Morning Brew September 15 2021
Senior Relationship Manager
Summary: US CPI inconclusive - Quadruple Witching Friday coming up
The US CPI is out of the way – pretty much in line with expectations and the Apple event yesterday delivered the expected but failed to excite, shares fall 1%.
The CPI came a little lower than expected and drove the 10 year yield lower to currently 1.28 but this failed to cause any further USD weakness nor significantly support equities.
The USD Index briefly traded lower to 92.31 but recovered to 92.64 again, EURUSD is trading at 1.1806 and GBPUSD at 1.3820 after the UK CPI came higher than expected, the annualized number was 3.2% vs 2.9% expected.
Gold could rise above the 1800 USD level while silver followed more the industrial metals and fell slightly to 23.70. Bitcoin rises to near 47k, Ethereum to 3400.
China's factory and retail sectors faltered in August with Industrial Production rising only 5.3% in August and consumer spending only 2.5%. due to fresh coronavirus outbreaks and supply disruptions, expectations were 5.8% and 7%. That does not bode well for the US Industrial Production later today. In China the situation around Evergrande continues to loom over the property market.
Electricity prices in Europe rise to all-time highs the German Baseload Yearly contract rose to 101 yesterday vs a level of 47.8 at the end of 2020.
ON, Swiss IPO of the year is looking for a valuation of USD 6 Billion
Amazon has increased its average starting wage to more than $18 an hour and plans to hire another 125,000 warehouse and transportation workers.
We are looking at the quadruple witching Friday and please remember it is the last time the Dax Future expires with 30 shares the underlying, from Monday it will be 40. Into to the expiry there could be additional volatility.
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.