Q4-2021-Market Outlook-Report-E-book-full

Winter is Coming:
The Deciding Quarter

Q4 Elliott Wave Market Outlook Report
Access professional fundamental and technical

insights for the fourth quarter of 2021.
Forex, Metals, Indices, Energies, and Stocks
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/en/?ref_id=c7546 Published in October 2021
About Orbex Daniel John Grady
Market Researcher
Orbex is an award-winning, fully licensed and regulated global forex broker, specializing in
the provision of access to the world’s biggest and most liquid financial markets. Orbex Daniel John Grady is a financial analyst and writer. He is a
boasts a world-class trading experience, providing fast and efficient 24/5 multilingual former CFO with a degree in Financial Management and has
support, exceptional trading conditions, and a wealth of educational material. Since its been published in both English and Spanish. With over ten
founding in 2010, Orbex has focused on technological advancement and the superior years of equities trading experience, he is primarily interested
quality of its services. As part of our customer support program, we provide enhanced in emerging markets with a focus on Latin America.
security of client funds and high professionalism in confidential finance matters. Orbex
understands the value of rapid decisions in fast-paced financial markets. Therefore, we
ensure sharp execution, sound market analysis, and comprehensive trading education. David Kindley
Market Strategist
David is an experienced analyst with over 10 years of trading

experience in the financial markets. With a keen eye for
About the Research Team macroeconomics and a special focus on trading psychology,
David is passionate about helping everyday investors make
informed trading decisions through his thorough research and
Stavros Tousios, MBA, CMI analysis.
Head of Investment Research
Stavros is a certified investment professional specializing in Mohammad Al-Mariri

core institutional trading strategies. An engineer by trade, his Head of Training & Market Strategy
analytical mind allows him to identify the right opportunities
at the right time. As both an active trader and analyst, Stavros Mohammad is a Chartered Market Technician (CMT), and a
selects investment ideas that offer a good risk to reward ratio. member of the American Market Technicians Association
(MTA). He has over fifteen years of trading experience and has
developed an advanced approach to fundamental analysis
Assem Mansour with a focus on risk management strategies.
Chief Market Strategist at Orbex Egypt
Chief Market Strategist at Orbex Egypt, Assem Mansour is an Roman Onegin

