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    • Nov 4, 2022
    • 5 min read

China re-open rumors ag, CNH / BoE +75bp / RBA peak infl soon / SPX 3600-3900 range / NFP next!

  • China Is Preparing a Plan to End Covid Flight Suspensions – Bloomberg >>> this looks like the weekly re-opening rumours from here on, although with a little more to it than last week…. it does feel as if they won’t be able to keep everything close for much longer, just a guess.. this will have a very decent reaction in markets over time, when confirmed

  • Fed swaps price in peak policy rate of 5.2% in May-June 2023, interest payments on the $31 trillion US debt is about to exceed what is spent on the Defence Budget..

  • Seven BoE Officials vote for 75bp hike; 1 for 50 and 1 for 25 – BoE’s Bailey manage to deliver 75bps and then gave a dovish statement, which pushed GBP lower and actually lifted Gilts yields, not exactly wise words from Andrew there

  • RBA ‘’inflation to peak around the turn of the year’’, headline inflation to be 3.5% by the end of 2024

  • APPL is now worth (or you could 'still worth') as much as Meta, AMZN and Google COMBINED

  • It is necessary to seek negotiations between Putin and Zelenskyi, - said the new head of the Italian Foreign Ministry, Antonio Tajani, on the air on Canale 5. "The goal should be an agreement, a meeting between Putin and Zelenskyi

  • China has set up a “reopening committee” to create a plan for China to roll back its strict pandemic rules – more to come not doubt, as they (no.-one) can issue more debt to keep folks at home!

  • Canada to impose 2% tax on stock buybacks as of 1st Jan 2024 – so everyone is going to do it in 2023—

  • ECB's President Lagarde: We must not, and will not, let high inflation become entrenched. If we were to see, for example, inflation becoming more persistent and expectations being at risk of de-anchoring, we would need to take additional actions

 
Markets :

  • UST 1year yields are now the highest since 2001, peak? re-reading and listening to Powell, what matters is what was written, not what he mumbled during presser? if so, we are getting near a peak..and a pause

  • WTI call option open interest vs put open interest, huge upside buying, Brent March $200 calls traded more than 7k times on Thursday: BBG (Iran, Saudi Arabia)

  • Equity markets: broad underperforming from QQQ and mega caps still, SPX500 range 3600-3900 still in place, key day with NFP now, note that we will get another NFP in Dec before the Dec FOMC, 2 soft numbers and 50bps and dovish and equity markets might actually hold, although big divergence between high growth and real economy still, which is welcome. Chinese stocks up 10-15%, way oversold last many months >>>> The volatility in 2022 is historic.The last time there were this many months up or down 7.5% was ... 1937! …we could yet get a ‘China pivot on covid policy’ and/or even some sort of FED pivot in Dec, and we have med-terms

  • Bond markets similar picture, all about data, NFP and med-terms eventually, 10’s UST yields must hold below 4.35 cycle highs recently, or else risk will roll over again

  • USDollar will follow bonds, although a China re-opening will push USDCNH down and take the rest with it, to a certain extent

  • VIX down and SPX500 down yesterday, shows market long lots of downsides (not surprising) / Thread

  • Happy Friday and wishing you a great weekend/team PVM

 

https://www.ibtimes.com/china-stocks-notch-trillion-dollar-gain-hopes-reopening-better-us-ties-3632137 China Stocks Notch Trillion-dollar Gain On Hopes Of Reopening, Better U.S. Ties



https://twitter.com/SteveMiran/status/1588270446591414272 Vix down AND stocks down today. That means the market has lots of downside put exposure already -- gamma kicked in and increased their delta and folks had to cut exposure, i.e. sell their protection structures, to prevent their exposure from increasing beyond their risk limits


https://twitter.com/carlquintanilla/status/1588224678115549187 $9 Million Option Trade Targets 3.75% 10-Year Yield in Two Weeks – UST’s


https://www.home.saxo/content/articles/forex/us-dollar-still-no-signs-of-peaking-04112022 Summary: With the Fed turning markedly more hawkish this week, along with other key central banks such as Bank of England and Norges Bank adding to the list of central banks taking dovish paths, there is potentially scope for another leg higher in the US dollar. A short-term peak in the greenback will only be seen when markets fully price in the Fed path, while a turnaround will have to wait for a shift in US economic data trends. Still, even mounting recession concerns will drive safe-haven flows to US assets.


