Morning Brew September 27 2022
Senior Relationship Manager
Summary: Consolidation day
Yesterday was a bit of a consolidation day with wild swings but no great direction. The S&P 500 lost 37 points, or 1 %, to end at 3,656 points, the Nasdaq 65 points, or 0.60%, to 10,803 and the Dow fell 319. points, or 1 to 29,271. The Dow is trading on support.
The big positive outlier were casino stocks as Macau is opening to Chinese tours from November,
Fed speakers yesterday reiterated the focus on inflation rather than market sentiment, causing yields to rise to 3.9%, the USD Index remained fairly stable at 113.50 and Gold as well as Silver are trading nervously around the 18.50 and 1630.
EURUSD is at 0.9650 and GBPUSD rose to 1.0850 while the JPY fell to 144.4 against the USD. The Bank of England stated it would not hesitate to change interest rates and was monitoring markets "very closely",
Volatility: the Vix rose to 32.3, implied vol of a 1 month ATM Option rose to 13.2% and that in GBP to +20% and XAG above 30%.
The December Bund Contract fell to below 138.
Nord Stream 2 is apparently leaking near the island of Bornholm and heavy fighting is reported from Ukraine.
Durable goods orders we well as any new government measures to cushion against inflation and energy costs are likely to dominate the market, we are also approaching the Chinese Party convention that could prove significant.
Trade carefully and adjust positions to the higher volatility!
Tuesday, Sep 27
US: Durable Goods Orders (Aug)
US: New Home Sales (Aug)
US: Conference Board Consumer Confidence (Sep)
US: 5-year Note Auction (USD44 billion)
China: Industrial Profits (Aug)
Eurozone: ECB M3 Annual Growth Rate (Aug)
Wednesday, Sep 28
US: MBA Mortgage Applications (weekly)
US: Advance Goods Trade Balance (Aug)
US: Wholesale Inventories (Aug)
US: Pending Home Sales (Aug)
US: 2-year FRN Auction (USD22 billion)
US: 7-year Note Auction
Japan: BoJ Monetary Policy Meeting Minutes (July 20-21)
France: Consumer Confidence (Sep)
Italy: Consumer Confidence (Sep)
Italy: Manufacturing Sentiment (Sep)
Italy: Economic Sentiment (Sep)
Thursday, Sep 29
US: Jobless claims (weekly)
US: GDP (Q2, 3rd)
HK: Trade data (Aug)
UK: Mortgage Data (Aug)
Eurozone: Economic, Industrial & Services Confidence (Sep)
Germany: HICP (Sep, flash)
Spain: HICP (Sep, flash)
Friday, Sep 30
US: Personal Income & Spending (Aug)
US: PCE & Core PCE (Aug)
US: Chicago PMI (Sep)
US: U of Michigan Consumer Sentiment (Sep, final)
US: U of Michigan 5-10-year Inflation Expectations (Sep, final)
Japan: Unemployment Rate (Aug)
Japan: Industrial Production (Aug)
Japan: Retail Sales (Aug)
Japan: Housing Starts (Aug)
Japan: Consumer Confidence Index (Sep)
China: NBS Manufacturing & Non-manufacturing PMIs (Sep)
China: Caixin China Manufacturing PMI (Sep)
HK: Retail Sales (Aug)
India: RBI Policy Meeting (Sep)
UK: GDP (Q2, 2nd)
France: HICP (Sep, flash)
Germany: Unemployment (Sep)
Eurozone: HICP (Sep, flash)
Latest Market Insights
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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.