Morning Brew April 12 2022
Senior Relationship Manager
Summary: Rates scare the market
Tomorrow I will be off and back on Thursday.
Rates continue to rise increasing the pressure on equities and the USD Index rises above 100. Japan's wholesale inflation remained high in March, nevertheless the yen rose to 125.77 yen overnight. EURUSD is trading at 1.0865 and GBPUSD at 1.3015. 1.08 and 1.0630 are key support level in EURUSD. Bitcoin fell below 40k yesterday but could rise to just above the level. The Bund Future fell to below 155 and US 10 year yields are at 2.82.
Gold and Silver are more driven by a flight to safety and as insurance against inflation and are fairly strong at 1956 and 25.15.
German Inflation just came as expected at 7.6% pushing the Dax Future below 14000, key data point will be the US CPI at 14:30.
Currently the ECB is not expected to change rates with a probability of 92% and the implied vol for 1 month atm is at 8.4%.
China is encouraging long-term investors to buy more equities and major shareholders of listed firms to increase their holdings when stocks slump, in a bid to stabilize a stock market rocked by a worsening COVID-19 outbreak (Reuters)
Joe Biden stated that buying more oil from Russia was not in India's interest, The EU executive is drafting an EU oil embargo on Russia, although there was no agreement yet
Wheat is at the high making a gloomy outlook for poorer nations to be able to feed the population.
- Wednesday: Tesco, JPMorgan Chase & Co, BlackRock, Fastenal
- Thursday: China Northern Rare Earth Group, Fast Retailing, Ericsson, UnitedHealth, Wells Fargo, Morgan Stanley, Goldman Sachs, Citigroup, US Bancorp, PNC Financial Services, Coinbase, State Street
- Friday: Hangzhou Hikvision Digital
- Tuesday: German CPI , ZEW, US CPI
- Wednesday: US PPI and BoC Rate decision
- Thursday: Sweden CPI, Turkey Rate decision, EU Rate decision and US retail sales
- Friday: French and Italian CPI , NY Fed and Industrial Production
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.