Morning Brew August 24 2022
Senior Relationship Manager
Risk sentiment remains low but the selloff lost steam. Disappointing Purchasing Manager Indexes raised hopes of dovish central banks. Indexes closed slightly lower and are currently near yesterday’s closing levels.
The USD Index retreated to below 109 to trade at 108.66, EURUSD remains below parity at 0.9950, Cable 1.1815 and EURCHF 0.96. Gold and Silver could stabilize to 1746 and 19.10 Bitcoin is meandering around 21000. 1 month ATM Vol for EURUSD remains elevated near 11%.
We had a client event in Zurich yesterday and our CIO Steen reiterated his belief t hat we will see a rise in oil prices. As Gas continues to soar, there will be a rush to substitute gas with oil wherever possible. Gas prices have risen almost 40% in August so far and nearly 300% this year.
The key view is that the tangible assets will outperform intangible ones.
The Kansas City Federal Reserve annual monetary policy conference in Jackson Hole is coming into focus and will likely dominate the rest of the week, The Key Event will be Powell speaking on Friday but expect comments form other central bankers to hit the wires at all times.
The Fight against inflation remains the key matter.
While the economic agenda is thin today, three important tech companies report and Peter covered that in a note: Nvidia, Salesforce, and Snowflake report earnings tomorrow providing more clarity on technology spending and the outlook for the overall technology sector. Nvidia is expected to report a big drop in its growth rate due to weakening demand in gaming and more importantly crypto mining. Salesforce is expected to show solid growth and here investors will focus on the Slack integration and what it means for growth ahead. Snowflake's growth rate is coming down and thus investors will demand improvements in the operating income. Pease find the full comment here
Today: US Durable Goods Orders
Thursday: German GDP, IFO, US GDP,
Friday: US GDP, Powell Speaks at Jackson Hole
Today: NVIDIA, Salesforce, , Snowflake
Thursday: VMware Inc
Friday: Industrial Bank
Physically Settled Futures:
Cocoa (CCU2) will expire 24th Aug at 15:00 GMT
Robusta Coffee (RCU2) will expire 24th Aug at 9:00 GMT
CNX Nifty Index (INQ2) will expire 25th Aug at 10:15 GMT
NATGASUSSEP22 will expire 25th Aug at 15:00 GMT
INDIA50AUG22 will expire 25th Aug at 2:00 GMT
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.