Morning Brew March 30 2022
Senior Relationship Manager
Summary: Too Much Too Fast Optimism into Quarter End may be exaggerated
We saw a massive rise in stocks yesterday in what Reuters calls 'Mystifying' U.S. stock rally. The Dow gained 0.27%, the S&P 500 0.71%, and the Nasdaq 1.31% and the S&P 500 is up 11% since March 8, its biggest 15-day percentage gain since June 2020. Reasons are still large inflows, short coverings after the Ukraine but also Quarter end purchases. Apple gains 11 days in a row, the longest streak since 2003 and adds 400 bio in Market cap.
Oil, Gold and Silver lost yesterday but could recover off the lows. UKOILMAY trades as low as 104.90 to recover to 111.55.
Silver broke below 24 to recover 85 cents and Gold hit 1890. Current Levels are 24.85 and 1924.
EURUSD gained 200 pips to trade at 1.1108 and GBPUSD 1.3110, USDJPY fell to 121.99, Bitcoin is holding above the 45k resistance, now 47500.
These are exactly the kind of moves we were warning about.
Uraine reacted with skepticism to Russia's promise to scale down military operations around Kyiv ,
Russia has offered to buy back dollar bonds maturing next week in roubles and the dispute between Russia and the G7 on the payment terms for Russian Energy seem to escalate. The German IFO warns of more companies than ever looking to raise prices and are expecting inflation so exceed 5% on an annual basis for the first time since 1981.
Today the market will be driven by the proceedings in Ukraine and negotiations between the G7 and Russia, the Suisse KOF at 9:00 and the EU Economic sentiment at 11, the German CPI at 14: 00 and last but not least the US PCE at 14:30.
Continue to be careful in nervous markets.
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.