expert in fundamental analysis and a seasoned technical Elliott Wave Specialist
analyst. He holds degrees from the IE Business School and
IIMB and is also a proficient trader with over 10 years of Roman is a seasoned analyst who has been studying the
experience in the Forex markets. Mansour has presented financial markets since 2008, specializing in various types of
many courses and seminars covering various financial technical analysis. Since 2012, his main focus has been Elliott
markets and has co-authored several books on economics Wave analysis, a skill he has perfected thanks to years of
and the financial markets. research and practice as an active EW trader.
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TABLE OF CONTENTS
Introduction 3 Equities 30
Executive Summary 3 S&P500 32
The United States 5 Metals 33
US Index 7 Gold 34
Europe 8 XAU/USD 35
EUR/USD 10 Silver 34
United Kingdom 11 XAG/USD 36
GBP/USD 13 Energies 37
Switzerland 14 Crude Oil (WTI) 38
USD/CHF 16 Natural Gas (NGAS) 40
China 17 Emerging Markets 42
USD/CNH 19 USD/TRY 45
Japan 20 USD/MXN 46
USD/JPY 22 USD/ZAR 47
Commodity Bloc 23 Stocks 48
Canada 24 Royal Caribbean (RoyalCarrib) 49
USD/CAD 25 Plug Power (PlugPower) 51
Australia 26 Nikola Corporation (Nikola) 53
AUD/USD 27 Glencore (Glencore) 55
New Zealand 28 BAE Systems (BAE) 57
NZD/USD 29 Conclusion 59
A Review on Q3 2021 and a Look at How Markets Could With global liquidity rising throughout Q3, there are expectations of a slowdown in liquidity
Perform in Q4 2021 growth until the end of the year. Could this, in turn, raise the prospect of higher market
volatility for traders? Time will tell until the end of the year, as the major economic
powerhouses of the world gear up for another attempt at normality.
Our Investment Research team proudly presents our Quarter 4 Elliott Wave Market Outlook
report, reviewing global economies in Quarter 3 of 2021 and examining the likely trend
themes for Forex, Indices, Metals and Energies, and Stocks. Analyzing asset prices,
Executive Summary
patterns, and structures, our professional market analysts construct a comprehensive
forecast emanating from market cycles and the way in which historical data and policy
As the markets attempt to close out 2021 in the best shape possible, some economies are
signals can change how the financial markets perform.
more worried about what the final quarter of the year has in store for us than others. This
comes as the Delta variant is still causing a concern, as most nations cannot afford a
Introduction slowdown in vaccinations.
Brushing aside the inflation, tapering, and Covid variant concerns, the third quarter of the Worse yet, the double-jabbed population has proven to be a serious carrier of the virus,
year was quite an impressive one. which has served as a stumbling block for companies trying to get their workforce back to
the office.
But while one could state the vaccine roll-out was successful, some nations such as Japan
still lag behind, although they are slowly getting closer to filling the inoculation gap. For example, top Wall Street banks such as JPMorgan and Goldman Sachs had been
pushing for a full return to work during the last quarter. However, with the US now
Meanwhile, both Europe and the UK are managing to keep up with their vaccine targets. recording over 40mn cases since last year, it’s looking like their plans will be interrupted by
This means that, theoretically, reopenings should continue across the major developed a 4th wave that could be here to stay.
economies in the run-up to 2022.
Meanwhile, tapering and inflation talks continued to take center stage. And with inflation
That said, unemployment remains at elevated levels. This is partly due to a significant sitting well above the bank’s target of 2%, predicting the Fed’s next move has become all the
portion of the vaccinated public still catching the virus, which has people questioning if the more challenging. As it stands, the exact definitions of “moderately” and “transitional”
licensing and regulation of the jabs had been rushed. remain as vague as ever, perhaps even to the Fed itself.
Thanks to the governments of the world applying considerable pressure to speed up As for the White House, it’s no secret that Joe Biden has undergone quite the trying first
vaccine distribution, global equities jumped higher these last three months, marking yet year in office. Besides Covid and the economy, the President played down a chance of a
another consecutive quarter of gains. smooth post-Brexit free trade deal between the US and the UK recently, leaving the UK
keen to strike free trade deals worldwide in the wake of leaving the European Union's single
In addition, talks of interest rates also reflected the possibility of a shake-up in fiscal and market.
monetary stimulus. Therefore, a key question for central banks and the financial markets
alike focuses on the inflation outlook and its implications for ongoing monetary policies. In addition, the President faced record supply and delivery disruptions in the last three
However, the exact length of the inflation leash remains in doubt, as a surge in reopening months. In fact, cargo ships up and down the west coast of America are still waiting to dock.
demand was met by supply chain disruptions. Investors were taking a cautionary approach to this, as delays in imports to the world’s
biggest economy could have serious repercussions in the market.
Meanwhile, consumer consumption has skyrocketed due to the pandemic, which has
disrupted the flow of supply chains. And with the ports understaffed, once again due to the
pandemic, it’s no wonder the wild merry-go-round ensues.
But with all that in mind, it’s important to note that Q3 wasn’t all doom and gloom.
July’s NFP figures relieved some concerns, indicating that the pace of employment was
back on track as job numbers surpassed 1 million for the first time in 2021. Even more
encouragingly, employment in the sector most impacted by the pandemic, leisure and
hospitality, saw the lion’s share of growth in new jobs.
But while there was growth that must be acknowledged, it’s important to note that the
situation remains dire. There are still more Americans out of work than there were before
the pandemic hit.
Elsewhere in the world, some economies were hit by Covid-19 harder than others.
Namely, Japan. Contrary to expectations, the country was unable to capitalize on the
benefits of hosting the Olympics. And only time will tell if the stadiums and venues will fall
into disrepair, as was the case in Athens.
With oil jumping to fresh highs recently and with gold slumping below the $1,700 handle
for the first time since Q1, traders will be licking their lips at the prospect of more
fluctuations in the commodity markets.
As demand for goods and services has kept economists perplexed on what current
economic data say about the future, traders will be keeping a keen eye on the fiscal and
monetary stimulus, as these will remain key players as we approach 2022.
The United States
The United States As we head into winter and concerns around contagion rise, Fed officials seem to be
debating the “tapering” of assets but not committing to timing. All they appear to be able
America Takes a Step Back as Delta Matures to say is that it is “soon,” as a statement following the September meeting said.
This is likely due to the data disappointments caused by the new variants. It may also be a
means of avoiding a premature market reaction as the risk of a government shutdown in
October remains present.
Should activity and jobs progress on a positive footing next month while inflation remains
transitory, the Fed will be more confident to start considering a time for tapering and
perhaps announce it in Q4. Further impetus to begin hiking rates should come if the
government’s debt ceiling issue comes to a resolution sometime in October.
On the other hand, if supply bottlenecks dissipate and the US gets a grip of the Covid
situation, the Fed Chair might express a more hawkish tone in the next meeting.
With the Evergrande situation carrying a significant risk for further supply disruptions, if
The US economy continued to improve in the second quarter of this year, data from the US not a full-blown financial crisis, it might get more challenging for the Fed to keep inflation
Census Bureau showed on August 26th. from overshooting.
However, growth is expected to slack off due to the impact of the Delta variant in Q3. There are positive murmurs of a 4th stimulus payment due to the cost of living soaring by
6%. However, only a few states are eligible, and Congress has neither authorized Covid
Analysts have cut their estimates from 9% to 5.5% due to the deceleration of consumer checks, nor does it plan to. Instead, Senators are continuing to look into ways to raise the
spending, despite expected supply disruptions hinting at increasing inflation. minimum wage.
The CPI growth figure started to lose steam in August. However, it managed to maintain a With unemployment benefits now expired, and with Congress not renewing the pandemic
rate of 5.4% in June and July. This suggests that markets expect the disruptions to start program, it seems that the Biden Administration is optimistic that the US economic
slowing down in Q4 2021. recovery is just around the corner.
With the pace of Covid-19 vaccinations accelerating slightly, the US economy continues its But will time prove them wrong?
recovery, albeit at a slower than anticipated rate. In fact, many US regions are projected to
continue to see moderate jobs growth this fall.
This is partly because businesses aren’t hiring as much, and partly due to people being
uncomfortable returning to pre-pandemic normalcy (e.g., shopping, entertainment, and
even starting work); something reflected in the lackluster unemployment figures.
The combination of slow jobs markets and the comparatively slow pace of vaccination rates
will likely hold back the economic recovery, and it might even lead to additional lagging as
the vaccines continue to show reduced effectiveness against new variants.
DXY
Europe
Europe
Eurozone
Time for the ECB to Step Up
Still, policymakers argue that the low-interest-rate environment contributes to inflationary
pressures, implying further policy recalibrations as the economy grows.
However, with purchasing power declining and wages adjusted for reduced inflation, the
question of whether the ECB’s mandate to ensure price stability remains.
As the ECB is well known for failing to raise inflation to target, this might be its only
opportunity to prove to other central banks that its “transitory” strategy around
overshooting inflation is working.
If inflation is proven to be moderate, the eurozone’s recovery to pre-Covid levels could be

