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    • Oct 24, 2022
    • 5 min read

Sunak heading to N.10 / HSI Techs / Freight rates / BoJ interventions + Fed's Daly / ECB next

  • FED’s Daly was sent to calm things down on Friday, IMHO, a few things were starting to break down behind the scene....now the word is another 75bps in Nov, and a pivot /WSJ-Timiraos on Friday..let’s see if we hear more from other FED members this week..>>> USD, Equity and 2y UST’s is what moved and should move first on a ‘pivot’, as you know we been looking for signs of #peakFOMC #peakrates >>> this may be a start, although we would need weaker US data to confirm, maybe Q3 data on Thursday >>> FED said they were data dependent but they leaked to WSJ potential for a pivot, the FED might well have seen a few things creaking in the background..

  • After BoJo retiring from the race last night,we’ll probably get Sunak in at N.10 by 2pm, could be a slow crawl back towards sanity for a while ! Bar any new news this morning

  • ECB meeting Thursday, expectation of at least 75bps hike

  • BoJ ‘intervened’ again on Friday, with USDJPY dropping from 151.50+ to a low 146.50 on Friday, BoJ meets on Friday, mostly expected to do nothing as per usual, but the market is kind of forcing the issue to drop YCC, estimate 20-25bn USD, and YET he JPN government talks stimulus plan must exceed $100 billion, says ruling party executive – Reuters, and finally : Japan’s Top Currency Diplomat Kanda: No Comment On Intervention On Monday Morning -Will Respond Appropriately To Excessive Moves While Monitoring Market 24-7

  • China’s Xi put his men in to strengthen is grab on power (thread)

  • European Commissioner for the Internal Market, Thierry Breton, said that the European Union has successfully achieved energy independence from Russia. "No one thought that we would be able to do it, because we depended on Russia. We depended on 40%, and now- only on 7%," — he said.

  • Russia's Shoigu holds second call with U.S. defense secretary in three days

  • 'Elon, The Everywhere' — Elon Musk is worrying government officials with his growing presence in global affairs, report says

  • Equity funds are still seeing inflows despite deeply pessimistic sentiment, with “final capitulation” not yet here, according to strategists at Bank of America (BofA) .Global stock funds had inflows of $9.2 billion in the week through October 19, according to a note from the bank citing EPFR Global data.

  • Foreign investors accelerated selling of Chinese A-shares as Beijing held its twice-a-decade Party Congress, offloading 29.3 billion yuan ($4.1 billion) of equities last week via trading links – Bloomberg, and HangSeng Tech Index slumping nearly 6% to drop below 3,000 and hit a new record low this morning

 

Markets :


  • Freight rates are almost back to square one (chart/thread)

  • Food prices truly peaked too (chart-thread)

  • Housing markets has followed rates across the globe, with the obvious country well ahead of others.. China Home Prices Fall for 13th Month as Property Woes Persist-BBG

  • Eq vol positioning : Once again, the crowd is short via delta 1 products. This trend has been going on for some time. This is part of the reason SKEW index has continued to decline as people do not buy downside protection. Instead, they have been "forced" to cover the possible upside risks via buying calls. First chart showing GS PB long/short ratio vs SPX open interest (calls). Second shows the crashed SKEW index.. Global Equity Market Cap has declined by -$30 Trillion Dollars YTD. This is the largest global equity market cap loss on record (full year 2008 lost -$28 Trillion in market cap), busiest earnings week ahead! SPX500 hit a 3800 on open overnight (sliding back down a little on HSI and Chinese stocks lower

  • Note the White House failed to convinced OPEC+ to cut, the WH was making some noise about the real economy and the FED lately, it is possible they manage to convince a few members to ‘’ease off’’ ahead of Mid Terms on 8th Nov


