FED : we have 130bps priced in for next 2 meetings, about 50/50 for 50 or 75bps in December >>> bring on presser tonight >>> U.S implied terminal rate back up to 5% for some time in Q2 2023
JPMORGAN: “.. the disinflation phase has already begun .. bond yields are likely in the process of peaking out .. inflation prints .. will be meaningfully lower in 3-6 months’ time. Our economists project US core CPI at 5.3% YoY rate in Q1, vs 6.6% currently ..” - thread
The Fed currently pays more in interest on reserves than it receives in coupons on its Treasury holdings. Unlike other CBs, the Fed does not ask Treasury for a check. Instead, it issues an IOU. Very interesting article by @NickTimiraos in WSJ – thread/chart
Brazil’s president Jair Bolsonaro broke a two-day silence after his election defeat, saying protests by his supporters reflected ‘indignation’ at the outcome but vowing to follow the country’s constitution-FT >>> a relatively smooth transition could see USDBRL down 5-10pct pretty quickly, thread below
North Korea fires 17 missiles; one lands off South Korean coast for first time
UK fresh food prices rise 13.3% in year to October – BRC
UN and Ukraine to resume grain deal shipments on Thursday
GOLD : “Central banks bought a record amount of gold last quarter, continued diversification, with a large chunk of the purchases coming from as-yet unknown buyers. That’s about 400 tons scooped up by CB’s last quarter, more than quadruple the amount a year earlier.”
FCC commissioner says government should ban TikTok
Moody’s talks - Liquidity tightens for leveraged finance market, raising corporate default risk
U.S personal savings near historical bottom (chart/thread) – and credit card loans through the roof
Oil windfall tax on companies, somehow it is a little strange to think governments want to tax the companies that they want to invest more in energy infrastructure for the future..might achieve the opposite of what they want them to do (having said that the likes BP and Shell have said many times that they would be OK with a relatively small one off tax…)
Germany's manufacturing sector gathers pace at start of Q4…remember the potential +ve impact from lower NatGas prices..
US and Chinese officials working to set up Biden-Xi meeting
S&P downgrades Credit Suisse Group, Moody's cuts some ratings
U.S Workers are “showing up late .. but companies can’t do anything about it because .. it is so hard to replace” them.“Back in 2019, the policy was one strike and you’re out .. Right now it’s 10 strikes, maybe you’ll be out.” / Washington post
Markets:
Equity markets saw some very decent capitulation last week with the mega caps losing close to 750bn$ in market cap (MSFT, GOOG, AMZN and META..), with some of them dropping 20% - clear sign of capitulation >>> a relatively friendly FED not forcing markets to price in more than is currently priced in, should help calm markets/possibly push for further correction higher in risk, as long as bond markets remain relatively steady<, IF so watch MOVE index (bond vols) they should steadily move lower and thus give markets time to breathe
USDollar, we remain on the look out for signs of peak inflation/peak usdollar/peak hawkishness etc , all about the FED, one could argue, the BoJ would not spend $50/70bn in interventions if they didn’t have a reasonable view that the FED will go on ‘pause’ sooner or later’ (pause does not mean lower rates, lets be clear, at least for now). IF China was to re-open and the FED goes on pause, USDCNH should correct lower, AUDUSD should have a decent bump higher, USDJPY will struggle (key area 145 USDJPY a must hold for the bulls..)
