Morning Brew December 17 2120
Senior Relationship Manager
Summary: Bubble Stocks weak - Expiry Day
Please bear in mind the Expiries today!
Yesterday’s surprise was certainly the Bank of England hiked hiked rates against expectation and catching the market off guard two times in a row and causing at 130 pip move in GBPUSD from a low of 1.3240 to 1.3374. Boris Johnson in under pressure after conservatives lost the local election in North Shropshire which was seen as a test of his standing.
The ECB kept it`s dovish tone, while it is looking to wind down the emergency asset purchase programme in March, it believes it would not raise rates in 2022. The EUR holds up quite well at 1.1340. The BoJ took a similar stance, the Yen is a little lower at 113.50.
After yesterday it is clear that even if Central Banks like the Fed are looking to act on high inflation, they are not willing to preempt it but only react to it – that implies they will remain behind the curve and inflation at least one of the key investment themes in 2022. Equities and commodities and real estate should overall perform well. The Bubble stocks of this year need to be treated carefully. If a stock has risen by 100% this year, it is unlikely to be driven by the question of inflation being 2 or 3 %
Stocks started the day strong only for growth stocks to turn sharply lower. The Nasdaq lost 2.47% and the big tech stocks lost significantly. Tesla and Nvidia closed 6.8% lower. It is a bit curious that the market move seems to be a day delayed but let’s remember that the market is always right.
Gold and Silver gained to trade at 1805 and 22.45, near their technical resistance levels at 1810 and 22.50. If we break these levels, 1835 and 23 would be in scope.
The USD Index fell below 96 to trade at 95.91.
The U.S. put restrictions on dozens of Chinese companies
Goldman Sachs sees global oil demand peaking in 2022/23 on travel, transport and infrastructure investments.
Key events today will be the German Producer Prices at 8:00, the German IFO, EU Inflation at 11.
Going into next week the holidays will kick off, often markets wither calm down significantly or are very nervous due to lower liquidity and fewer participants.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.