 

https://finance.yahoo.com/news/fed-shift-quantitative-tightening-tinkering-161938964.html A Fed shift from quantitative tightening to 'tinkering' will emerge as a new bull factor for the stock market in 2023, Bank of America says

https://www.bbc.com/news/world-asia-china-63358627 Hu Jintao: The mysterious exit of China's former leader from party congress

https://twitter.com/ProfYangZhang/status/1583788208894414849 What we just saw was the making of an All Xi's Men team, the breaking of decade-long rules, and the birth of an unlimited supreme leader. These are not entirely surprising, but Xi's grab of power is still beyond our expectation. He is now a truly modern emperor


https://twitter.com/FerroTV/status/1583414432310636545“inflation + budget deficits = higher rates...335 rate hikes past 2 years (record 35 in Sept’22)... collapse in stock of global negatively yielding debt to $1.4tn ($18.4tn peak 2 years ago)” – good thread


https://twitter.com/MichaelKantro/status/1583594557438300163The Fed has always cut BEFORE core CPI peaks. Why?

Because core inflation is so lagging that something often breaks before it rolls over >>>> something was breaking lately.... UK Gilts, USD, parts of Eq, some Pension Funds going bust etc etc

https://finance.yahoo.com/news/buckle-brutal-free-fall-home-090000513.html Buckle in for a brutal free-fall in home prices and US housing is in a massive bubble, experts say. Here's how bad Jeremy Siegel, Paul Krugman and 5 others think it could get.


https://twitter.com/AndreasSteno/status/1583563108152266752 Freight rates are almost back to square one (chart)


https://twitter.com/C_Barraud/status/1584220434446237697 SPX | After $13 Trillion Stock Crash, Signs of a Turn Are Now Mounting - Bloomberg


https://twitter.com/BurggrabenH/status/1584278508062224384 The only certainty for European natural gas prices going forward is volatility, volatility and more volatility.

Here is why...


Russia's Shoigu holds second call with U.S. defense secretary in three days http://reut.rs/3z7BOmV

https://www.bbc.com/news/world-europe-63357393 Ukraine war: Massive Russian strikes target energy grid – Zelensky


Thousands in new Moldova anti-government protest http://reut.rs/3F8wdjO


https://www.indy100.com/politics/boris-johnson-running-reactions?utm_content=Echobox&utm_medium=Social&utm_campaign=Main&utm_source=Twitter#Echobox=1666552388 – some great stuff in there - Boris Johnson ‘clearly running’ for PM according to Rees-Mogg - the best memes and reactions!

https://www.telegraph.co.uk/politics/2022/10/22/jeremy-hunts-halloween-budget-could-hit-high-earners-20bn-tax/ Jeremy Hunt’s Halloween budget could hit high earners with £20bn of tax rises

Richest to bear the brunt of the increases as Chancellor tries to plug £40bn black hole in the nation’s finances



'Elon, The Everywhere' — Elon Musk is worrying government officials with his growing presence in global affairs, report says https://www.businessinsider.com/elon-musk-foreign-presidents-prime-ministers-washington-report-2022-10?r=US&IR=T


https://www.adidas-group.com/en/media/news-archive/press-releases/2022/adidas-reports-preliminary-q3-results-and-adjusts-full-year-guid/ ADIDAS REPORTS PRELIMINARY Q3 RESULTS AND ADJUSTS FULL YEAR GUIDANCE lower, like many others Nike etc


Credit Suisse chief compliance officer set to leave - Bloomberg News http://reut.rs/3slWBPw

https://citywire.com/ch/news/credit-suisse-sells-remaining-stake-in-zurich-asset-manager/a2400589?re=102418&refea=1898423 CS selling non core assets, as they should (have done long ago..but at least they do now)


https://www.straitstimes.com/world/europe/prioritising-italy-inc-is-meloni-s-plan-as-new-prime-minister ROME – Ms Giorgia Meloni plans to uphold Italy’s pro-Ukraine and pro-Nato stance, but her government is set to shift internal policy to provide a greater shield for the country’s companies and industry.



Hang Seng – astonishing wealth destruction


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