B. Varchev on Bloomberg TV “Markets – two sides of the coin”


Biser Varchev, the founder and owner of Varchev Finance is here at the studio, good afternoon Good afternoon With one comment, the situation on the markets on 21st of February, how does the picture looks like on the world’s more likely in the context of the states and Europe, where our main focus is at. What is interesting? If you mean the last few days or weeks and the tendency, everyone sees on their computers that all the indices, almost all, with the exception of CAC, French index, almost all intently go up, surpisingly and amazingly go up… such a situation we have not had, do not want to say a “great word”, from before the balloon burst. What is interesting is this case is the correlation between the stocks prices, which are included in the relevant indeces of the relevant country and the revenues of the companies, whose stocks are included into the same indices, and this correlation is 21 at the moment. 21 is the number of correlation that was present before the balloon burst last time. This is the one side of the coin. From the other side, there are many rumors and speculations at the moment in the states and the UK that Trump is so reliable and will handle his political obligations so well, that during his mandate the price on Dow, more likely, will reach 30,000, which sounds a bit chimeric now, But the number of 30,000 stops, thus the coin has two sides – either the burst or 30,000. Eventually, looking from the short-term side, what are we awaiting, as many experts talk about the correction this year, as you have mentioned, the stocks are overpriced on the global level, especially in the states..Are we awaiting for some “healthy” correction… Well, we are waiting for it for two years already. This correction for two years. Yes, there was sometime ago… Correction was 20-36 on Fibonacci, which implies that it wasn’t meaningful at all. And not the “healthy” correction”, which we all are waiting for, so all the traders, investors and speculators are waiting and call it “healthy”, because, if it happens and the indices prices correct up to the level… I never say it in terms of index price, as we always watch it on Fibonacci – 50% on Fibonacci is a “healthy” correction It is where traders, investors and speculators would look for buying low. As there is nothing to lie about – money is made when bought low. This is what we do all day long, analyzing relevant stocks in the portfolios of Dow Jones, S&P, CAC and are looking for the divergency between the index and relevant stocks. I.e. expensive index – cheap stock. As the most in that portfolio, for reaching the price of 20,500….20,600 I think it reached, we look for the remaining stocks, cheap stocks, which will… Catch up Will sooner or later catch up, exactly, yes. And this is the great opportunity for profit. Can we consider some interesting offers on the market up to the moments? Maybe its better for the traders and investors – your audience, it would be better to firstly mention what the big `’players” in this business do , as Carl Icahn, Warren Buffett.. There is so-called “big three”. These are big investment banks, such as: Blackrock, Vanguard and Soros. Soros’ Funds. These three collossal players determine and drive 80%, more than 80% of money flows in the whole world. And if even two of them will move the same way, we get what it is at the moment – 20,500-20,600…Yes, these three giants at the moment – Vanguard, Blackrock and Soros… We have the special software, that analyzes the matches between these three companies. And what is interesting that there is always a match. if in their portfolios….for example, if they manage 200 stocks of 200 companies in which they have invested millions, managing 200-300-billion in one company and in their portfolio is 200, can you imagine the volume – 3 companies… imagine the predetermination of the market direction that outcomes eventually. And we, continuously, watch what they buy and what they sell… Any tendency that they have…is there anything interesting? Yes, exactly, this is precisely correct question. But firstly, before reaching the certain stocks, there are sectors. Index, sectors, certain stocks. At the moment, what can be noticed is that all the big players, even such as Coehn, Fisher, Ray Dalio, and the “big three” that I mentioned, are mass buying new stocks in the energy sector. Energy sector on the first place. On the second place, which is very weird, which happens rarely, at the moment mutual funds are very modern and popular. They were always there in the civilized world, in England and the states, now in Bulgaria. But at the moment, they mass buy the shares of Mutual Funds of S&P – Standard & Poor. On the third place they strengthen positions in technology sector, then in finance sector. Industrial and material – that’s the new. From what they retreat? They retreat from the technology, which is very weird, I think as the technology is always developing. More likely, they retreat from the technology sector, as it is overexposed. Overbought territory, overbought, overbought…Maybe there is a fear, they are the most expensive yet, thus they reduce the positions in the technology sector. Soros, for example, quit the utilities, where he always has been very strong. Blackrock, which I mentioned, and all the rest, annulate all their positions in the healthcare. because of, unclarity… Obama Care.. Obama Care, what will be the new policy of Trump…till what will he be rigid with the liquidation of Obama Care…So, there is a full exit out of the healthcare sector. What do Vanguard and the “three big” do – the same, quitting the healthcare, and also the consumer sector. At the moment, you might know, in Financial Times or somewhere they wrote that Warren Buffett has sold nearly billion shares of Walmart. Why? Because of Amazon. Because of their foresight years ago to bet on investments in technology sales, not physical sales. Companies like Walmart, only now have realized that it was the future and now are trying to catch up. They have reduced the delivery price for one month from 50 to 35 USD. They panically try to catch up in sales on the technology companies, such as Amazon and others – here it is, the typical