Morning Brew January 3 2022
Senior Relationship Manager
Summary: Calm start to the year but volatility looms
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,
- Green transition and ESG
- Trade frictions
- Supply Chain disruptions
- Conflicts with Nato, Russia and China on Ukraine and or Taiwan.
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.
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.