Morning Brew September 28 2022
Senior Relationship Manager
Summary: Doom and Gloom continues to drive
Risk Off continues to dominate markets with yields rising, the USD rising and Equities falling. Asian shares fell to 30 month lows and Europe and the US are under pressure as well. The Japan 225 is now trading at 26070, the US 500 at 3630 , the US Tech 100 at 11180 and the GER 40 is meandering 12000. Key Levels for the Ger 40 ate 11508 and 11323.
The USD Index rose to 115, EURUSD at 0.9555, GBPUSD at 1.0682 and USDJPY 144.70, USDCHF is nearing parity at 0.9950. Gold and Silber are trading lower at 1624 and 18.15.
There are leaks in the gas-pipelines to Europe, and it is suspected that targeted attacks are the cause.
There is little to say except that a combination of rate fears as well as rising rates along worries about the energy crisis in Europe drive fear and it is difficult to foresee the turning point. A good example is the GFK Consumer confidence at -42.5, a new record low, a new Reuters poll shows that analysts are now expecting even higher grates than previously priced in, 45 of 83 economists, predicted the fed funds rate peaking at 4.50%-4.75% or higher in Q1 2023.
A turnaround is only likely to happen when the rate expectation shifts to lower rates again and that seems not to be likely at the moment as most central banks are seen hawkish and are expected to hike in their next meeting – except for Japan, Brazil and Turkey.
Trade safely and consider options for portfolio protection if not already done.
Wednesday, Sep 28
US: MBA Mortgage Applications (weekly)
US: Advance Goods Trade Balance (Aug)
US: Wholesale Inventories (Aug)
US: Pending Home Sales (Aug)
US: 2-year FRN Auction (USD22 billion)
US: 7-year Note Auction
Japan: BoJ Monetary Policy Meeting Minutes (July 20-21)
France: Consumer Confidence (Sep)
Italy: Consumer Confidence (Sep)
Italy: Manufacturing Sentiment (Sep)
Italy: Economic Sentiment (Sep)
Thursday, Sep 29
US: Jobless claims (weekly)
US: GDP (Q2, 3rd)
HK: Trade data (Aug)
UK: Mortgage Data (Aug)
Eurozone: Economic, Industrial & Services Confidence (Sep)
Germany: HICP (Sep, flash)
Spain: HICP (Sep, flash)
Friday, Sep 30
US: Personal Income & Spending (Aug)
US: PCE & Core PCE (Aug)
US: Chicago PMI (Sep)
US: U of Michigan Consumer Sentiment (Sep, final)
US: U of Michigan 5-10-year Inflation Expectations (Sep, final)
Japan: Unemployment Rate (Aug)
Japan: Industrial Production (Aug)
Japan: Retail Sales (Aug)
Japan: Housing Starts (Aug)
Japan: Consumer Confidence Index (Sep)
China: NBS Manufacturing & Non-manufacturing PMIs (Sep)
China: Caixin China Manufacturing PMI (Sep)
HK: Retail Sales (Aug)
India: RBI Policy Meeting (Sep)
UK: GDP (Q2, 2nd)
France: HICP (Sep, flash)
Germany: Unemployment (Sep)
Eurozone: HICP (Sep, flash)
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.