The ECB has announced that it will decrease the pace of securities purchases under their reached in Q4.
1.85tn euro PEPP program as inflation hit a decade high of 3% in August.
Although it is highly unlikely that any rate changes will materialize over the next few years
As the first big bank to announce a “moderate” ‘taper’ following Covid, the direction it wants in the eurozone, the divergence with the US will likely become more evident in the coming
to take indicates that the euro area has a good handle on the pandemic, and that the months as longer-term bonds become more attractive to fixed-income investors.
vaccine roll-out went relatively well.
This viewpoint is reflected in the GDP data with the eurozone growing by 2% in Q2,
overtaking both the US and China.
Despite supply disruptions not being as evident as in other countries, the ECB must prepare
to deal with risks associated with wage growth and fuel prices rather than “overshooting”
inflation. That is because when averaged out over two years, the CPI change is more
reflationary at 1.5%.
It's worth noting that the ECB will only start tapering its PEPP to keep rates low for longer
while boosting asset purchases under its non-pandemic QE program, which amounts to 3.2
trillion euros to date.
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Q4 is expected to hit a 4.5% CPI in G20 economies, which pushes the figures in France and
Germany up dramatically. The ECB expects inflation to rise only to 2.2% this year and slip Open Your Live Account FX Trading & CFD trading involves a high level of risk,
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further in 2022. Had housing prices been added in, the CPI would have come in around
0.2-0.3% higher.
EUR/USD
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The
TheUnited
Europe
UnitedKingdom
Kingdom
United Kingdom
Inflation Cloud Continues to Loom
If inflation continues to increase due to higher pre-Covid spending, the recovery from
lockdown may falter, halting the MPC’s plan to not only push policy tightening timing back,
but to reduce asset purchases at a later stage.
With BoE Governor Bailey reaffirming that inflation would prove transitory, the UK might be
the first of the G7 to raise rates as current inflation is double the target rate.
The UK economy managed to exit a technical recession in the second quarter of 2021.
Now, as the economy improves, Great Britain is expected to see growth accelerate to 2.5%
in Q3. However, during its last MPC meeting in September, the BoE revised GDP down from
2.9% to 2.1%.
Although the estimated acceleration remains unusually uncertain, GDP growth last came in
at 2.1% as the Office for National Statistics reported. This result was below pre-Covid levels
and reflects post-Covid and Brexit challenges, as well as construction contraction.
The inflation expectations for the year ahead hit a 9-year high of 3.2%, continuing to rise,
primarily due to higher energy prices, and secondarily due to supply disruptions.
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year’s end, economists estimate almost a 60% chance of a hike in February next year.
In general terms, MPC members are leading the QE tapering race compared to other big
banks as several pre-conditions for rising rates have already been met.
One risk factor to keep an eye out for is rising costs from inflation which push debt and
business costs up.
GBP/USD
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Switzerland
Switzerland
Has the time for risk finally come?
Should global inflation diminish over the coming months, then the Swissie could return to a
downward trajectory. However, global economic and geopolitical uncertainty is expected to
increase throughout the winter, and demand for safe havens like the CHF is likely to remain
high.
As expected, the Swissie got a bit weaker during the summer as Covid cases appeared to be
getting under control. But after the spread of Delta, there was a return to demand for safe
havens, much to the annoyance of the SNB.
The drop in exports might have helped keep the currency from appreciating, but it only
ended up causing regulators to double down on their rhetoric that the CHF is too strong
once again.
Rhetoric notwithstanding, no analyst at the moment is projecting a change in monetary