https://www.channel4.com/news/economy-was-potentially-hours-away-from-meltdown-says-bank-of-england-governor Economy was potentially hours away from meltdown, says Bank of England governor

Why was BoE still doing QE months ago when it was evident inflation was heading (much) higher… no accountability, they got it wrong, and now everyone pays the price

Mark Carney tells @BBCr4today that Brexit is a key reason for interest rates having to go up. Says 2016 vote devalued sterling, hit growth and productivity + adds he was right in his warnings. https://twitter.com/paulwaugh/status/1588447292046147584

Business leaders urge govt to restore ‘hard-won reputation for stability’ after rate rise and recession warning http://dlvr.it/ScCfwp

https://www.bbc.co.uk/news/business-63507630?at_custom1=%5Bpost+type%5D&at_custom4=B7C13C16-5C07-11ED-B2A3-F3292152A482&at_medium=custom7&at_custom2=twitter&at_campaign=64&at_custom3=%40BBCNews A new nuclear power plant in Suffolk is under review and could be delayed or even axed, as the government tries to cut spending, the BBC has been told. … No No No ! this is ridiculous

Tories cannot escape blame for economic chaos https://on.ft.com/3h0a1yi


UBS launches digital bond that straddles blockchain and traditional exchanges http://reut.rs/3FM7YZi


https://twitter.com/izakaminska/status/1588141602257702912?s=20&t=BxkXzqaAzrQ1AHCq48W34Q Very good thread from Izabella ! THREAD🧵Here’s why I believe the market is missing the true significance of

@Elonmusk reconfiguring Twitter’s funding model into one that isn’t dependent on you being the product. If he succeeds, and I suspect he will, it could upend two-sided pricing in the digital economy.



Japan says North Korea has fired at least one more missile into the sea, bringing the day’s total to at least four. The launch came after North Korea threatened to retaliate over a decision by South Korean and the U.S. to extend joint aerial exercises. https://apnews.com/article/business-japan-united-states-seoul-south-korea-aed56829790621f0d0abfb4fafa91aca?taid=6363be75e9efe3000172d24c&utm_campaign=TrueAnthem&utm_medium=AP&utm_source=Twitter


https://twitter.com/Peston/status/1588155825100570626 The Bank of England’s expectation that the British economy will be shrinking till mid 2024, as the interest rate it sets is on couse to rise from 3% today to 4.75% in coming months, means Sunak and Hunt face the two most stressful weeks of their political lives. Here’s why


brutal.. this stock was $450 during the covid moment, right back down and lower than pore covid


https://twitter.com/JeffWeniger/status/1587871002654134275 The biggest headline today is not the Fed.

Nope, it's this 90% decline bombshell from Wells.

Total housing freeze-up. Keep your focus. Housing is the number one macro driver now and for all of 2023.


Some good news! Britishvolt is behind plans for a £3.8bn gigaplant in Blyth, which is expected to create more than 3,000 direct jobs once operational, alongside a further 5,000 in the wider supply chain.


As a mother to a pup, I should be able to leave work early to pick him up from doggie daycare, like parents can leave early for school pick-up


SPX500 3600 support if we break 3300 target area, vs 3900 resistance (the top we mentioned a few times recently) before 4150 – that’s the play big picture. Till then rangy – together with bonds, we watch UST’s 4.35 levels, if we head higher QQQ will lead lower, if NFP softish, market may start to talk again, of some sort of ‘pause’ by Fed in Dec – long way to go AND we have the possibility of China re-opening + med-terms all shortly ahead of us. Interesting point is DAX and European markets holding up pretty well and VIX softer



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