Morning Brew March 31 2022
Senior Relationship Manager
Overly Complacent? Nvidia pulls markets higher exaggerate
Welcome to the last trading day of the first Quarter and the finale of the Japanese fiscal year.
Equities and Risk on sentiment wavered yesterday and indexes fell. The lack of any real progress in Ukraine disappoints and there was little basis for optimism. Inflation is rising and calling for action. The Dow fell 0.19%, the S&P 500 0.63%, and the Nasdaq 1.21%, the USD Index fell to below 98, yields fall 20 bps from Mondays high to trade at 2.35 (10 Year) EURUSD is trading at 1.1167 and GBPUSD 1.3130.
Bitcoin is holding at 47k and Ethereum at 3390 Bitcoin has recovered 42% off the quarters low. Gold and silver receded to 1923 and 24.60.
Over the last few days, risky assets saw massive inflows of funds and made up for a decent part of the quarters losses, it will ne interesting to see how today plays out. Goldman Sachs continues to expect massive inflows to the equity markets as there is USD 15 Trillion in cash on the sidelines.
The US is considering releasing up to 180 million barrels of oil over several months driving oil lower to 108 in the UK line.
European Goverments are advising their citizens to reduce energy consumption to get ready for a suspension of Russian energy deliveries.
Chinese PMI contracted in March for the first time 2020, adding to the urgency for more policy intervention to stabilize the economy.
Negotiations in Ukraine are set to continue tomorrow so economic data and unscheduled news from Urkaine should be the key market movers along with quarter end moves.
Economic data today is the Swiss Retail Sales at 8:30, the Official Reserves at 9:00, German and EU Unemployment at 9:55 and 11:00 and US Employment and PCE data at 14:30. Lastly he Chicago PMI at 15:45.
Physically Settled Futures:
HOJ2, RBJ2 will expire 31st March at 15:00 GMT.
LEJ2 will expire 1st April at 15:00 GMT
WK2 will expire 6th April at 09:00 GMT
LIVECATTLEAPR22, OILUKMAY22 will expire 31st March at 15:00 GMT.
GASOILUKAPR22 will expire 8th April at 15:00 GMT
Sharp moves remain likely at any point in time, remain on your toes or adjust your positions.
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.