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  • Stéphan

EU gas prices..LDN electricity cap.. / EDF, META.. / FED delivers 75bps, no guidance / Recession?


  • FOMC hikes 75bps, as expected (little market reaction), unanimous decision (so it’s all about inflation – inflation), no clear guidance (same as ECB, meeting by meeting – good – finally), and then Mr Market (who was looking for friendly fire) decided to rally on.. ...''we are now at levels broadly in line with our estimates of neutral interest rates, and after front-loading our hiking cycle until now we will be much more data dependent going forward'', basically he added ‘’from here onwards, we are fully data dependent’’.. market has a strong opinion that inflation will fall next year and thus is looking for cuts into 2023 and ’24, far too early for markets to think a pause is coming, let alone look for so many cuts next year IMHO…The FED should deliver 50 or 75bps in Sep, they haven’t even started QT yet…

  • U.S : The NAR reports that an index measuring contracts signed to buy existing homes fell 8.6% in June from May and was down 20% from one year earlier . Confidence among high-income Americans is declining rapidly, which could impact spending (chart)

  • TPI - It is unclear why the European Central Bank has introduced a new asset-purchase instrument instead of using its existing Outright Monetary Transactions facility. By shielding countries from both market forces and political commitments, the Transmission Protection Instrument risks destabilizing European monetary union >>>> very/far too political IMHO

  • China and Russia are in the final stages of building the first pipeline that can send gas from Siberia to Shanghai…

  • US Carrier Group Heads Towards Taiwan Ahead Of Potential Pelosi Trip After China Warns Of 'Forceful Response'….let’s hope nothing dramatic happens then!...and the inevitable just came out ..CHINA'S WU: CHINA URGES THE US MILITARY TO STOP PROVOCATIONS

  • EU Gas Crisis: Gas supplies via Nord Stream fell to 20% of capacity on Wednesday. Russia signaled more problems are possible, saying only one turbine is in working condition of the five needed for the Portovaya compressor station to run at full capacity. One beneficiary of the turmoil: Germany's RWE, which raised its outlook as energy prices soared. It's not heavily reliant on Russian gas. Asian liquefied natural gas prices rallied to a fresh four-month high as utilities in the region stepped up efforts to compete with their counterparts in Europe

  • Meta/Facebook reported a drop in yoy revenue for the first time ever

  • EDF has been fully nationalized and the government has imposed a price freeze into 2023….so EDF has lost some 5bn euros (so far) and has had to be fully nationalized (that’s another 10bn euros), in other words it’s a bill that is going to tax payers..

  • London is running out of electricity capacity because it's all being sucked up by data centres. Things are getting so bad that housebuilders in west London have been told they can't build new homes, and that’s before everyone has a EV car..

  • German State Baden Wurttemberg CPI (Y/Y) Jul: 7.1% (prev 7.1%) - State Baden Wurttemberg CPI (M/M) Jul: 0.8% (prev 0.1%)

  • The U.S. Senate passed sweeping legislation to subsidize the domestic semiconductor industry, Pelosi all over that trade..(I mean her husband..)

 
Markets :
  • SPX – as expected, market wants to look through and talk peak inflation=peak rates soon and 3 cuts next year…thus 4000/4100 area possible (chart), for me target for short covering is 4100/4125 max, note DAX struggling to rally. QQQ rally is mostly short-covering, same for the coins and al

  • Gas prices, electricity remains the biggest issue facing the EU, and it’s summer time!

  • Bonds rallied just after FOMC, but yields back to where we were ish pre FOMC, more to do with ‘curve inversion pain’ - almost 10bp round trip and more in some front ends. BUND/BTP spread on recent highs (chart) remains a big worry/focus, it WILL remain volatile, depending on where Mr Market’s narrative goes… on any given day or week

  • USD weakened, post FOMC, same script, USDJPY most exposed down to 135JPY, held so far, overall won’t take much for USD to pick up again, either on stronger data (thus higher rates expectations again..) or risk-off again – would look for some of these levels as ‘opportunities’ to rebuy USDollar on strong data!. Metals higher in similar price action… USDJPY through 135 area, would hurt a lot of ‘macro USDJOY longs’ (and crossjpy’s)

  • The real moves post FOMC start today..

