Senior Relationship Manager
Summary: Calm start to the year but volatility looms
Good morning,
Happy New year to all of you
Equities had a strong year : the S&P 500 gained 27% and the Nasdaq 100 41% . Biontech 205%, Nvidia 140% but there were not only winners- Cathie Woods ARK Innovation lost 15.3%
Basically no analysts expect a negative year for the S&P 500 but trust in growth and trust in central banks despite the highest valuation since 1999.
We are currently near the high in most large indexes and early year sentiment will show if we break towards new all-time highs.
We are looking at a vey interesting year coming up with a number of possible themes,
Neither the Vix at 17.22 nor FX volatility (EUR 1 Month at 5.3%) seem to reflect that.
The USD Index trades below 96 in years open with EURUSD at 1.1345 and GBPUSD at 1.3500, both mid- range
Gold is once again near the resistance at 1835, currently trading at 1825 and silver 23.50 while currently trading at 23.15
The Turkish Lira hits the new year on the wrong foot after it just suffered the worst year in the last 20, losing 44% in value.
Bitcoin starts the new year positively with 1.5% gains, not 47.000
European Natural Gas has lost almost 60% in the last week of the year on warm weather and US Deliveries, Electricity has fallen from 400 to 235 Euro per Megawatt. With colder weather coming up and threats towards Russia, not least the shutdown of power plants in Germany, it will be interesting to see how that develops.
The Swiss National Bank spent CHF 2.8 billion on foreign currencies during the third quarter, less than expected, the Franc is at 1.0370 against the EUR.
Singapore`s economy grew by 7.2%, the fastest in 10 years.
Tesla exceeds expectations and delivers 308k vehicles in the last quarter of the year, the expectation was 263.
China Evergrande shares have been suspended from trading, pending a news release.
U.S. President Joe Biden on Sunday told Ukraine's President the United States would "respond decisively" if Russia further invades Ukraine.
Key economic news today are a load of PMI, Sweden at 8:30, France at 9, Germany 9:55, EU at 10 and the US at 15:45.
Trade safely
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach