Morning Brew July 27 2021
Senior Relationship Manager
Summary: Risk off again - weak Q3 except USD
This is my last morning brew for the next three weeks as I will be travelling in Asia. Please use our global Markets call to stay up to date: https://www.home.saxo/insights/news-and-research/podcast
Equities traded lower yesterday, mainly driven by better than expected employment data which reiterates the “higher rates for longer” theme and raises the fear of secondary effects.
Germanys inflation rose to double digits at the same time as the government announced a ceiling on gas costs that will cost €200 bio.
UK just reported better than expected GDP at 4.4% vs an expectation of 2.9%
Russian will hold a ceremony to annex the four regions of Ukraine
So far this quarter the USD Index has gained 7.6%, GBPUSD has lost 11.5% and oil and Gold has lost 22.2% and 8.6%.
The US 500 is down 3.8% in Q3 and 22.6 YTD, the Nasdaq 2.6% and 31% and the Dax 6.3% and 34%.
Today watch out for the US PMI and the EU Inflation data.
Trade carefully and have your risk firm in control via stops, options or a controlled long term strategy.
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
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.