 40%. Although again, if someone is scared to take a clean short position on the US stock market of the US stock market (a bubble around the bubble has been inflated for a long time), now there is a good opportunity for Hedge - buy Bat and sell Faamg.

Moreover, today, consumer inflation data in the United States can remind markets for the tightening of the Fed monetary policy. And then Faamg will definitely not last.