policy. Like the rest of the continent, Switzerland has seen a slowing in the uptake of
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There is increasing concern that another round of economic restrictions - if not full
lockdowns - might be coming in the fourth quarter. If this happens, we could see a spike in
safe-haven flows, pushing CHF higher.
Another potential driver for safe-haven inflows to the franc is the housing situation in
China. While the full extent of the Evergrande situation is only likely to become apparent
over the coming quarter, the weakening of the safe-haven status in Chinese property could
increase demand for gold, also affecting the franc.
On the other hand, Switzerland's major trade partners continue to insist that their inflation
is transient. The ECB forecasts inflation at 2.2% currently, with a fall to 1.5% next year, while
the Fed expects inflation this year to come in at 4.2% and 2.3% in the next. By comparison,
Swiss inflation is projected at just 0.4% for this year and 0.7% for next year.
USD/CHF
China
Europe
The United Kingdom
China
No Signs of a Slowdown
Although investors are somewhat optimistic about China, if the property market-inflicted
debt crisis takes the wrong turn, investors will most likely pull their capital to safe-haven
gold. Evergrande and their financial woes will likely be the main topic for the coming weeks
if not months.
As a result, several tech companies will be in dire straits, dragging the Yuan down and GDP
growth with it, almost certainly below the 5% mark.
The Chinese economy may well be about to enter a period of slower growth, despite the
World Bank recently raising their estimates for this year's GDP to 8.5%.
Employment rates and labor force participation in other ASEAN countries are projected to
falter on increasing uncertainty around containing Covid. China’s industrial profits, for the
moment at least, provide an excellent reason to continue to have some optimism, despite
the increasing costs of energy.
After accelerating sharply at a record pace in Q1 of 2021 on the back of unprecedented

