Morning Brew February 18 2022
Senior Relationship Manager
Summary: Worries on Ukraine persist
Ukraine remains the key focus still with contradicting signals. Russia states it is withdrawing troops from the area but is seems difficult to confirm while tensions between separatists and Kiyv are rising, Russia says it is deeply concerned. Acc to Reuters there have been 60 ceasefire violations with one injured.
The unclear developments weighed on Risk sentiment yesterday and I would expect them to remain the key driver today as well. Just now, Indexes are rising again on reports of Russian units returning to base.
The Dow lost 1.8% yesterday, the S&P 500 2.1%, and the Nasdaq 2.9%, over night, Futures are currently up 0.6%.
Gold and Silver remain strong, Gold touched the 1900 for the first time in 8 months and Silver is approaching the 24,00. Watch 1915 in gold for the next step on of the move to 2000. The USD Index is fairly calm below the 96 level and 10 year yields at 2.00. EURUSD is trading at 1.1380 and GBPUSD rose above 1.36 again. The UK Retail sales could be important here.
Bitcoin fell to near 40.000 again.
St. Louis Fed president James Bullard was rather hawkish yesterday stating that it would be warranted to raise rates by a full percentage point over the next three meetings. That implies a hike by 50 basis points in the March meeting and the two following ones. Loretta Mester made similar remarks.
Nvidia fell 7.5% with worries on the crypto exposure and disappointing margins being cited as the reasons. Albemarle fell almost 20% on a disappointing outlook and Doordash gained almost 11%.
G20 Finance Ministers are meeting today with limited expectations, the assumption is that they will state inflation and global tensions are ta threat to global recovery.
Key Data coming up:
UK Retail Sales, Eurozone Consumer Confidence
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.