Morning Brew January 19 2022

Morning Brew 1 minute to read

Erik Schafhauser

Senior Relationship Manager

Summary: Nervousness rises and stocks sell off

Good Morning

Nervousness is picking up with the focus on next weeks US rate decision, rising energy costs and tension around Ukraine while Omicron continues to rage.

U.S. Treasury yields jumped to two-year highs and two-year yields breached 1% and the 10 year is near 1.9%

US shares were under pressure yesterday with the Dow losing 1.51%, the S&P 1.84%, and the Nasdaq 2.6%. Over night the pressure remains and most Indexes fall further 0.5%.

Nasdaq ends down 9.7% from Nov 19 record, close to a 10% correction for the first time since early 2021, Reuters reports that a survey by BofA showed fund managers had cut their overweight positions to their lowest levels since December 2008 and a second by Deutsche Bank showed that an overwhelming majority believed U.S. technology shares are in a bubble territory. Shares in Goldman Sachs Group fell as 8% yesterday after missing expectations, Big tech lost between 1.8% and 4%

EURUSD fell from 1.1450 to 1.1330 and GBPUSD to 1.3600. The UK releases Inflation data at 8:00 this morning, expected at the almost a decade of 5.2% and Prime Minister Boris Johnson is on the brink of facing a leadership challenge, according to reports. 1.3550 is the next decent support ahead of the big figure at 1.35.

Silver jumped by 2% yesterday, Gold did not follow and we are currently trading at 1813 and 23.50. The Russian Ruble was under pressure and stocks fell on tensions over the Ukraine. German Foreign Minister Baerbock visited Moscow yesterday and the US Secretary of State is expected un Ukraine today.

Bitcoin remains near 42000

Oil prices hit their highest since 2014 an a pipeline outage near Turkey and worries about political tensions.

Germany reports more than 100k for the first time ever, France and Italy also report numbers at record levels.

Microsoft Corp is buying "Call of Duty" maker Activision Blizzard for $68.7 billion in the biggest gaming industry deal in history

The Biden administration is reviewing Alibaba's cloud business to determine whether it poses a risk to U.S. national security, stocks lost 2.2%.

The Swiss National Bank does currently not plan to issue a digital currency.

Key Events today are the UK and German CPI at 8:00, and the Canadian one at 14:30 and earnings by Bank of America, Morgan Stanley, Procter and Gamble, Alcoa, United and US Bancorp.

Expiries
Physically Settled Futures:

CLG2 will expire 20^th January 2022 at 16:00 GMT.

ECOG2 will expire 23^th January 2022 at 10:00 GMT.

NGG2G2 will expire 27^th January 2022 at 10:00 GMT.

GCG2, MGCG2 will expire 28^th January 2022 at 16:00 GMT.

Expiring CFDs:

NATGASUSFEB22 will expire 25th January 2022 at 16:00 GMT.

INDIA50JAN22 & TAIWAN95JAN22 will expire 27th January 2022 at 02:00 GMT.

GASOLINEUSFEB22, GOLDFEB22 & HEATINGOILFEB22 will expire 27th January 2022 at 16:00 GMT.

CHINA50JAN22, HK50JAN22 & SINGAPOREJAN22 will expire 28th January 2022 at 02:00 GMT.

Outrageous Predictions 2023: The War Economy

Billionaire coalition creates trillion-dollar Manhattan Project for energy
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.
Read article
French President Macron resigns
The 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.
Read article
Gold rockets to USD 3,000 as central banks fail on inflation mandate
As 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
Read article
EU Army forces EU down path to full union
With 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.
Read article
A country agrees to ban all meat production by 2030
In 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.
Read article
UK holds UnBrexit referendum
Following a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Read article
Widespread price controls are introduced to cap official inflation
History 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.
Read article
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve asset
Sanctions 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.
Read article
USDJPY fixed to the USD at 200 as Japan overhauls financial system
Following 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.
Read article
Tax haven ban kills private equity
With 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.
Read article

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Morning Brew January 19 2022

Erik Schafhauser

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Latest Market Insights

Outrageous Predictions 2023: The War Economy

Billionaire coalition creates trillion-dollar Manhattan Project for energy

French President Macron resigns

Gold rockets to USD 3,000 as central banks fail on inflation mandate

EU Army forces EU down path to full union

A country agrees to ban all meat production by 2030

UK holds UnBrexit referendum

Widespread price controls are introduced to cap official inflation

OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve asset

USDJPY fixed to the USD at 200 as Japan overhauls financial system

Tax haven ban kills private equity

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