Ftse Mib: is it time to sell? ENI better than Saipem?

Below is the interview with Gaetano Evangelista, sole director of AGE Italia.
It is now possible to try Gaetano Evangelista’s strategies and operational forecasts for free! Sign up here, and find out why 80% of investors express their approval for AGE Italia.

Equity markets are moving to their highs without showing any signs of slowing down: is there room for further stretches in the short term?

The answer will, as always, be provided by the economy.
In recent years we have obtained some comforting answers from the relationship between stock markets and the real economy.

Contrary to what some somewhat superficial observers believe, the two worlds communicate continuously. And they understand each other very well.

We have just recorded the highest Global PMI in the last ten years. The world economy is booming, with 95% of the individual economies boasting an expansion, in the sense of PMI over 50 points.

This data (blue line in the figure above) is obviously very well correlated with the annual performance of world stock exchanges (red line, right-hand scale).

In other words, when the economy expands, market performance becomes positive, while only a shrinking economy – PMI below 50 points – would translate into negative year-over-year returns for the MSCI.
It seems to me that this eventuality is currently remote.

In Piazza Affari, the Ftse Mib has slightly updated the 2020 tops only to go back. Is this a false bullish break? What to expect now?

The achievement by the Ftse Mib of the maximum at the beginning of 2020 was taken for granted, the day after passing the last aperture at 23,000 points.

Moreover, it is a question of goat’s wool, since that maximum has already been exceeded for some time, if we think in terms of “total return”: that is, including dividends, which in Italy are always an important part of overall performance.


As the figure shows, we are now close to the upper wall of a canal in existence for more than two decades, and which in all this time has always contained the trend of Piazza Affari, with the exception of the February route incident. March 2020.

Now we will see what the market will want to do when it grows up: will it break dramatically upwards? or will a lateral decanting phase be inaugurated?

I would lean towards the second solution, but before the supports break down I would not sell.

Oil reaches new highs of the year: what strategies can you suggest for two oil themes such as ENI and Saipem?

The preference for these two actions is resolved immediately, considering that ENI sails peacefully above the average of the last 200 days, while Saipem is well below. This speaks volumes about the balance of power.

ENI has been moving sideways for some time, but in my opinion as long as it remains above € 9.90, it makes sense to keep it and trust in reaching the resistance at € 11.75.

Sooner or later the Federal Reserve will start discussing tapering. Beyond the short run, affected by the business cycle, what can we say about the long run trend for interest rates?

In the long run it is another story altogether. Over multi-year periods, the potential growth capacity of the economy comes into play. The discourse is valid in all ages, and at all latitudes.

Take the United States, which in 2007 boasted a potential for real GDP growth of just over 4%.
It is natural that the yield on Treasuries (light blue line in the figure) would adjust to this trajectory.

Then, as the years went by, the American economic machine got stuck, lost its beats; the potential rate of expansion of the economy has pointed down, dragging interest rates with it.


At this moment the two measures are aligned. In other words, 1.75% is an equilibrium level for US ten-year rates.

The possibility that the cost of money continues to rise is linked to the ability of this administration to implement adequate measures to permanently bend potential GDP upwards. Not an undemanding challenge, in fact.

It is now possible to try Gaetano Evangelista’s strategies and operational forecasts for free! Sign up here, and find out why 80% of investors express their approval for AGE Italia.

Trend-online Deputy Director, born in 1978.
After completing his studies at the Classical High School “Antonio Calamo” of Ostuni I entered the world of economics.
For about twenty years I have been dealing with Stock Exchange and Finance. After having worked as a financial promoter for several years, in 2005 I joined the Trend-online team as an editor, to later become deputy director of the cylinder head. Among other countless activities, I take care of maintaining relationships with all the experts, analysts and traders, consulted daily by Trend-online.

My motto is? “Life is like a mirror, if you look at it smiling it will smile at you”.

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