Morning Brew April 25 2022
Senior Relationship Manager
Risk off sentiment is driving markets after a terrible end of the week in which all 3 US indexes fell more than 2%. This morning it looks like the selloff is set to continue withteh GER40 below 14000. The S&P500 at 4230 the Dow at 33500 and the Nasdaq 100 at 13260, all based on the futures. The Euro could initially gain on the news that Emmanuel Macron beat Le Pen with a wide margin but gave up the gains over night.
EURUSD is trading at 1.0770, GBPUSD at 1.2800, the Japanese Yen remains high at 128.50, and the USD Index to 101.35, Gold and Silver fall to 1915 and 23.70 respectively and Bitcoin below 40k at trade at 39000. Oil is down 3%. EU bonds are little changed with the Bund Future trading at 153.50
Driver is a combination of rate hike fears in the US and now even the EU, where the market has now priced in around 85 basis points of hikes for this year, continued lockdowns in China, and overall growth fears.
The EU planning the 6th round of sanctions against Russia and the US are planning more weapons deliveries.
The takeover of Twitter by Elon Musk remains in the headlines, Hyunday reported a first quarter profit increase of almost 20%. Credit Suisse is rumored to pan a next restructuring as it threatens to fall out of the SMI Index.
The week will be driven by earnings data, with key companies reporting. Today Coca Cola is the largest, tomorrow Microsoft, Alphabet, GE, VISA and 3M will come out.
Technicals by Kim Cramer: : Nasdaq and S&P 500 have resumed their bear trend. Like to test March lows in a few days . RSI below 40
S&P 500 strong key support 4,164 likely to be tested coming week. 3,815 likely level to be seen before summer. Possibly 3,500 !
Dow Jones closed well below 34,102 key support. March lows around 32,578 likely to be tested within next 5-8 trading days.
Semiconductors already taken out March lows
Nikkei . Look out for key support test at 26,239.
ASX 200 rejected a few points below all time high. Likely to test support 7,356
DAX Key support 13,989 ! likely to close below Monday . If so March lows are targets.
Today the only significant economic data is the German IFO at 10:00 CET.
Remain cautions today and trade safely.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
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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.