Morning Brew November 4 2021
Senior Relationship Manager
Summary: Taper without Tantrum - Markets calm
The FOMC delivered a dovish taper yesterday – fairly in line with our expectation. Tapering will start end of the month, no rate hikes are in sight and inflation is transitory and largely caused by supply constraints. Equities rose, Dax as well as the Nasdaq100 are trading above 16000. The Non-Farm Payroll will be closely watched as Powell linked the speed of tapering to the employment situation, albeit not fully transparently. The feared “taper tantrum” was avoided for now. Christine Lagarde came on the wires ahead of the FOMC reaffirming the dovish ECB stance, stating a 2022 hike was unlikely.
Gold and Silver came under pressure before the FOMC yesterday but could recover some of the losses after the rate decision, currently trading at 1772 and 23.45.
GBPUSD is trading at 1.3663, the BoE will announce rates at 13:00. A hike of 0.25% is expected with 62% probability but if the BoE follows the Fed and the ECB there could be a surprise. Poland raised rates yesterday, to fight inflation.
Ether hit a new record yesterday.
Crude oil came under pressure on a triple dose of price negative news on yesterday says Ole Hansen: The EIA report showed higher stocks and rising production, Iran nuclear talks resume on Nov 29 and the Fed started to roll back its stimulus support.
Credit Suisse announced a sharp decline in 3rd quarter income and is expecting a Q4 loss due 1.6 bio in impairments.
Toyota Motor Corp reported a 48% rise in operating profit and raised its earnings outlook for the year on a weak yen.
Poland Raises Rates More Than Expected to Temper Inflation.
Economic Data today:
EU PMIs in the morning, the Norwegian Rate decision at 10:00 the BoE at 13:00 and US Employment data.
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
Quarterly Outlook Q3 2022: The Runaway Train
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.