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October performance of Element One

Element ONE hedge fund performed +4,26% during October 2021

Element ONE
Issuer: ELEMENT ONE LTD 
ISIN Number: VGG299771086
IssueDescription: USD CL B SHS
ISO CFI: CICXXX

  • Hedge fund share price — $1 978,02.
  • Investment in Coinbase (Nasdaq: COIN) reached the target price on the 25th of October, 2021. Total return — 30,12% for little over than 3 months.
  • On the 15th of October Element ONE purchased shares of iPower (Nasdaq: IPW). Purchase price — $3,06.

5 best-performing companies in Element ONE portfolio

  1. Ovintiv (Nyse: OVV)
  2. On Semiconductor (Nasdaq: ON)
  3. Progenity (Nasdaq: PROG)
  4. Immunome (Nasdaq: IMNM)
  5. Walmart (Nyse: WMT)
  6. Benchmark-aware, not benchmark-driven investment approach by Raison Asset Management 

In the independent rating of investment analysts — invest-idei.ru, Raison Asset Management has a leading position out of more than 50 companies.

United States

The S&P500 index appreciated by 6,91% — from 4313 up to 4609. DXY or dollar index slightly decreased by 0,18% and closed the month at 94,13. 

The value of the US 5-year credit default swap (CDS) diminished over the last month by 2.84% and was equal to 13.7. This value represents an implied probability of United States default of 0.23%.

Key takeaways from the last FOMC meeting that determined the Fed’s mid-term policy

  • From the end of November, the committee will reduce the monthly rate of net asset purchases by $10 billion for Treasury securities and $5 billion for mortgage-backed securities.
  • From December, the committee will reduce the monthly rate of net asset purchases by $20 billion for Treasuries and $10 billion for mortgage-backed securities.
  • The Committee believes that tapering is likely to be appropriate every month, but is willing to adjust the rate of purchases if warranted by changes in the economic outlook.
  • The committee decided to maintain the target range for the federal funds rate of 0 to 0.25% and expects it to be prudent to maintain this target range until labour market conditions reach expected levels.

Resource: Federal Reserve

FED Officials’ comments

US Federal Reserve Chairman — Jerome Powell

  • Inflation will approach the Fed’s target of 2% as the economy adapts.
  • If inflation rises above the desired level, we will make adjustments.
  • Supply chain problems will continue into 2022.

US Treasury Secretary Janet Yellen

  • The rise in prices will begin to decline in the second half of next year.
  • A further decline in unemployment is expected in the coming months.
  • Spending within the infrastructure package will not lead to higher inflation.

Economic forecasts of Fed rate hikes until 2024

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Expected inflation is at rate of 2,96% 

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The spread between 10-year and 2-year US Treasury bonds continued to decline and now equals 1.05. The narrowing spread indicates that markets anticipate a tightening of US monetary policy.

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The unemployment rate in the United States (October 2021): 7419 thousand people.

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Source: FRED

European Central Bank

Monetary Policy Decisions (October 28, 2021).

  • The Board of Governors continues to believe that favourable funding conditions can be maintained with a lower pace of PEPP net asset purchases than in the second and third quarters of this year.
  • The interest rate on the main refinancing operations and the interest rates on the margin credit line and the deposit line will remain unchanged at the level of 0.00%, 0.25% and -0.50%, respectively;
  • The net purchases programme will remain at €20 billion per month. The Governing Body believes that the APP purchase of net assets is necessary to strengthen the regulatory impact of interest rates. It is planned to end the purchase shortly before the start of the increase in the key interest rate.
  • The Governing Council will continue to purchase net assets under the PEPP totalling €1,850 billion until at least the end of March 2022 and, in any case, until it decides that the coronavirus crisis phase is over;
  • The Governing Council stands ready to adjust all of its instruments as necessary to ensure that inflation stabilizes at the 2% target over the medium term.

Source: ecb.europa.eu

Consumer inflation expectations in the Eurozone are at their highest since 1993, according to the latest data from the European Commission.

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Russian Federation

Key metrics

  • Inflation (Octover 2021): 8,1%;
  • Inflation target: 4,0%;
  • Inflation forecast for 2022: 4,0–4,5%, next years: 2–3%;
  • Key interest rate: 7,5%;
  • Interanational reserves: $623,2 billion.

Excerpts from the Monetary Policy Report (October 2021)

  • The sustained inflation rate remains well above the target. This reflects a significant imbalance between the level of aggregate demand and the possibility of increasing output.
  • In the baseline forecast, on average for 2022, the key rate will be 7.3–8.3% per annum. The key rate will return to its long-term neutral range of 5.0–6.0% no earlier than mid-2023. In 2023–2024, the annual average key rate will be 5.5–6.5% and 5.0–6.0%, respectively.
  • The economy returned to long-term growth trends in the second quarter and exceeded them in a number of sectors. The slowdown in Q3 growth reflects the completion of the recovery phase.
  • The labour market situation also confirms the completion of the recovery phase. Unemployment is approaching historic lows, and the number of vacancies is close to historic highs. To fill new jobs, either an influx of labour migrants or the redistribution of the existing labour force between regions, industries and enterprises is required.
  • Government Bond yields between the September and October key rate decisions increased by 50–60 basis points. In the short term, this growth reflects a revision of market expectations for the rate, and in the long term — trends in global financial markets.

Source: Central Bank of Russian Federation

Commodities market

The total commodity market represented by the Invesco DB Commodity Index Tracking Fund (ETF) grew 5.43% from 20.25 to 21.35.

Gold futures (GC) rose 3.35% to $ 1,783.90 at the end of the month.

Futures on the WTI mark in September rose 11.75% to $ 83.57 / bbl. OPEC + adheres to the current plan to restore oil production by 400 thousand barrels per day.

New indicators developed by Bloomberg Economics show the magnitude of the global supply shortage that is threatening the global economic recovery.

The forecast model shows that a sustained deficit could keep the US CPI at 5%.

In October 2021, the average value of the FAO Food Price Index (CPI) was 133.2 points — 3.9 points (3.0%) higher than September and 31.8 points (31.3%) higher than October 2020. As a result of growth for three consecutive months in October, the CPI reached its highest level since June 2011.

Source: fao

SPAC

Dynamics of placement through SPAC in 2021.

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COVID-19

More than five million people worldwide have died from Covid-19 in the 19 months since the start of the pandemic, according to Johns Hopkins University.

While vaccines have helped lower death rates, WHO warned last week that the pandemic was “far from over.”

At the end of October, Russia had the highest number of daily cases of morbidity and mortality since the beginning of the pandemic. Russia accounts for 10% of the last million deaths recorded in the world.

More than 745,800 people have died in the United States, making it the country with the most recorded deaths.

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