fiscal and monetary measures, China only needs to meet an annualized GDP expansion rate
of around 5 to 6% to sustain stable growth in the coming months.
As mainland China’s economy is expanding and private businesses form an essential part of
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China has emerged as one of the most successful players in the fight against Covid as it
remains the world’s factory. However, more than 250 of the top 500 private Chinese firms
have lost tremendous business, mainly affected by global constraints rather than domestic
problems.
If the cost of raw materials continues to rise, though, the PBOC might have to adopt more
aggressive monetary easing measures. That could be through asset purchases, QE, or by
injecting more short-term liquidity to keep interest rates stable.
USD/CNH
Japan
Europe
The United Kingdom
Japan
Substantial Growth Far on the Horizon
Japan's economy is expected to grow at just 2.6% this year, with the BoJ likely to continue to
fight deflationary pressures.
The yen traded generally flat versus the dollar throughout most of the quarter.
Fluctuations in risk sentiment kept balancing out, but with concerns over the housing
situation in China, Japan's largest export destination, safe-haven flows have reasserted
themselves at the end of the third quarter.
The fourth quarter is expected to be more complicated than the preceding ones for Japan.
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The supply chain problems are expected to last well into 2022. In fact, many firms have
already cut their outlook, and major Japanese manufacturers are expected to report lower
sales with their upcoming earnings.
Any boost that Japan might have received from hosting the Olympics is over. Furthermore,
there is substantial concern that the northern hemisphere winter might cause another
round of economic restrictions due to Covid. That would mean further pressure on Japan
from its major trade partners, the US, the EU, and China, even if the domestic economy
were to remain largely healthy.
The Nikkei, however, appreciated over 10% in the last quarter, leaving analysts to speculate
if a correction might be in the works. The leadership contest that will produce the new
Prime Minister is also expected to weigh on sentiment, at least for the start of the quarter.
USD/JPY
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Commodity Bloc
Canada
How Long Can They Keep Defying Expectations?
Like most countries, Canada saw a rise in Covid cases throughoutz the summer due to
Delta. However, this did not manifest as a significant drop in optimism in the economy, and
there was a transient impact on economic growth. In fact, the OECD raised their economic
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In the coming quarter, Canada is expected to benefit from relatively fast growth in the US
and strong indicators at home. The Canadian dollar is expected to be supported as analysts
project that WTI crude will remain closer to $80 until the end of the year.
Although OPEC+ has continued to agree with their gradual increases in the production
program, members have commented about potentially suspending it.
At their latest meeting, the BOC acknowledged that inflation was rising but insisted that it
was transitory. They also said that they still expect the economy to grow through the rest
of the year, despite the recent uptick in Covid cases.
The consensus among analysts is that the BOC will maintain its asset purchasing program
at least for the next three months, leaving the bank on course to raise rates by the end of
next year.
Despite economic tailwinds to support the CAD, general weakness in the commodities
could continue to pressure the currency.
USD/CAD
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Australia
Some Light at the End of the Tunnel
With the domestic economy in difficulty, Australia might not be able to rely on the global
economy to get a boost, either.
China's main trade partner has seen its growth outlook cut to 8.1% from 8.5% prior. And
further revisions to the downside are expected as China deals with its housing issues. This
implies additional commodity price drops, as much of Australia's raw material exports are
used in construction.
It has been a tough quarter for the Australian economy. The rise in Covid cases forced most
of the country into one of the harshest lockdowns in the world.
On top of that, commodity prices have been falling throughout the majority of the last three
months. Covid cases appear to have finally peaked in mid-September, allowing the
government to announce a return to normal by Christmas.
Covid, and the slow lifting of the associated economic restrictions, is likely to be the theme
for the Australian economy for the final quarter of the year. Australia had been the slowest
developed country to get the jab, but the surge in cases has accelerated the vaccination
program.
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months ago. including capital invested.
The situation has prompted expectations for the RBA to keep rates low for even longer, and
to not reduce their asset purchasing program. On the plus side, though, the housing
situation appears to have improved a bit, with realtors unable to complete home sales.
On the other hand, construction firms have not been able to work. This could cause a
sudden return of the housing bubble problem later in the quarter, which could then
dominate headlines.
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AUD/USD
New Zealand
Looking Ahead to Economic Normalization
For most of the quarter, it appeared that New Zealand would avoid the economic problems
their nearest neighbor was facing. But the detection of one Covid case in Auckland led to
strict lockdowns and a precipitous fall in optimism.
In an unusual move, the RBNZ opted to delay a reduction in stimulus at the last minute.
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measures to control the bubble without affecting general stimulus for the economy. including capital invested.
Despite initially having a better outlook due to higher vaccination rates, New Zealand has
seen demand for the jab fall precipitously since mid-August.
The initial optimism of completing the vaccination program by the end of September has
vanished, leading PM Ardern to promise an end to lockdowns if over 90% of the population
has been vaccinated.
The fourth quarter is when tourism ramps up in the island nation, but that is expected to be
delayed with the trans-Tasman travel bubble suspended until the middle of November.
Meanwhile, falling consumer confidence in New Zealand's largest trade partner, China, will
likely keep exports under pressure.
So far, analysts haven't downgraded their economic forecasts for New Zealand as the
consensus remains for higher dairy prices through the rest of the year.
NZD/USD
https://www.orbex.com/blog/en/2021/04/nzdusd-5
Equities
Europe
The United Kingdom
SPX500
Getting Ready for the Taper
The S&P500 moved higher through most of the quarter. But, as expected, the index hit As a result, analysts are already dialing back their earnings growth forecasts for the quarter,
somewhat of a snag in September. as there is increasing worry that many index components won't meet estimates.
A series of events closer to the end of Q3 are expected to keep equities under pressure for Political wrangling could also pose further downside risks as it becomes increasingly
the rest of the year. Although analysts aren't ruling out stocks reaching new record highs unlikely that additional stimulus bills are passed. This quarter is seen as the last
before Christmas, there appears to be a consensus forming that it will be increasingly opportunity to increase government spending before the campaign for next year's
difficult to achieve. midterms ramps up.
Through September, VIX futures trended higher, suggesting that market influencers expect In sum, politics, not the Fed, might be the largest downside risk going forward.
increased volatility in the coming months. Factors lining up would likely push the markets in
either direction, with timing likely to be more important to determine market direction.
The Fed made it clear that the taper was coming, with the consensus penciling in November
as the likely date. However, the S&P500 moved higher in response, as markets welcomed
the reduction in uncertainty.
Many analysts have been fretting over the Fed's record-high repo holdings, suggesting that
the liquidity from the asset purchase program was returning to the Fed. If this theory
proves true, then the expected taper will likely have a minimum impact on the stock market.
The uncertainty over the evolution of Covid has also slowed the pivot towards cyclical and
value stocks, supporting higher risk stocks even as Covid cases climbed through the
summer. This came on the heels of a leveling off on inflation.
The Fed has raised its CPI forecast but still insists that cost increases will likely moderate
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On the other hand, traders are looking at other global uncertainties that could impact risk
appetite. Supply chains have not decompressed despite several months of recovery, and
major US retailers are even forecasting fewer sales due to their inability to get products to
shelves. This has raised concerns that we could see companies cutting back on forecasts
through the course of third quarter earnings season.
SPX500
Metals
Gold
Careful What You Risk For
Gold prices remained relatively flat during the quarter, in line with most safe-haven assets.
Risk sentiment has been swinging between positive and negative over the last several
months, without taking on a firm direction.
As we head into the end of the year, that theme is expected to continue, leading to
potentially larger swings in precious metals.
On the one hand, some expect inflation to cool down through the end of the year - at least,
that's what most central banks are arguing. On the other, there is the threat of new
lockdowns that could lead traders to increase gold holdings.
