Morning Brew December 21 2021
Senior Relationship Manager
Summary: Winter Solstice - Try changes course
Markets are on the rise again, equity futures are up app 1%, 10 year yields rise to 1.42 , EURUSD and GBPUSD rise to 1.1280 and 1.3215, Bitcoin rises to above 48000 gold and Silver make up most of yesterdays losses to trade at 1789 and 22.36.
Most interesting yesterday was an announcement by Turkish president Erdogan to make up for losses in lira deposits if the lira declines exceed interest rates promised by banks. The Lira rises by 40% on the measure. Yesterdays high was 18.24 todays low is 10.68. It will be interesting to understand the financing.
Overall markets are not sure of their direction between Lockdown worries and optimism.
Megatech remained under pressure, Tesla closed below 900 for the first time in since October, Apple lost 0.7%, Meta 2.5% and Microsoft 1.2%.
The Dax Future seems again drawn to the 200d MA that lies at 15503.
GBPUSD is trading above support at 1.3170 and the leaders of both countries are under severe political pressure that could be an interesting setup.
European natural gas prices jumped more than 8% yesterday, nearing an all-time high, with Russian deliveries to Germany through the Yamal-Europe pipeline at very low levels. This will have an impact on inflation and also drive secondary prices ie for fertilizer. Also Electricity prices continue to rise. Track and trade the European Energy Exchange Futures by looking for EEX in Saxo Trader.
The economic agenda is winding down for the year end, today we are expecting the GFK from Germany at 8:00 , the US current account and Canadian retail sales at 14:30 and the EU consumer confidence at 16:00.
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.