Morning Brew April 20 2022
Senior Relationship Manager
Summary: Dovish Speakers support Equities, Netflix drops after hours
Equities had the best day in a month yesterday driven by earnings and dovish comments by Charles Evans and Atlanta Feds Raphael Bostic, the Dow gained 1.45%, the S&P 1.6% and the Nasdaq 2.15%, the German Dax gained to 14235 in the Future.
Real 10 year yields turned positive yesterday on 10 year yields exceeding the 3% level for the first time since 2018. Real Yields are the yield of the respective bond minus the expected inflation.
Oil fell 5% yesterday on worries of lower demand due to a lower growth forecast by the IMF, interestingly that did not affect equities. Over night , it can recover roughly 1%.
Japan’s trade balance come at a deficit 4 times higher than expected at JPY 412 bio, the Yen traded as low as 129.40 before a verbal intervention by the BoJ. EURUSD Is at 1.0813 and GBPUSD at 1.3025. Gold and Silver lost some ground on high yields and falling oil and are now at 1940 and 24.99. The USD Index falls slightly to 100.70
Netflix suffered falling subscriber numbers for the first time in a decade, stocks fell 24% in late trading. Twitter also lost 4.5% on uncertainty of a takeover. Elon Musk is rumored to provide an offer in the next ten days.
Credit Suisse expects Q1 loss due to legal costs.
Watch for Tesla earnings today.
Earnings this week:
- Wednesday: Tesla, Alcoa, P&G, Nasdaq
- Thursday: American Airlines, Snap, AT&T
- Friday: Amex, Verizon, SAP, Schlumberger
- Wednesday: German PPI at 08:00EU Industrial Production at 11:00, CA CPI at 14:30
- Thursday: EU HICP at 11, US Labor Data at 14:30
- Friday: UK CPI at 8:00, International PMI
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.