Gold is also likely to be one of the beneficiaries of the aftermath of the Evergrande issue in Silver
China. Many Chinese citizens invest in housing as a store of value and might shift to gold
more, given the potential impact on housing prices in China.
Meanwhile, India's return to economic growth means that the world's second-largest
country and largest retail gold buyer could be back on the market.
Holders of precious metals may be using it as a hedge against risk. But if Covid gets under
control and economies return to growth, central banks will look into raising rates. This
would increase the relative value of bonds and weigh on gold.
Furthermore, gold has competition from digital currencies now. More people are investing
in crypto as a hedge against inflation. If it becomes clear by the end of the year that new
lockdowns aren't in the offing, the risk to precious metals might be on the downside.
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yield-chasing environment. That's the typical situation in post-recession recovery. But with
spreads in the industry, starting from 0.05 pips! FX Trading & CFD trading involves a high level of risk,
Covid variants floating around, we might not have the typical swing to the downside in gold including capital invested.
prices.
At least until next year, that is.
XAU/USD
XAG/USD
Energies
WTI Oil
Keeping a Lid on Production
The very first meeting after OPEC agreed on a production raise, at least one member came
out to suggest a production cut. Although the idea was roundly rejected, it indicated that it
might be really easy to suspend production increases if demand drops.
The incident helped affirm the case of several market analysts projecting crude to stay
close to $80 for the rest of the year.
Two hurricanes have gone through the Gulf Oil Production area, with Ida getting most of the
attention. It was estimated that the impact of Ida essentially wiped out the production
increase from OPEC. And hurricane season isn’t even over yet.
On the other hand, the rise in the Delta variant has led to a drop in demand for travel. All US
airlines have cut their forecasts for the rest of the year and analysts expect them to cut
them again during their earnings reports. https://bit.ly/3FywYAw
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US crude stocks, in general, have been lower, as the system works through oversupply Open Your Account Now. FX Trading & CFD trading involves a high level of risk, including
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during the pandemic.
The latest mobility trackers show that US drivers are not only back on the roads, but that
traffic has surpassed pre-pandemic levels. That means there is less chance of upward
demand pressure.
Meanwhile, the other source of major consumer demand is heating fuel. Estimates from
the NWS suggest that this winter will be colder than average, which will likely increase the
oil and natural gas demand.
WTI Crude
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Natural Gas
A Bleak Winter Ahead?
The natural gas issue in Europe and in the US isn't being attributed to supply problems. In
fact, BP had to come out with a statement to that effect to reassure markets.
Natural gas is used for peaking power, which has seen increased demand due to lower
electricity production from less wind. The weather is now increasingly an important factor
in fuel prices, as renewables production depends on weather conditions.
In general, energy demand is expected to grow over the next three months. But there isn't
any sign of a comparable increase in supply. The combination of factors is likely to support
the price of crude for the time being, though probably not to the point of pushing it
significantly higher.
NATGAS
Emerging Markets
Emerging Markets
Resurgent Dollar Threatens to Upend Recovery
Emerging markets had another quarter to remember as the Covid recovery continued. The
rand, peso, and lira all made significant strides over the greenback as economies took their
foot off the restriction pedal. However, as we close out Q3, the dollar is making a steady
comeback.
The Turkish lira made minor gains, which was juxtaposed against the economy growing at a
record pace. The easing of restrictions lifted the domestic economy, with household
spending and capital expenditure both jumping.
Business confidence rose on average in the quarter, suggesting solid private sector activity.
Moreover, operating conditions in the manufacturing sector have improved steadily,
reaching a seven-month high in August.
Turkish tourism recovered, supporting the Turkish economic growth. In fact, Turkish Airlines
was confirmed to be Europe’s best-performing national carrier during the crisis. Total
revenues reached $4bn in the first half of 2021, as the second half looks to exceed that
amount.
However, with a continuous soaring inflation rate, the highest since 2019, is this a sign that
the country is getting back to pre-pandemic levels?
The Mexican economy appeared to lose some steam during the last quarter amid surging
infection rates, compared to Q2. Throughout August, both the non-manufacturing and
manufacturing PMIs pulled back while consumer confidence fell.
However, the government’s moderate approach to new restrictions limited the fallout. At
the same time, remittances continued to soar in July on the improving American labour
market, which supports domestic consumption. In September, the 2022 budget was
presented, marking a slight loosening of austerity.
The Mexican central bank eased inflation to a 5-month low in August, as it climbed down
from jumping over 6% in the second quarter. These might be signs that Banxico’s 3% inflation
target could come into fruition, but it’s unlikely that that will happen anytime soon.
Among the three economies, growth prospects are a bit more subdued for South Africa. The Mexico
country’s unemployment rate rose over 34% in Q2, and early indications show that this
figure is expected to increase as we enter Q4.
But the data does paint a mixed picture. The nation’s economy grew by 1.2% in the second
quarter compared to the previous three months. But then again, it was expected due to the
lifting of major restrictions thanks to the vaccination drive.
Locally manufactured vaccines and the arrival of around 6 million jabs from the US boosted
supplies. But this did not seem to stem the flow of an uptick in infections.
The World Health Organisation stepped in to remind the globe that a lack of vaccine supply
in the nation could make it a breeding ground for new variants, as only 14% of the population
has been vaccinated. South Africa
The early August explosion at the Eskom power unit, coupled with already recurrent energy
shortages, could push power shortages to an all-time high. In turn, it could also put a halt to
economic growth for the remainder of the year.
In addition, former President Jacob Zuma’s recent jailing led to violent riots that claimed the
lives of over 300 people, not to mention the looting and vandalism that cost businesses
billions. Now, it is the latest Finance Minister Tito Mboweni’s turn to get spending and debt
under control.
So, with the greenback slowly creeping up on the three currencies, will the run up to the end
of the year be a make or break quarter for the pairs?
Turkey
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Royal Caribbean
An Unexpected Opportunity in the Pandemic
Analysts expect RCL to get back to full capacity through 2022 (they are currently sailing at
Despite the pandemic, Royal Caribbean is pushing ahead with their expansion plans. Just
80% of capacity, with a lower than usual occupancy). The coming winter vacation season is
recently, they launched the largest cruise ship globally and announced a new terminal in
likely to be the test to see if those predictions work.
Italy.
Royal Caribbean has a distinct advantage over other cruise lines, as illustrated by their
What gives them so much confidence in a world of Covid restrictions and limited vacation
name: Caribbean. Cruises sail primarily from Miami, with fewer Covid restrictions than other
travel?
areas and easier passenger onboarding.
One of the reasons is the basis of the cruise industry as a whole. It's a highly cyclical
Even still, RCL is expected to report a loss this quarter, with EPS coming in at -$4.10
business, meaning that cruise lines keep a substantial amount of cash on hand. And RCL is
according to the consensus of estimates. Although, we must note that this is expected to
no exception. Even after two years of pandemic, they still have $5.0 billion in available
be on the improved sales of $684M.
funds.
This is partially thanks to the system itself, which allows for idling cruise ships to operate at
a relatively lower cost than other transportation/lodging companies.
The elevated level of available capital and lower cash burn allowed the company to take
advantage of the pandemic to streamline their fleet, reduce costs and potentially even
become a more efficient and profitable company.
In addition, as bookings resume, the company has been able to substantially cut the cost of
serving its debt in a low-interest environment. RCL's latest bond issuance was simply to
refinance existing credit, cutting their interest payments on that debt segment in half.
In their latest report, RCL said that bookings were back to 90% of pre-pandemic levels.
Despite an expected dip in bookings in the short term due to the Delta variant, the
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Having been able to keep afloat during the hospitality crisis, they can stay in a market with including capital invested.
potentially less competition. Furthermore, cruise lines can take advantage of onboard
spending, as the different regulations for cruises allow them to capture guests who would
otherwise go to casinos and hotels.
ROYALC
Plug Power
Is the Future Now?
The current energy situation in Europe is showing one of the real-world issues with Plug’s expected EPS is -$0.08 on revenues of $148M for this quarter. They are also
renewables. projected to book up to $750M in sales next year, showing substantial growth potential.
