Morning Brew December 22021
Senior Relationship Manager
Summary: Risk sentiment if fighting back
Please find the trading schedule for Christmas and the New Year here
Markets saw a strong reversal yesterday, proving the year will remain interesting. Indexes soared ad closed up 1.6% in case of the Dow, 1.8 the S&P 500 and the Nasdaq 2.4%. Megatech rose with Tesla +4.3%, Amazon +2%, Nvidia 4.9%. Apple gained 2% but needs a few good days this year to breach the 3 trio USD in market cap. Nike gained 6% on strong results. After the rise yesterday, the Dax future is trading spot on the 200d Moving average and has the day to decide. The S&P 500 closed above initial resistance at 4630 opening the chance for a year end rally.
US 10 Year yield rose to almost 1.5% yesterday before falling to 1.46, the German 30 yield turned positive again yesterday to reach 0.069. The 200d MA is 0.19%
The USD Index gained a little ground yesterday to 96.50, the EURUSD falls to 1.1270 GBPUS trades at 1.3250, gold 1787 and silver 22.45. The Turkish Lira stabilized near 12 against the USD.
Japan plans the largest Budget in history for fiscal 2022, USDJPY can gain to 114.
Bitcoin is approaching the 50.000 again, now trading just at the key initial resistance at the trendline from November to now. If it makes the break, 41k and 54k would be the next levels to watch.
In Europe, energy prices continue to rise , the March 2022 Baseload closed above 400 per Megawatt, Natural Gas at a high.
It seems overall the market sentiment into year end is quite positive as long there are no really striking bad news. There is certainly enough potential to scare off investors starting with Omicron, the looming conflict n Ukraine, US Politics and not least inflation.
Events today are UK GDP at 8:00 CET this morning and the US GDP, the Final PCE at 14:30 and Consumer Confidence at 16:00. Tomorrow German Import Prices and the Spanish GDP are on the agenda.
I will be off from this afternoon until the 29th of December and wish you all great holidays and safe travels.
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.