Depending on FED outlook, markets could move quite sharply into year-end, IF Fed stays the course/sound hawkish, USD will try higher again, but market will quickly turn and think December pivot etc again (the more they do now, the sooner they will flip…), IF the FED sort of flips now already, long USDollar consensus will be challenged clearly.. Next 200pts on S&P500 are in play, technically we can go to 4150 area, on a break of our recent top of the range level around 3925. However, a FED that talks of more to come and more QT etc could bring us back quickly to 3650 support area
https://twitter.com/HannoLustig/status/1587290874613940225 The Fed currently pays more in interest on reserves than it receives in coupons on its Treasury holdings. Unlike other CBs, the Fed does not ask Treasury for a check. Instead, it issues an IOU. Very interesting article by @NickTimiraos in WSJ – thread/chart
https://twitter.com/carlquintanilla/status/1587183969447120897 JPMORGAN: “.. the disinflation phase has already begun .. bond yields are likely in the process of peaking out .. inflation prints .. will be meaningfully lower in 3-6 months’ time
https://twitter.com/CiovaccoCapital/status/1587429862284853248 JPMorgan laid out a very wide range of scenarios for Fed day, with the two below lining up best with what has come from the Fed in recent weeks. 75 bps with tone of the press conference being the most likely wildcard. Click image to enlarge. Text via Bloomberg
https://twitter.com/Schuldensuehner/status/1587740166122356739Downturn in Germany's manufacturing sector gathers pace at start of Q4. Goods producers reported steepest drop in output since May2020. German manufacturing sector slid further into contraction territory w/MFG PMI dropped to 45.1 in Oct from 47.8 in Sep. https://pmi.spglobal.com/Public/Home/PressRelease/16d6b88628bb4586b8c080b38dae43eb
https://twitter.com/Mayhem4Markets/status/1587599539992764416 U.S personal savings near historical bottom (chart/thread) – and credit card loans through the roof
Russia rejoins wartime deal on Ukrainian grain exports https://trib.al/i4PcDnE
https://www.bbc.co.uk/news/business-63446174 US throws out charges against interest rate ‘rigger’
Indeed, it was proven that the FCA senior executive responsible for investigating LIBOR manipulation allegations had made various knowingly false representations in a statement for the U.S. Court >> who was in charge of FCA !!!????...
A certain Andrew Bailey..
https://uk.news.yahoo.com/uk-fresh-food-prices-rise-001243249.html UK fresh food prices rise 13.3% in year to October – BRC
https://www.reuters.com/world/asia-pacific/north-korea-fires-ballistic-missile-says-south-korean-military-2022-11-02/ SEOUL, Nov 2 (Reuters) - North Korea fired at least 17 missiles into the sea on Wednesday, including one that landed less than 60 km (40 miles) off South Korea's coast, which the South's President Yoon Suk-yeol described as "territorial encroachment" by Pyongyang
https://www.cnbc.com/2022/11/01/amazon-plunge-pushes-valuation-below-1-trillion-first-time-since-2020.html Amazon sell-off pushes market cap below $1 trillion for first time since April 2020
https://meduza.io/en/news/2022/11/02/un-and-ukraine-to-resume-grain-deal-shipments-on-thursday Ukrainian Infrastructure Minister Oleksandr Kubrakov said Wednesday that grain shipments through the Black Sea humanitarian corridor will resume on November 3 as part of the grain export deal that was reached in July
https://www.axios.com/2022/11/01/interview-fcc-commissioner-says-government-should-ban-tiktok FCC commissioner says government should ban TikTok
Could give a bit of help to Meta
S&P downgrades Credit Suisse Group, Moody's cuts some ratings http://reut.rs/3NqvJYu
https://www.moodys.com/web/en/us/about/insights/podcasts/moodys-talks-behind-the-bonds/liquidity-tightens-for-leveraged-finance-market-raising-corporate-default-risk.html?utm_medium=social&utm_campaign=Levfin_2022&utm_source=twitter&utm_content=&utm_term=&cid=YJZ7YNGSROZ5414 The leveraged finance market – leveraged loans and high-yield bonds – has expanded considerably in recent years and now represents around $4 trillion in outstanding debt worldwide. In the first segment of this podcast, we look at how the tide of liquidity that helped the market grow so much is turning now and what tighter, pricier credit means for speculative-grade companies. Then, at 8:45 minutes, we examine the role of private equity firms in this market and the risks for companies they own.
https://twitter.com/RobinBrooksIIF/status/1587469694709137411 We'd flagged that an orderly transtion of power would take Brazil's Real below the psychologically important $/BRL 5.00 threshold. Markets priced a large election risk premium of over 10%. That's coming off now. An orderly transition will make Brazil the top EM into 2023... >>> FWIW like the idea
Tesla closes its first showroom in China in retail strategy shift - sources http://reut.rs/3zFbxfN
https://www.youtube.com/watch?v=t7WO05eMJDg Man Group CEO Says US Recession 'Inevitable' to Curb Inflation
Corona und Ukraine-Krieg kosten deutsche Wirtschaft 420 Mrd. Euro http://to.welt.de/tVPn7zx
https://www.washingtonpost.com/business/2022/10/31/productivity-down-employers-worried-recession/ U.S. workers have gotten way less productive. No one is sure why.
EUstokks50