 

About this ‘’’recession..’’’…the obsession about media about whether we are in a recession or not is a little insane!... … the economy is what it is, slowed slightly (so what), inflation IS far too high, the labor market has grown rapidly and remains strong, yet real wage growth is way negative, so there are signs of cooling economy/growth (after years of boom thanks to QE , ZIRP and NIRP), NO big deal if we work out he excesses of the last many years over the next few years…in fact it’s a MUST….… it means NOTHING to most people whether the financial market calls it a recession or not..


https://twitter.com/MacroAlf/status/1552395679586295812 good thread FED thread here on decision and thinking process

Powell hikes 75 basis point and yet Nasdaq & Bitcoin are going to the moon.

What the heck?

While I disagree with the unfolding market narrative here, let me try to explain why we are witnessing such a rally.


https://www.project-syndicate.org/commentary/ecb-transmission-protection-instrument-could-destabilize-eurozone-by-lars-p-feld-et-al-2022-07?utm_source=twitter&utm_medium=organic-social&utm_campaign=page-posts-july22&utm_post-type=link&utm_format=16:9&utm_creative=link-image&utm_post-date=2022-07-27 The ECB’s Toxic Bond-Purchase Program

In recent years, the ECB has bought more bonds than were newly issued by eurozone member states, and has thus indirectly financed substantial new government debt. Since the central bank will now no longer purchase additional bonds on a large scale because of rising inflation, there is considerable uncertainty about the interest rates at which private investors will be willing to buy government debt.


https://twitter.com/PeterStefanovi2/status/1552004204524437509 In the first 30 minutes of tonight’s Tory leadership debate Rishi Sunak & Liz Truss managed to completely eviscerate the whole Tory Government

these people are shameless.. they destroyed the economy and now they want the same people to find solution to improve it!!? 😊

This is the 3rd PM that is going to be decided by a bunch of 160’000 tory members… absolutely ridiculous state of affair (reminder, there were 3mio member back in the 50’s, at least back then it was a little more representative of the folks out there)..


Credit Suisse : https://www.youtube.com/watch?v=PyuUc74Qdzs this was before another CEO went – nothing will change, nothing, unless some pretty drastic re-org is done, and I mean DRASTIC

https://www.finews.asia/finance/37381-credit-suisse-ulrich-koerner-axel-lehmann-ceo-president-successor-strategy?utm_source=newsletter_1716&utm_medium=email&utm_campaign=finews-asia-newsletter-28-07-2022 Do These Men Have the Right Stuff for Credit Suisse?.... most likely NO, rinse and repeat with the same old people = same old result …end of


China and Russia are in the final stages of building the first pipeline that can send gas from Siberia to Shanghai. https://www.cnbc.com/2022/07/27/map-of-power-of-siberia-gas-pipeline-that-china-russia-are-working-on.html?utm_term=Autofeed&utm_medium=Social&utm_content=Main&utm_source=Twitter#Echobox=1658928445


https://www.theverge.com/2022/7/27/23281294/facebook-meta-revenue-declines-for-first-time Facebook reports drop in revenue for the first time

Meta’s money-making machine is in trouble


The U.S. Senate passes sweeping legislation to subsidize the domestic semiconductor industry https://reut.rs/3PIfAhw


London is running out of electricity capacity because it's all being sucked up by data centres. Things are getting so bad that housebuilders in west London have been told they can't build new homes https://ft.com/content/519f701f-6a05-4cf4-bc46-22cf10c7c2c0


https://www.independent.co.uk/news/business/shell-profits-2022-energy-prices-b2132978.html#Echobox=1658991127 Shell profits hit record $11.5bn doubling in one year amid soaring energy prices


https://www.itv.com/news/2022-07-27/minister-walks-out-mid-interview-after-being-asked-about-johnson-lebedev-meeting Business secretary walks out mid-interview after being asked about Johnson-Lebedev meeting

totally normal these days..










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