Morning Brew August 18 2022
Senior Relationship Manager
Summary: Will Risk Off continue or was it just a bump in the Road?
Yesterday was a risk off day with stocks lower and the USD stronger against basically everything else. The Dow gave up 0.5%, the S&P 500 fell 0.7% and the Nasdaq lost 1.3% and the official Dax close was down 2.06%.
EURUSD fell to 1.0167, GBPUSD 1.2039, USDJPY rose to 135.10 and Gold and Silver lost to 1763 and 19.70. Bitcoin is trading 23500.
The Probability of a 50 BPS hike in September has risen to 60%.
Disappointing earnings by target, lower than expected US retail sales and a higher than expected UK Inflation triggered risk aversion along with profit taking. After the Fed Minutes show a flexible path and decent Cisco earnings, sentiment seems to calm.
The old subject of Meme stocks is back in play with bed bath and beyond as well as Manchester United being affected. Elon Musk had tweeted he was interested in buying ManU, then commented it was a joke but Jim Ratcliffe stated he was interested in increasing his stake. This caused large swings
Cisco beat expectations after the close and the stock gained app 2%.
Todays Focus will be on the EU HICP at 11:00 expected at 8.9% annually and US Data at 14:30. The Turkish Central bank rate will be release at 13:00.
Tomorrow Morning at 8 we are expecting the UK retail sales.
Kim Cramer compiled an Energy Chart Collection, very useful: https://www.home.saxo/content/articles/commodities/ta-energy-17082022
- Thursday: EU HICP, Turkey rate decision, US Jobless claims, Philly Fed
- Friday: UK Retail Sales, Canada Retail Sales.
- Thursday: Applied Materials, Estee Lauder, NetEase, Adyen, Nibe, Geberit
- Friday: China Merchants Bank, CNOOC, Shenzhen Mindray, Xiaomi, Deere
Physically Settled Futures:
- Cocoa (CCU2) will expire 17th Aug at 15:00 GMT
- Light Sweet Crude Oil (WTI) (CLU2) will expire 22nd Aug at 15:00 GMT
- Coffee C (KCU2) will expire 22nd Aug at 15:00 GMT
- OILUSSEP22 will expire 18th Aug at 15:00 GMT
- COFFEENYSEP22 will expire 19th Aug at 15:00 GMT
- PALLADIUMSEP22 will expire 22nd Aug at 15:00 GMT
Futures can be rolled online via the Futures Spread Trade Ticket. Any open positions will be closed after the mentioned times.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.