Market Talk: What’s up today? | Swissquote

US inflation came in line with expectations. The kneejerk market reaction to the data was surprisingly negative, but the major US stock indices extended rally, while the US dollar dropped sharply. The S&P500 ended the session at a very important technical level – the index is now testing the ceiling of the 2022 bearish trend and the 200-DMA to the upside. The 200-DMA has not been broken since April 2022, and has, so far, acted as a sign to sell the top. It could take more (…better-than-expected earnings) to clear resistance around 3990-4000 range. From now, investors' focus will shift to earnings. According to FactSet, the S&P500 companies could post earnings growth of -4.1% for the Q4. Energy companies and tech stocks are an exception to this, of course. Energy companies will likely reveal another excellent quarter due to high energy prices, while tech stocks will likely deliver their second straight quarter of negative growth, with a decent 9.5% contraction expected across the sector. But don't forget that high expectations are difficult to beat, while low expectations are easier to beat, and the prices move regarding where the results fall compared to expectations. Today, big US banks including JP Morgan, Citigroup, Bank of New York, Bank of America and Wells Fargo will reveal their Q4 results. Listen to find out more!

Today is the most important day of the trading week, in terms of economic data release, as the US will reveal its latest CPI update, and it could be a make-or-break moment for the market sentiment. Consumer price inflation in the US probably eased to 6.5%, from 7.1% printed a month earlier. Core inflation fell to 6% at last release, from a peak of 6.6% printed for October, and is expected to fall further to 5.7% y-o-y. US equities extended gains yesterday, on hope that softening inflation will further boost the Fed doves. Today's US inflation data will help move things, to one side or the other. But keep in mind that there is room for decent hawkish pricing given that the money markets still price that the US interest rates will top around 4.9%, while the Fed officials are struggling to convince investors that they will go above 5%. Listen to find out more!

Wed, 11 Jan 2023 09:05:51 +0000 https://markettalk.podigee.io/412-stop-fighting-the-fed 4ff64d9e9c134c3f5573cf811d1b648e 412 full no Swissquote

Good news is that Asian stocks entered bull market. Bad news is that the Federal Reserve (Fed) President Jerome Powell could hammer the post-NFP stock rally in US stocks. Sentiment is mixed and investors are tense before Powell's speech, and Thursday's US inflation data. The S&P500 was unable to extend gains above the 3900, rapidly started erasing early-session gains and ended the session 0.08% lower. Nasdaq also gave back early-session gains, though closed the session 0.60% higher. US equity futures are in the negative this morning, as the King of market disappointment, the Fed Chair Jerome Powell, will be speaking at an event in Stockholm today, and he will probably not pop the champagne just because the wages grew less than expected last month, especially when you think that the US economy added a near record 4.5 million jobs last year, and that the unemployment rate fell to 3.5%. In the FX, the US dollar index remains under a decent selling pressure, as a result of the dovish Fed expectations since last Friday's US jobs data. The EURUSD advanced to 1.0760 yesterday, Cable flirted with 1.22 this morning, and gold consolidates gains. In energy, crude oil remains under pressure despite the Chinese reopening talk, and the falling Russian supply. We see that the European sanctions weigh on Russian oil supply, as the 4-week average shipments decline despite a small gain posted last week. That means that the lower Russian supply will be another supportive factor of oil prices. Listen to find out more!

Friday's jobs data in the US, and more specifically, the market reaction to Friday's jobs data helped stock markets to record their best boost since more than a month on Friday. However, Friday's jobs report was rather… mixed, and spurred a lot of discussions and debates regarding whether the data was soft enough to convince the Federal Reserve (Fed) officials that the inflation battle is over, or it was strong enough to make them further scratch their heads. US markets, however, gave a strong positive reaction to Friday's jobs data. Both the US 2 and 10-year yields fell more than 4% after the data, pulling the US dollar index lower along with them. The S&P500 jumped around 2.30%, while Nasdaq 100 rallied near 2.80%. Gold reached our $1880 per ounce medium term target, boosted by lower US yields, which made the opportunity cost of holding the non-interest-bearing gold lower, and increased appetite. Activity on Fed funds futures now price in a 25bp hike at the next FOMC meeting at around 75%, but the Fed has not hesitated to disappoint markets since last year to cool down the optimism and send the stocks to turmoil. So the dovish pricing in Fed expectations make the latest gains a bit bitter-sweet, as the slightest news, or hints that the Fed would not step back from its hawkish tone could vanish the latest rally. So, this week's US inflation data will be key in either giving the bulls a further boost or bringing back the bears with revenge. Jerome Powell will speak on Tuesday, and the US CPI data will be released on Thursday. On the corporate calendar, the earnings season will kick off with big bank earnings due Friday. Listen to find out more!

