Morning Brew November 9 2022
Senior Relationship Manager
Summary: Midterms not clear markets in limbo
The US Mid terms results are out in the open and traders are looking for a clear picture, what seems certain is that the mid terms did not deliver the red wave that had been hoped for by the republicans.
Markets traded risk on yesterday and are in high limbo at the moment. Gold and Silver broke initial resistances at , the S&P tackled the 3800 to trade 3818, the Dax broke above 13.600 and the Nasdaq 100 11.000. The USD Index fell below 110 as 10 year yields fell to 4.15. EURUSD Broke above parity, USDJPY is at 145.60 and GBPUSD 1.1550.
Mover of the day was crypto where news of a struggling FTX caused a massive selloff, bitcoin fell to near 17.000 before it recovered on news that Binance announced plans to buy FTX in a bailout, currently trading 18300.
We are observing interesting technical levels in Silver and the GER40 where the 200 day moving averages are being tested. The 200 day moving average in XAGUSAD is at 21.44 and the current level 21.45. In GER40 we are trading at 13637 and the moving average is at 13608.
The next major impulse will come from either the election result or the US CPI tomorrow, if the CPI does not come higher than the feared 8%, it could cement expectations of a less hawkish fed. We are at 67% probability of a 50 BPS hike in December and 33 for 75 bps.
The move the last few days hints that traders are setting up for a year end rally – let us see if we get it.
- China's factory gate prices for October dropped for the first time since December 2020
- North Korea fired at least one ballistic missile into the sea
- Commerzbank said on Wednesday that net profit fell by 52% in the third quarter,
- Elon Musk has sold app 4 bio billion worth of Tesla shares in the last few days
- Wednesday: Japan Trade Balance, China PPI and CPI,
- Thursday: US CPI and Labor Data
- Friday; DE HICP, UK GDP, Uni of Michigan sentiment
- Wednesday: Honda Motor , Manulife Financial, Siemens Healthineers, TC Energy,
- Thursday: Deutsche Telekom, Allianz, Merck, Tokyo Electron, Engie, Becton Dickinson, AstraZeneca, Brookfield Asset Management, National Grid, TransDigm
- Friday: SoftBank Group, Cie Financiere Richemont
Latest Market Insights
Outrageous Predictions 2023: The War Economy
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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.