Morning Brew February 21 2022
Senior Relationship Manager
Summary: Risk On Sentiment after Ukraine Summit Proposal
Please remember that today is a US Market holiday.
Biden and Putin have agreed on a summit on Ukraine, raising hopes of a peaceful resolution, index futures gain, oil and precious metals retreat. The Dax Future is indicated 1% higher, the US Indexes as well. Emmanuel Macron had pitched a summit to Biden and Putin on the "security and strategic stability in Europe." The White House said in a statement that Biden had accepted the meeting "in principle" but only "if an invasion hasn't happened." (Reuters)
Gold and Silver fall to 1888 and 23.70, EURUSD rises to 1.1370 and GBPUSD to 1.3630. Bitcoin remains under pressure just below 40k.
Credit Suisse is under pressure after newspapers report illegal accounts at the bank. Currently shares are indicated app 2% lower.
Credit Suisse Analyst Zoltan Pozsar made Headlines with a note calling for the Fed to cause a crash of asset prices to halt inflation: Maybe the Fed should hike 50 bps in March, put an end to press conferences, and sell $50 billion of 10-year notes the next day… Maybe FOMC members talk too much. They don’t keep the market guessing. They suppress volatility… the capitalist market response to low interest rates and QE through sky-high equity valuations, house prices, and the rise of Bitcoin probably does the same: if the young feeling Bitcoin-rich are less inclined to work and the old feeling mass affluent are eager to retire early, labor force participation drops to the detriment of real growth prospects.
About almost 80% of the S&P 500 companies that have already reported this season have exceeded expectations.
It will be interesting what will drive the markets this week, if Ukraine fears tune down, Inflation and monetary policy should gain traction again, also reopenings from corona restrictions can be significant.
Key Events this Week:
Monday: International PMIs
Tuesday: German IFO, US PMI
Wednesday: EU HICP
Thursday: US GDP New Home Sales
Friday: German GDP, EU Consumer Confidence, Durable Goods Orders
Tuesday: HSBC, Home Depot
Wednesday: Rio Tinto, Iberdrola, Stellantis
Thursday: Safran, Anheuser Bush Inbev, Axa, Deutsche Telekom, Royal Bank of Canada. Alibaba, Moderna, Newmont Mining
Saturday: Berkershire Hathaway.
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.