Yesterday's US ADP print was too strong to please the Fed, as the data revealed way stronger than expected private job additions in December, posting 235'000 new private jobs last month, versus only around 150'000 expected by analysts. Today's NFP read is also expected to reveal around 200'000 new nonfarm jobs in the US - quite a strong figure when you think that recession could be around the corner in the US. Therefore, stronger-than-expected jobs data will certainly boost inflation expectations, bring the Fed hawks back to the market, send the US yields and the dollar higher, and stocks lower. Pricing in Fed funds futures still points at a 25bp hike in Fed's next monetary policy meeting, meaning that we could rapidly see the pricing turn in favour of a 50bp in case of strong jobs data. In the FX, Cable slipped below 1.20 – and is even testing 1.19 at the time of video shooting. The EURUSD is drilling below the positive trend base that's building since November, and is preparing to test the 1.05 to the downside. US jobs data, and the USD reaction will likely determine the mood into the weekly closing bell. In individual news, Amazon fires 18'000, Salesforce cuts 10% of workforce, Bed, Bath and Beyond and Genesis warned of bankruptcy, as Silvergate saw $8 billion leave after the FTX collapse. Bitcoin remains stoic to news, while Grayscale's Bitcoin trust trades with 45% discount to its NAV. Listen to find out more!

Released yesterday, the FOMC minutes were hawkish enough to get the S&P500 erase early gains, but not hawkish enough to get the index to close in the red. The index closed the session 0.75% higher. Nasdaq gained 0.50%. Today, we will see what the ADP report tells about new hirings in December. Analysts believe that the US economy may have added around 150'000 new private jobs last month. Note that the latter is not a good indication regarding what's to come on Friday. Last month, the ADP printed a weak 127'000 figure, while the NFP came in at 263'000. Therefore, even the avalanche of layoff news from big companies, and a soft ADP print may not be enough convince that the US jobs market is cooling. In energy, weaker nat gas prices, combined to the past few days' recession fears, and news that OPEC output increased in December thanks to the recovery in Nigerian supply from outages – despite the OPEC+ will to cut output to keep prices sustained - pulled the price of American crude 5% lower yesterday. In the FX, the Australian dollar is surfing on the positive Chinese vibes, while the US dollar index couldn't extent the early week gains, and we are about to see a death cross formation on the daily chart. The EURUSD is bid around 1.0550, as Cable sees buying interest below 1.20 despite its worse economic fundamentals compared to other G7 economies. One of the most popular trades of the moment is long the Japanese yen against EUR, USD and pound. Listen to find out more!

European investors got an energy boost from lower inflation reads, and the falling nat gas futures, but US investors didn't follow up on the cheery market mood. However, US sovereign bonds gained yesterday as an indication that the latest market moves were backed by recession fears, rather than hawkish Federal Reserve (Fed) expectations… And if the first trading day of the year is any indication, we could see the holy negative correlation between stocks and bonds come back in 2023. This is what many investors think will happen. The risk-off investors will likely continue exiting stocks on profit recession – and not on hawkish Fed expectations, and they could go back to bonds and to gold instead. Due today, the ISM manufacturing index will reveal if and how fast US manufacturing contracted last month. If yesterday's PMI is any hint, we could see a fastening contraction in ISM manufacturing, which would then boost recession worries, hit the stocks, but not necessarily the bonds and gold. Also, JOLTS data will show if, and by how much the US job openings fell in November. But regardless of the ISM data, and the US job openings, the FOMC minutes will likely confirm that the Fed remains serious about further tightening policy, even if it slows the pace of interest rate hikes. Remember, if the Fed decided to go slower on its rate hikes, it's to be able to go higher! And the more resilient the US economy and the US jobs market, the more eager the Fed will be to continue its journey north… Listen to find out more!