It's not enough to just increase renewable generation – you have to store the energy to
meet demand as that is a vital element for the grid. Therefore, providing peaking power for
electric systems will be one of the major challenges and investment opportunities of the
coming decades.
Companies that are competitive in the renewables space are likely to outperform, that's a
given. However, attention now turns to renewable generation and power management, and
companies that have an edge in storage mechanisms are likely to have an even better
outlook.
Enter Plug Power, with their interest in green hydrogen development. The market is still
debating on which storage/regeneration system is the best, and hydrogen offers a few
advantages over other proposals. Chief among those advantages is the application for
mobile engines, such as cars, ships, and even potentially airplanes.
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Morgan Stanley was highly impressed with Plug Power's development projects, banking on will fare. Open your live account now. FX Trading & CFD trading involves a high level of risk,
hydrogen as a key component of future renewables. including capital invested.
Despite the pandemic, demand for the company's products remains strong. They also
expect green hydrogen costs to reach parity with grey by the end of next year, suggesting
that Plug might not only be a worthwhile investment in the short term, but also in the long
term.
There are a couple of key events that could help push Plug Power's stock price higher next
quarter: first, they could raise guidance with their earnings release; or, if they don't, they
could raise guidance at their capital markets day presentation, where they could also
announce new products that they will be developing.
The risk is that many market participants are bullish on the company, with only 10.5% short
interest at the end of the second quarter. Should Plug power not deliver a substantial
increase in their outlook, it could be a "buy the dip" opportunity.
PLUG
Nikola Corporation
When Will They Earn the Name?
Nikola, named after the same famous inventor as Tesla, has not seen as much success as Nikola is expected to report earnings of -0.26 per share on no sales. Their outlook
its more famous electric vehicle peer. But that's OK, since they are targeting a different andptential for managing their first sale could be a key driver of the stock this quarter.
market altogether.
While there has been much focus on replacing fossil-fuel-guzzling cars, most road pollution
comes from heavy vehicles, such as trucks.
It's not as flashy an investment area. And it doesn't have the same impressive margins. But
truck and bus sales have the permanence and stability in the market to compensate. Car
consumers are more fickle and likely to switch brands quickly for things as frivolous as
fashion and CEO tweets.
Transportation companies have a more long-term strategy, meaning that Nikola might not
necessarily have the same ROI outlook, but they also don't have the same risk outlook. That
is, assuming they manage to start making revenue.
Although the company has made some deliveries, they have not formally sold any trucks. https://bit.ly/3lvr5fs
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This means that for now, investing in the company is "getting in at the bottom". The
consensus among analysts is that they won't make their first formal sale until later this Open your live account now FX Trading & CFD trading involves a high level of risk,
quarter or sometime in the next, and that could be the catalyst to secure further pipeline
development to push the stock higher.
In the meantime, the supply constraints on semiconductors are expected to keep the
company under pressure. This could also be another opportunity for the company's shares
to break out, once the situation is resolved to speed up production.
The remaining challenge for electric trucks is the lack of charging infrastructure, particularly
for long-range trucking. This leads many analysts to suggest that it could be a relatively
slow growth market. However, the Biden Administration's focus on green infrastructure
development could give the adoption of BEV trucks a boost as well.
Nikola, therefore, remains a generally speculative play since it can't yet offer its primary
investment advantage: a steady growth in sales.
NKLA
Glencore
Copper is the New Gold
Commodity prices have been higher through the pandemic for a number of reasons. This Glencore estimates that their production cost for the next quarter will be $0.80/lb, and
has put miners in a good position. The question is, will the situation continue through the Freeport projects average unit costs at $1.48/lb for the same period.
recovery?
So, if prices go up, Glencore is going to make more money than its big competitor. But if
Well, some companies are better positioned than others to not only weather what's prices go down, Glencore can keep producing at a higher profit margin, making them able to
coming, but to take full advantage of the money-making opportunities. weather downturns better as well.
Commodity prices have been somewhat shaky in the latter half of the year. On the one Glencore is expected to report earnings on October 29. Watch out for capital allocation
hand, the Chinese government has been trying to push prices down as they interfere with strategies, such as potentially raising dividends or buybacks.
the country's monetary and fiscal policy. On the other, there’s the Evergrande fiasco that
pushed commodity prices down as well.
The repercussions of the housing situation in China are probably going to keep affecting the
market for some time.
But copper is likely to be an exception, even in the worst cases for Chinese commodity
demand. As the world seeks to get rid of fossil fuels, electric transmission is the likely
replacement. Meaning, we are going to need a lot more copper in the future, as it is by far
the best conductor.
The majority of copper is still going into housing construction, but that could change once
the majority of vehicle manufacturing turns to EVs.
Copper is necessary for every step of the renewables process: from solar panels to wind
turbines, to batteries, to chargers, to motors. Companies with substantial copper mining https://bit.ly/305t3ec
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holdings are likely to be the foundation of the green revolution. So now, which one is best
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Glencore is only the third-largest copper producer in the world. The first, Codelco, is
government-run, so we can't invest in it. The second is Freeport-McMoran, but there is one
reason in particular why Glencore could be a much better investment: production cost.
GLEN
BAE Systems
New Opportunities in a Troubled World
The shambolic withdrawal of NATO forces from Afghanistan has put the defense sector
back in focus. And not just because several militaries will have to procure replacements for
the material they left behind. The geopolitical situation has shifted such that many
countries, including the UK, might look to step up their defense spending.
US defense outlays this year have increased by 4.5%, even when considering inflation.
Despite a general perception that when Democrats are in power, defense spending
decreases, the reality is that defense companies maintain their margins under Democratic
administrations, and sales do increase.
But there might be an even better opportunity for investment in defense outside of the US.
BAE Systems does a substantial amount of business in the US; but as a UK company, they
are set to get a larger share of orders from the British Isles. https://bit.ly/3aq8A5J
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risk, including capital invested.
submarines. The exact details of how the new structure will work haven't been made public,
but there is the potential that BAE might be a big winner. After all, they are the suppliers of
the UK's submarines, which would be the platform most suitable for Australia's needs.
Furthermore, US relations with the rest of NATO are particularly strained after the
Afghanistan debacle. Ministers in the UK have publicly wondered whether they can be as
reliant on the US as before. This shift towards more self-reliance among NATO members
could offer more opportunities for BAE in the coming months.
Many countries are working on developing their spending budgets for the next year. This
next quarter we could see BAE announcing bidding on an increased amount of defense
contracts.
BAE is expected to report its earnings in the second week of November. Watch out for a
potential rise in outlook; the company currently expects their EPS to rise by 3-5% this year
to increase 5-7% in sales.
BAE
Conclusion
Heading into the back end of 2021, most economies are looking better than at the start of
the year. With the amount of fiscal stimulus being injected and the lifting of restrictions, we
finally saw a glimpse of a pre-pandemic world.
Interest rates among the leading nations look to remain low for some time as most central
banks don’t want to run before they can crawl. This will be something to take note of when,
or if, inflation becomes more grounded.
Should further lockdowns ensue, it will hit nations hard as they try to emerge from the
shadow of Covid. However, on the bright side, most economies have the potential to make
significant gains in 2022.
World leaders will need to make their minds up on climate factors, further stimulus, and
providing more vaccinations to poorer countries. As these issues linger on, more
geopolitical tensions will take over.
In short, there is more of an expected rebound in the markets in Q4. However, the risks
could outweigh sentiment as analysts look for some respite.
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or prediction of future performance. ORBEX does not take into account your personal investment objectives or financial situation. ORBEX makes
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Winter is Coming:

