Morning Brew July 27 2021
Senior Relationship Manager
Summary: Risk off again - weak Q3 except USD
This is my last morning brew for the next three weeks as I will be travelling in Asia. Please use our global Markets call to stay up to date: https://www.home.saxo/insights/news-and-research/podcast
Equities traded lower yesterday, mainly driven by better than expected employment data which reiterates the “higher rates for longer” theme and raises the fear of secondary effects.
Germanys inflation rose to double digits at the same time as the government announced a ceiling on gas costs that will cost €200 bio.
UK just reported better than expected GDP at 4.4% vs an expectation of 2.9%
Russian will hold a ceremony to annex the four regions of Ukraine
So far this quarter the USD Index has gained 7.6%, GBPUSD has lost 11.5% and oil and Gold has lost 22.2% and 8.6%.
The US 500 is down 3.8% in Q3 and 22.6 YTD, the Nasdaq 2.6% and 31% and the Dax 6.3% and 34%.
Today watch out for the US PMI and the EU Inflation data.
Trade carefully and have your risk firm in control via stops, options or a controlled long term strategy.
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
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.