The New Year started with the IMF Chief Georgieva warning that the global economy faces ‘a tough year, tougher than the year we leave behind'. German PMI data pointed at a faster than expected contraction in manufacturing activity in December, while the European manufacturing PMI came in at 47.8, in line with expectations. This being said, trading in European markets was rather optimistic on the first trading day of the year, as European nat gas futures eased on mild weather. The US dollar index kicked off the year on a subdued note, letting the dollar-yen tip a toe below the 130 mark. The EURUSD however, couldn't build on gains above the 1.07 mark, while Cable remained steady-ish a touch above its 200-DMA, which stands near 1.2030 level. Gold jumped to $1843 per ounce despite the positive pressure on the yields recently, while oil remained offered into the 50-DMA, which stands a touch below the $81 per barrel mark. Trading in Bitcoin remains boring. On the economic data front, we will watch FOMC minutes, US jobs data, and OPEC meeting this week. On individual stocks front, carmakers announce their Q4 deliveries. Tesla hit a fresh record, but the number of cars delivered last quarter fell short of expectations, while Rivian reportedly doubled production in the final quarter of 2022 to hit its 25'000 yearly target. Listen to find out more!

Last year at this time, we were about to see Apple become the world's first $3 trillion company. The S&P500 and Nasdaq were running from record to record, and no one imagined how bad the hangover would be. Big Tech and chipmakers got shattered, war in Ukraine wreaked havoc in Europe and in the world. Global energy prices sent inflation to the moon across the globe, while Bitcoin and cryptocurrencies came back to earth, with some big institutions failing to withstand the financial shock. The US dollar gained, as the Fed raised rates. Others raised rates as well, but the dollar kept rising. Finally, gold hasn't been great in tempering inflation, but despite soaring yields, the yellow metal managed to recover yearly losses, and is even preparing to end the year around 1% higher than where it started in US dollar terms. So voilà. Everything looked ugly this year, except for energy and the US dollar. The most important take of the year is: the era of easy money ended, and ended for good. It means that the financial markets won't look like anything we knew since the subprime crisis. There is still plenty of cheap central bank liquidity waiting to be pulled back, therefore the situation may not get better before it gets worse in the first quarters of next year. Recession, inflation, stagflation will likely dominate headlines next year. Happy New Year!

Thu, 29 Dec 2022 09:10:09 +0000 https://markettalk.podigee.io/404-why-will-ftse-100-close-the-year-with-gains-while-sp500-is-down-20 2907952b0cefefdad99defe794046964 404 full no

Yesterday, Russia finally responded to the EU's price cap on its oil exports, saying that they will simply stop exporting their oil to parties that ‘directly or indirectly use the mechanism of setting a price cap'. The latter announcement gave a minor boost to crude oil yesterday, but the barrel of American crude remained offered into the 50-DMA, near $81.60pb, and the price is back below the $80pb this morning. BUT, an eventual decrease in Russian oil supply gives support to the oil bulls' in the medium run, along with other factors as China reopening and cold winter in America. IMPORTANT to note: If the Chinese reopening story is positive for oil and commodity prices - and for the massively battered Chinese stocks, it's bad news for global inflation. This is why we don't see the US stocks gain on China reopening news, but we rather see them under a decent pressure, as the surge in Chinese demand will certainly boost inflation through higher energy and commodity prices. And in response to higher inflation, the central banks will continue hiking rates. As a result, the sovereign bond yields are higher, the stocks are lower, while the US dollar is mixed. Apple is down to lowest levels since summer 2021, and Tesla's deep dive deepens by the day. Listen to find out more!

It has been quite a quiet start to the week with many major markets still closed for Xmas holiday, but no one saw Santa coming this year, have you? On the contrary, the Bank of Japan led drama across the global financial markets reminded that the year will certainly not end on a positive footage, Amazon became the first US megacap to lose more than a trillion USD in market cap, and the expectations for the S&P500 are very much mixed… …even though the last trading week of the year is expected to be marked by a ‘Santa rally'. A few encouraging news could, indeed, give a minor boost to equity markets, among them the softer US PCE data, and the Chinese reopening news despite hundreds of millions of new Covid cases that threaten a smooth coming back. Listen to find out more!