The Deciding Quarter

Access professional fundamental and technical

Forex, Metals, Indices, Energies, and Stocks

David is an experienced analyst with over 10 years of trading

Stavros is a certified investment professional specializing in Mohammad Al-Mariri

Chief Market Strategist at Orbex Egypt, Assem Mansour is an Roman Onegin

Executive Summary 3 S&P500 32

The United States 5 Metals 33

United Kingdom 11 XAG/USD 36

Switzerland 14 Crude Oil (WTI) 38

USD/CHF 16 Natural Gas (NGAS) 40

China 17 Emerging Markets 42

Commodity Bloc 23 Stocks 48

Canada 24 Royal Caribbean (RoyalCarrib) 49

USD/CAD 25 Plug Power (PlugPower) 51

Australia 26 Nikola Corporation (Nikola) 53

AUD/USD 27 Glencore (Glencore) 55

New Zealand 28 BAE Systems (BAE) 57

If inflation is proven to be moderate, the eurozone’s recovery to pre-Covid levels could be

session with Stavros Tousios! including capital invested.

Rhetoric notwithstanding, no analyst at the moment is projecting a change in monetary

After accelerating sharply at a record pace in Q1 of 2021 on the back of unprecedented

months ago. including capital invested.

At least until next year, that is.

during the pandemic.

hydrogen as a key component of future renewables. including capital invested.

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