Morning Brew November 24 2021
Senior Relationship Manager
A busy day in the markets yesterday. Yields rose, weighing on Tech but supporting banks and value stocks, and supporting the USD. In the end the Dow Jones gained 0.5%, the S&P 500 0.17% and the Nasdaq lost 0.5% Tesla closed 4% lower.
Overnight, the US 10 year yield is trading lower at 1.6350 after 1.6850 yesterday. EURUSD is trading at 1.1245 and GBPUSD at 1.3385 with the USD Index little changed at 96.40. Gold and Silver fell significantly yesterday but stabilized at 1790 and 23.60 for now. Curiously, we saw similar moves precisely a year ago in the precious metals after the US election.
The key question seems if we will see a strong year end rally or if profit taking and corona and yield worries weigh.
Bitcoin is trading at 57k still.
Turkish Lira had a rough day yesterday losing more than 10% yesterday, USDTRY is testing the 13 level and has gained 75% year to date.
New Zealand CB raised rates again but dovish tones prevented a rise in the Kiwi.
The U.S. will release millions of barrels of oil from strategic reserves in coordination with other countries but less than the markets had hoped? So far the Oil price remains strong.
The Biden administration has invited Taiwan to its "Summit for Democracy"
Apple filed a lawsuit against Israeli cyber firm NSO for targeting Apple users.
Jamie Dimon stated he would take bets that JP Morgan outlasts the Chinese Communist Party, and the Biden administration has invited Taiwan to its "Summit for Democracy" That seems a lot of provocation.
For today, key events will be the German IFO at 10 and a mass of US data including durable goods orders, the PCE and GDP at 14:30
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.