example – Warren Buffett’s quit from his long-term investment. The other interesting thing is that the great money, which he quits the customer sector with, he invests into the sector, that he never liked. Planes….even though for years, everything was fine with the transport…mostly aeronautics. Yes, iteresting things are happening…Big shifts. Shifts, however, and in Europe, as focused at the moment on the US stocks, there are serious records and effects..in Europe the picture is similarly positive in terms of indices, but yet there are other factors, which let’s say is Brexit, which stays hanging and unknown, and your company has an office in…. Canary Wharf, London. In London. In this order of thoughts I would like to ask you from your perspective, not only from the market analyst, from the perspective of the owner of the financial company, how would this affect your business? And everything that is happening around it? We are trend following traders. Following the trend. What is happening at the moment is exclusively favorable for us…for our luck, or our abilities. I don’t know, but being the followers of the Dow theory on following the trend, this moment works well for us. You see the many-months-long trend, if you bought a year ago and has not done anything afterwards, you are not trying to speculate, to buy and to sell, to harass the market, trying to catch any movement – long and short movement, gaining from everything – if you do not do this, as we did at the moment – you buy prior a year, why to buy, why to sell again afterwards, there is a missed gain, a missed profit, why would you do that… Being trend following traders is very profitable for us, as all the indices – we trade predominantly indices, 15% of our portfolio is currencies; indices, stocks and ETF’s…. For our company – that was the question, for our company is it reflected extremely good, as we bought, then added to what we bought, and hold… Hold and wait for what we have spoken about, whether the balloon will happen, or Trump, who will speak in two months, will present his tax policy… Which is a cardinal event, everyone is awaiting for…And we are waiting while placing our Stop-Loss, if the market unexpectedly shifts, to close our positions and to collect the profit. From the viewpoint of business, the fact that London may be in a shaking position as a financial hub might affect your company… What would exactly effect? London as European financial hub may reach your company, your company to be jammed in that direction… Unfortunately…..how would it be jammed? It would be if British Parliament would agree on Brexit…. it would hit London extremely hard as the financial capital, along with Wall Street, New York…there are only two points in the world… To retreat their capitals from the UK, from London particularly…We see that it is not happening up to the moment…Thus it doesn’t affect, OK, what will happen, if we speak particularly about Varchev Finance… The office will be closed. It would be replaced to Frankfurt. I do not know why everyone consider Paris as London’s heir, as Paris has never been a financial city. Let’s not forget where the center of European Union is, let’s not forget where the Europeans stock exchanges are…Paris..what does it stand for? More likely, if something happens, which, for me, has no more than 20% chance… Politicians, Theresa May’s Parliament, even though she’s very harsh, we see how Parliament rejects her decisions and is very cautious and pretends, as we spoke…as we have spoken before this conversation.. if they do the foollishness, if they quit the European Union, which is a foolishness for me, as one country, whose export is about 57% focused on Europe…to quit that Europe…is not very smart, perhaps. And from this point of view, it is thought that the mind will prevail or they will take some half-decision somewhere in the middle, to have no views…only, only. Now, the last expression of Theresa may, if I am not mistaken was if the UK quits the European Union, there are 50 billions to return to the EU, the investment of the EU in the UK… and the UK counterattacks from its side, that they will become the duty free zone like Singapore and it will hurt the Europe. Interminable battle. For us, if it happens….we cancel our agreements in the UK, we move to Frankfurt, I believe. In the timeframe of few seconds, the question our previous guest has asked – Brexit and Donald Trump – game changers, the events that have changed the things dramatically last year, this year, will there be something like that? Whether there will be? Something from the range of Brexit or Donald Trump, his election, the events that have “shifted the layers”? No…they were two major events, such as electing a non-politician as the President, compared to Ronald Reagan, because of his non-standard policies and behavior and so on… and Brexit…Nothing like this is expected. At the moment, what we expect…a week ago Donald Trump said that within 3 weeks he will present his exact and clear tax levies, corporate tax levies, which is extremely important. This is the big event. It in awaited in the beginning of March actually. Which can change… We are standing on the edge of the thorn, to be honest…two-three-maximum four weeks..and it is very important what he will do…He will present his policy, tax policy..he must justify it… Because, if he keeps the promise from his pre-election company that he will reduce the taxes, there will be a hole in the budget..But that hole must be fulfilled from somewhere. Let’s not forget their phenomenal obligation, thus, he must justify it – the market, in the whole world, all the big players, are cautiously watching not when exactly he will present it, but whether he will justify it stably, properly and will say – “OK, I’ll reduce the taxes, but the hole will be fulfilled, taking from there and there…and the US economy will not suffer”. It is left to wait and watch what exactly the expectations are… These are the upcoming events.

One thought on “B. Varchev on Bloomberg TV “Markets – two sides of the coin””

  1. тук годините опит на Бисер си казаха тежката дума .. мн респект към хората който са знаели къде тръгват в целеустременоста си !! …

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