Video: Risk picks up, oil erases 2022 gains, Campbell Soup boils up, General Mills rises
Summary: Risk picked up in markets with Putin warning the threat of nuclear war is rising, yet he stopped short of pledging not to use atomic weapons. Traders are also unnerved by growing recessionary fears; and next week’s US CPI read ahead of the Fed's interest rate hike. Campbell Soup boils up on stronger than expected earnings, gold and gold stocks bound higher as they typically do amid recessionary concerns. Gold stock Evolution Mining appears in an uptrend. Watch our six minute video.
December 8 2022
What you need to know now about markets
Risk picked up in markets with Putin warning the threat of nuclear war is rising, yet he stopped short of pledging not to use atomic weapons. Traders are also unnerved by growing recessionary fears; and next week’s US CPI read. Will it show CPI fell to 7.3% down from 7.7% YoY? And will the Fed hike by 0.5% on December 15 instead of 0.75%? Uncertainty pushed up bond yields, and pressured equities lower with the S&P500 falling for the fifth day. Oil fell for fourth day to $72,01 erasing all of 2022s gains. Focus is on uranium stocks and the URA ETF, as well as metals with iron ore, copper, and gold higher. Agriculture commodities and equities are back in the limelight, with Putin’s threats pushing wheat prices up 3.1%.The major indices, the Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) skid again. Campbell Soup boils up
S&P500 fell for the fifth session falling below its 100 day moving average again, but managing to close above it as a sign that sell pressure could be easing, as markets await Friday’s producer inflation. Nevertheless, the S&P500 has now lost about 3.6% over five days of selling with the next level of support at perhaps around 3900 still insight. The Nasdaq 100 fell 0.5% on Wednesday, taking its four-day lost to almost 4.6%.
Outperforming stocks on watch - Campbell Soup and wheat giant General Mills
Generally, there are always outperformers in markets, even when times are tough. A hot scoop for you is that that Campbell Soup shares popped 6% higher on Wednesday, gapping up to $56.18 after the company reported stronger quarterly earnings than expected. Its shares are now 15% off their record high that it hit in 2016. That year, the Syrian war escalated, Trump was elected, and there was a string of terror attacks around the world. And amid war talks now escalating this year Campbell Soup shares entered an uptrend, gaining 45% from last November. If recessionary talks and Russia war concerns linger, you might expect this company to continue to benefit. It has free cash flow, and consistent rising profit growth. Another stock that did well overnight was General Mills, rising 2% to an all-time high, $87.50 after the wheat price jumped 3% overnight on supply concerns returning. We mentioned General Mills as a company to watch in our Five Stocks to Watch video. Despite the wheat price falling 19% from September after supply returned to the market, General Mills has been able to grow its quarterly profit and free cash flows.
Gold stocks charge, Australia’s share market holds six month highs
The Australian benchmark index, the ASX200 (ASXSP200.1) opened 0.3% on Thursday, but holds six month high territory. As for the best performers in the ASX200, clean metal small cap miner Chalice (CHN) rose 12% after drilling confirmed it found new sulphide minerals in Western Australia. CHN would typically be classed as higher risk company as its doesn’t earn income, which is why its share are suffering while interest rates are rising. CHN shares are down 35% YTD. Gold stocks are looking interesting as recessionary calls get louder- gold generally outperforms in a recession. Evolution Mining (EVN) shares are up 5%, continuing to rally it in uptrend and have gained 61%, moving EVN shares up off their 5-year low. In the larger end of town, BHP shares broke higher but profit taking turned its break higher into loss. BHP shares are up 26% this year, with the major miner, along with RIO and Fortescue doing well of late after the iron ore (SCOA) price picked up 7% this month, with China easing restrictions. On the downside, engineering company Downer (DOW) plunged 31% to $3.31, which is its lowest level since April 2020 after Downer downgrading its outlook and flagging irregularities in utilities business.
In FX, the AUDUSD slides on Australia exports falling in October, and imports sinking; supporting the RBA remaining dovish
Australia’s trade surplus fell in October, but less than expected. This reflects that Australia is earning less income as demand for commodities has fallen from its peak, ahead peak energy season and China easing restrictions. The Australian surplus fell from $12.4 billion to $12.2 billion (when the market expected the surplus to fall to $12 billion flat). In October, exports surprisingly fell 1%, vs market expectations they'd rise 1%, while imports fell 1%. This supports the RBA keeping rates low, as such after the data was released, the AUDUSD immediately fell.
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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.
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