Morning Brew March 27 2023

Good Morning,

Markets seem to be a bit calmer today but it remains too be seen if we have seen the worst of the banking crisis. This will most likely also be the most important to watch this week.

Overall bank deposits fell in recent weeks and nervousness in the financial system was very dominant – especially in social media. Options on the GLD ETF rose to record highs and risk averseness was the dominant sentiment. Friday, CDS on banks rose strongly driving stocks lower and Gold and Siiver higher-

There are basically two things that can resolve a banking crisis, either government intervention or time so the underlying caution may go on for a while.

Lack of bad news over the weekend and news that First Citizen was purchasing a large part of silicon Valley Bank helps risk sentiment today.

2 Year Yields are on the rise,  now near 3.9%, the USD Index is back at 103.2, EURUSD is at 1.0750, GBPUSD 1.2225, USDCHF 0.9195. Gold and Silver are lower at 1970 and 23.00. Gold could be interesting this week with the large amount of call options being bought – if the price rises, there could b a so called gamma squeeze which we saw from the so called meme stocks during the pandemic. A rising price basically becomes a self-fulfilling prophecy as sellers of the options are forced to buy to hedge their exposure.

Equities are also friendly with the US 500 back near the 4000 (3992) the US tech 100 at 12820 and the GER 40 at 15122.

The week is thin on key data, focus will be on the banking crisis, month end adjustments and comments from central bankers and politicians.

Trade safely.-

Monday 27 March

• Germany IFO Business Survey (Mar)
• Germany Retail Sales (Feb)
• UK BOE Bailey speaks
• US Dallas Fed Manufacturing Activity Index (Mar)
• China Industrial Profits (Feb)

Tuesday, 28 March

• Australia Retail Sales (Feb)
• UK Bailey Testifies on SVB
• US Senate Banking Committee to hold first hearing on SVB collapse
• US Advance Goods Trade Balance (Feb)
• US Consumer Confidence (Mar)

Wednesday, 29 March

• Australia CPI (Feb)
• Bank of Thailand rate decision
• German GfK Consumer Confidence (Apr)
• UK BOE Mann speaks
• US House FSA hearing on SVB

Thursday, 30 March

• Germany CPI (Mar P)
• US Initial Jobless Claims (25-Mar)
• US GDP (Q4 T)
• US Treasury Secretary Yellen and Fed’s Barkin speak

Friday, 31 March

• Japan Jobless Rate (Feb)
• Japan Tokyo CPI (Mar)
• China PMIs (Mar)
• UK GDP (Q4 F)
• France CPI (Mar P)
• Italy CPI (Mar P)
• Eurozone CPI (Mar P)
• US PCE (Feb)
• US Univ. of Michigan Sentiment (Mar F)

Earnings on watch this week:

• Monday: BioNTech, Carnival
• Tuesday: BYD, Nongfu Spring, Micron Technology, Lululemon Athletica, Walgreens Boots Alliance
• Wednesday: Constellation Software, Cintas, Paychex
• Thursday: Kweichow Moutai, Great Wall Motor, H&M