Morning Brew November 1 2021
Senior Relationship Manager
Summary: Equities shrug off Apple and Amazon, Microsoft back in the top spot
Rates and earnings continue to dominate the markets. Equities are focusing on the strong economy and strong earnings (more than 80% of companies in the S&P500beat expectations this earnings season, more than 50% have reported) while FX is concentrating on the shifting rate expectation and the USD is gaining broadly as rate hikes seem to be coming closer.
Goldman Sachs moved their prediction for the first hike forward to mid-next year from 2023 and is now seeing 2 rate hikes in 2022.
The USD Index is trading at 94.20, 94.50 is the next key level is the 94.50. EURUSD dropped 1% on Friday and is trading at 1.155, 1.1520 is the next support if broken we would target 1.1490.
Gold and Silver are relatively strong given that both normally react strongly to shift in the rate expectations, Gold is trading near support at 1782 and Silver at 23.80. Gold needs to firmly break the 1810 and the 1835 for a significant upside potential.
Bitcoin is trading above 60k at 60700 and needs the next impulse to make new highs or break to the downside.
Apple and Amazon both came under pressure on Friday as the holiday outlook disappointed, Microsoft overtook Apple as the most valuable company again. Nevertheless all big 3 Indexes could end the day positively and over the weekend the positive sentiment prevails. The Dax Future adds 0.4% to 15730 and the US Futures app 0.2%. The Chinese PMI came stronger than expected at 50.6.
The G20 so far delivered nothing too exciting so far.
Todays Calendar is fairly empty, the UK PMI at 10:00 the one from Canada at 14:30 CET and the US at 14:45 will be watched with interest, at 04:30 tomorrow the Royal Bank of Australia will announce rates, no change is expected (99% probability)
Key Earnings this week:
Monday: Industrial & Commercial Bank, Westpac Banking
Tuesday: T-Mobile US, Mondelez International, Amgen Inc ,Pfizer, Estee Lauder, ConocoPhillips, BP PLC, KKR
Wednesday: Novo Nordisk A/S, Booking Holdings, QUALCOMM Inc , CVS Health
Thursday: Siemens Healthiners , Toyota Motor,Deutsche Post AG ,Duke Energy Corp,Square Inc, Airbnb Inc, Enel SpA, Uber Technologies, MercadoLibre, Moderna Inc , Zoetis Inc Cigna Corp, Fidelity National
Friday: Alibaba Group Holding, Enbridge Inc
Saturday: Berkshire Hathaway
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.