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    • Nov 7, 2022
    • 5 min read

HSI holding / U.S-RU talks - WSJ / UK : £60bn / U.S Med-terms (gridlock) and U.S CPI Thursday

  • U.S labour data headline was slightly better though unemployment rate rose a little, but the industry and household survey details both suggested a notable loss of momentum NFP starting to look odd, households basically saying no employment growth since end of Q1 2022 and NFP saying 2.5 million job created—(pretty strange), raised hopes of a Fed pause again at the Dec Meeting, more rumours of China re-opening on Friday pushed risk higher, though these re-opening chatters were denied over the week-end, risk is holding up though (China will reopen in the spring – very likely scenario IMHO)

  • China agreed to approve BioNTech SE’s Covid-19 vaccines for foreign residents, German Chancellor Olaf Scholz said in Beijing Friday, in what would mark the first mRNA vaccine for Covid-19 approved for use in China/WSJ – this could help the re-opening eventually (for now Covid Cases Jump to Six-Month High as Outbreaks Flare)

  • Jeremy Hunt to outline £60bn of tax rises and spending cuts - Guardian understands early drafts of UK government’s autumn statement include at least £35bn reduction in spending, helping GBP this morning

  • Hong Kong's third-quarter GDP plunged 4.5%. The government is trying to rally support for fintech and finance, but has no clear plan to help mundane sectors like real estate and retail which are the biggest drags

  • U.S economy is currently dealing with an average rate on 30y mortgage around 7.25% (highest since 2000), crashed demand to a 25year low, Well Fargo mortgage business down 90%, CC debt approaching $1trn, highest since 2008 and average American’s savings are down over 2/3rd

  • In last couple of weeks, the BOC/ECB/RBA and BoE have all intimated they are stepping down (or intend to step down) the intensity of their tightening campaigns… if/when data weakens a little the FED will eventually pause too

  • A Gruyère from Vorderfultigen in Bern has been named the 2022 World Champion Cheese, beating a Gorgonzola from Italy (has to be top world news!)

  • BoJ : The central bank held 73% of 10-year government notes with a residual maturity of at least seven years as of end-October, up from 56.5% in June and 54.7% at the end of last year, according to data compiled by Bloomberg.

  • IMF Georgieva: Global Inflation May Be Nearing Its Peak – BBG

  • After a decade of making money for the US government, the Fed is now losing money on an ongoing basis. As the QE portfolio is taking a beating and interest on excess reserves to be paid to banks is quickly heading above 4%, the Fed will be delivering a negative P&L going forward

  • Eurozone Sentix Investor Confidence Nov: -30.9 (est -35, prev -38.3)

  • The United States midterm elections will be held Tuesday. Owing to time differences, polls will not start closing until late Wednesday morning AEDT

  • Senior White House Official Involved in Undisclosed Talks With Top Putin Aides – WSJ

 
Markets :

  • U.S gridlock post med-terms generally speaking taken positively by markets – rule of thumb based on previous

  • SPX500 still 3600-3900 range, lot more going on underneath, growth struggling vs real economy stocks still, this should go on for years! There's a correlation between changes in liquidity and S&P 500 price discovery, suggesting that as long as liquidity is being reduced, we're likely to see pressure on stock prices (thread). Hang Seng ignoring all sort of bad news / bottoming? chart

  • USD took a very decent notable ‘dive’ since NFP on Friday, market seems desperate to position itself for ‘peak worries, peak inflation, peak usd’ etc. We continue to look for signs of this developing, price action was telling

  • U.S CPI on Thursday will be one of those moment again – confirmation of peak, or another delay

  • U.S med-terms (gridlock usually a decent outcome for risk), UKR/RU/U.S and others talking, grain traffic, China covid policy all pretty binary, but (hopefully) going towards some sort of positive outcome – we all hope, long and bumpy road ahead though! Again for us, a Fed pivot of any kind is for now only a pause in the fast hiking cycle, not a view that they will cut any time soon – unless the data gets much worse (in which case, not sure at all this is positive for markets, a recession isn’t positive for most..), things can change quickly these days though, as often discussed in recent weeks, the first movers should be 2yUST, USDollar and Gold on any signs of peak inflation/peak worries, Friday showed just that…

 

https://twitter.com/MikaelSarwe/status/1589555463011860481 NFP starting to look odd. Households basically say no employment growth since March, NFP says +2.5 million.

Also, odd net birth/death business numbers & not sure about seasonal adjustment used, revisions sooner or later? …after med-terms!



https://theconversation.com/with-two-days-until-us-midterm-elections-republicans-will-probably-win-control-of-both-chambers-of-congress-193442 With two days until US midterm elections, Republicans will probably win control of both chambers of Congress

RNC chair says committee can’t pay Trump’s legal bills if he announces 2024 run https://trib.al/oGHD59C


https://twitter.com/Mayhem4Markets/status/1589286490877857795 There's a correlation between changes in liquidity and S&P 500 price discovery, suggesting that as long as liquidity is being reduced we're likely to see pressure on stock prices


https://twitter.com/Flash_news_ua/status/1589550129853632513 88 dry cargoes are waiting for permission to enter Ukrainian ports as part of the grain agreement, another 18 loaded ships are preparing for inspection in Turkish territorial waters, – the Joint Coordination Center reports.


https://twitter.com/MacroAlf/status/1588555119687499778After a decade of making money for the US government, the Fed is now losing money on an ongoing basis

As the QE portfolio is taking a beating and interest on excess reserves to be paid to banks is quickly heading above 4%, the Fed will be delivering a negative P&L going forward


https://twitter.com/MichaelMOTTCM/status/1588906282437599232 Oct. CPI could be significantly hotter-than-expected. Analysts' estimates are for a y/y Oct. CPI of 7.9%, and Cleveland Fed estimates a y/y CPI of 8.2%. CPI has come in at or hotter than the Cleveland Fed Estimates 16 of the last 19 times, quite a few punters pointing this out, pricing action says differently at mom


https://www.ibtimes.com/meta-eyes-large-scale-layoffs-this-week-tech-industry-pays-price-overhiring-3632807 Meta Eyes 'Large-Scale' Layoffs This Week As Tech Industry Pays Price Of 'Overhiring'


https://www.bbc.co.uk/news/world-europe-63533769 Standoff as Italy stops male migrants from disembarking rescue ships


Guardian understands early drafts of UK government’s autumn statement include at least £35bn reduction in spending


https://www.businesspost.ie/news-focus/bargaining-chips-how-the-semiconductor-industry-has-emerged-as-an-industrial-battleground/Bargaining chips: how the semiconductor industry has emerged as an industrial battleground


Consumption of precious metal may jump about 80% to a record. ‘Poor man’s gold’ remains popular in nation’s rural regions


https://www.swissinfo.ch/eng/business/gruy%C3%A8re-named-best-cheese-in-the-world--again-/48030670 A Gruyère from Vorderfultigen in Bern has been named the 2022 World Champion Cheese, beating a Gorgonzola from Italy


Central Asia is poised for robust growth in 2023 stemming from oil export and growing ties with China https://econ.st/3zPxOYC



The United States' special envoy for climate John Kerry acknowledges that developing countries are angry that wealthy nations are not doing enough to fight climate change.

He says it is "understandable" and he plans to address this during #COP27.


Binance versus FTX: the face/off https://on.ft.com/3UwcZZS



Hang-Seng oversold


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