Morning Brew April 1 2022
Senior Relationship Manager
Summary: So far 2022 has been full of surprises we`ll see what Q2 brings
Welcome to April and the second quarter of 2022.
Historically, April is a good months for Equities, since 2006 the S&P gained in April 15 of o 16 times before the classic “sell in May” and go away” kicks in.
Markets lost confidence yesterday as negotiations between the G7 and Russia on the delivery terms for energy products – as of now it looks like Europe may have to go without for a while. Indexes lost app 1.5% yesterday, the USD Index rose to above 98 again and is currently at 98,47 as EURUSD lost sharply to 1.1050 on news Putin ordered the acceptance of Ruble only. Gold and Silver rose to currently 1937 and 24.80, Gold needs to break the 1950 for further potential.
Oil fell on a huge US release of strategic reserves and Bitcoin fell below 45k on regulatory fears.
Negations between Ukraine and Russia are set to continue today and will be closely monitored along with the Non Farm payroll at 14:30 today. Expectation for the nonfarm Payroll is 490k and a jobless rate of 3,7%. A “better” number would be worrisome as it would indicate higher wage inflation.
The Chinese PMI came at a disappointing 48.1 and Ford as well as GM are forced to halt production next week on lack of parts.
According to Reuters, an options trade by a JPM Fund added weight to risk sentiment with a sale of about 44,000 June calls and the purchase of an identical number of June put spreads, that would break even if the S&P 500 fell more than 5% .
Today we are expecting a huge amount of economic data; The Swiss CPI at 8:30, International PMI
9:00 France and Turkey
10: 00 EU and Greece
EU HICP at 11 an the US ISM Prices paid at 16:00 CET.
We are up for an interesting month, stay on your toes.
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.