Morning Brew November 5 2021
Senior Relationship Manager
Summary: Central Banks still can surprise
The BoE surprised markets yesterday with no action – a hike was priced in with 60% probability and the GBP lost more than 1.5 % against the USD to trade below 1.35. Money markets had also priced in a second hike before year-end now this to February. The BoEs Governor Andrew Bailey stated the Bank had never indicated it would act at a particular meeting.
In a further central bank surprise, the Czech central bank hiked rates by 1.25% only a day after the Polish central bank was more hawkish than expected.
Today the Non farm Payroll will be closely watched, as Jerome Powell is linking his policy strongly to the labor market. The expectation is at 450k, the unemployment rate at 4.7% and average earnings 4.9%.
Dax is trading at the top of the broader range again and needs to break above 16070 for new upside potential.The Vix Index found some support in the 15 area, currently at 15.44
Gold and Silver could recover quite strongly yesterday to 1797 and 23.89, this is despite a rising USD Index, currently 94.33. Bitcoin is lacking direction at 62.300. A break to the upside would require new highs above 67..250, support is in the 60.000 area.
Nvidia could gain more than 12% after a positive analyst comment triggered a buying spree. Wells Fargo raised the price target to 320. Qualcomm shares also jumped more than 12%
Moderna dropped 18% on delivery shortfalls.
Kaisa Group Holdings Ltd and three of its units had their shares suspended from trading on Friday, a day after an affiliate missed a payment to onshore investors as China's snowballing property debt crisis
Honda cuts profit outlook by 15% due to the chip shortage, Nintendo also stated the global chip shortage was forcing the company to reduce the sales outlook
Todays agenda is dominated by the US labor data at 13:30 and earnings by Alibaba and Enbridge Inc, over the weekend we are expecting Chinese Trade data as well as Berkshire Hathaway earnings, I will travel Monday and return Tuesday.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- 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.