Morning Brew November 10 2022
Senior Relationship Manager
Summary: Will Crypto Spill over? Will the CPI Save the day?
The failure of crypto exchange FTX and the news that Binance would not step in to acquire the rival caused massive ripples in crypto. Bitcoin fell to a low at 15600 and can recover to 16700 just now.
The woes of crypto spilled to overall risk sentiment and boosted the US Dollar as safe haven. The USD Index rose back to above 110 to trade at 110.23 despite falling yields (confirming it is a safety move as opposed to the normal yield seeking one)
There continue to be worries of larger spillover effects and calls for Bitcoin to drop to 10 or even 5k.
US Indexes lost sharply with the S&P 500 -2.08%, the Nasdaq -2.48% and the Dow -1.95%, the GER40 was relatively stable at 13600.
EURUSD is trading just above parity at 1.0033. GBPUSD trades at 1.14 and USDJPY at 146.14.
The US Midterms so far do not provide a very clear impulse for the markets. Most interesting seems to be a loomig showdown between Donald Trump and Ron DeSantis for the next presidential ticket.
Today, all eyes will be possible spillovers of FTX and then the US CPI at 14:30 CET. Traders and investors hoping for a year end rally will be expecting a number below 8 and a higher one would raise fears of a hawkish Fed for the December 15 Rate decision. Right now, the odds are even for 75 and 50 basis points.
Make sure to have your risk management under control, as always when everybody is maiting for a single moment, moves can be sharp.
- Casualties in the Ukraine war are estimated to be 100k each side acc. to US sources
- BoJs Kuroda said an exit from ultra-loose monetary policy will be based on increases in short-term interest rates and adjustments in the bank's balance sheet.
- Meta Platforms Inc META.O said on Wednesday it would cut more than 11,000 jobs, or 13% of its workforce
- Tesla fell more than 7% on the sales by Elon Musk
- Disney dropped 13%.
Thursday: US CPI and Labor Data
Friday; DE HICP, UK GDP, Uni of Michigan sentiment
Thursday: Deutsche Telekom, Allianz, Merck, Tokyo Electron, Engie, Becton Dickinson, AstraZeneca, Brookfield Asset Management, National Grid, TransDigm
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.