The European Central Bank (ECB) raised its interest rates by 50bp as expected yesterday, and President Christine Lagarde said that the ECB will raise the rates by another 50bp at the next meeting. Then by another 50bp in the meeting after that. And another 50bp in the meeting after that. Then another one! European yields spiked during Madame Lagarde's speech. The DAX and the CAC fell more than 3%. The S&P500 slipped below its 100-DMA, as Nasdaq fell below its 50-DMA. The EURUSD spiked to 1.0736, the highest level since April. The significant hawkish shift in ECB's policy stance, and the determination of the European leaders to shot inflation to the ground should continue giving some more support to the euro, therefore, price pullbacks in EURUSD could be interesting dip buying opportunities for a further rally toward the 1.10 mark. And if the US dollar strengthened yesterday, it was certainly due to a heavy selloff in stocks and bonds that ended up with investors sitting on cash. Other than that, the data released in the US yesterday was not brilliant! The retail sales fell by most in a year; holiday shopping apparently didn't help improve numbers. The Empire Manufacturing index tanked from 4.5 to -11, versus -1 expected by analysts. Both data hinted at a slowing economic growth in the US, which should normally boost recession fears and keep the Fed hawks at bay. And that could mean a further downside correction in the dollar in the run up to Xmas. In Individual stock news, Netflix slumped more than 8.5% on news that its new ad-supported versions didn't kick off well, as most people preferred keeping ads away when they were in the middle of the Meghan and Harry drama! Listen to find out more!

As expected, the Fed raised its interest rates by 50bp to 4.25/4.50% range, the dot plot showed that the Fed officials' median forecast for the peak Fed rate rose to 5.1%. Plus, the distribution of rate forecasts skewed higher, with 7 officials out of 19 predicting that the rates could rise above 5.25% Moreover, the inflation forecast for next year was revised higher DESPITE the latest decline in inflation. And the median rate forecast for 2024 was revised higher to 4.1%. In summary, the FOMC message was very clear: the Fed is not ready to stop hiking rates - even though they will be hiking by smaller chunks. Today, the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) are also expected to hike the rates by 50bp to tame inflation in Europe. But a 50bp hike is not the same for all of them! Listen to find out more!

Yesterday's inflation report in the US filled investors with joy and further hope that inflation in the US may have peaked this summer and we will be heading lower from here, and that the Federal Reserve (Fed) will adopt a softer monetary policy stance and hike, yes, by 50bp today, but certainly not more than another 25bp in February. But Powell could also stress the fact that inflation remains significantly high compared with the 2% policy target, and that relaxing the tightening measures prematurely is not a good idea. In the FX, the US dollar index fell following the softer-than-expected CPI print, and hit a fresh low since summer. The softer US dollar, and stronger euro sent the European indices to fresh highs since summer. The DAX flirted with the June peak, and the Eurostoxx50 traded at the highest level since February Crude oil rallied more than 2.50% yesterday, on hope that the Fed could slow down the rate hikes, and not push the US into a deep recession to fight inflation. In cryptocurrencies, the FTX drama continues with the arrestation of Sam Bankman-Fried in the Bahamas, news that investors withdrew $3.7 billion worth of funds from Binance since last week, and that Binance reportedly stopped the stablecoin USDC withdrawals. But Bitcoin couldn't care less. The price of a coin advanced more than 3% yesterday, showing that the FTX drama has been priced in and out and further drama should not hit the coin harder. Listen to find out more!

European equities traded in the red at the start of the week, but equities in the US rebounded as investors are hanging on to hope of slower inflation and reasonably hawkish Federal Reserve (Fed) by their fingernails. Today and tomorrow will tell whether they are right to be optimistic or not. If, by any chance, we see a softer CPI figure, then the S&P500 could easily jump above its 200-DMA, and even above the ytd descending channel top. But, but, but… today's US CPI data, unless there is a huge surprise, will probably not change the Fed's plan to hike the interest rates by 50bp this week. Therefore, even if we see a great CPI print and a nice market rally today, it may not extend past the Fed decision on Wednesday. In energy, US nat gas prices jumped more than 30% since last week due to a powerful Pacific storm bringing cold and snow to the norther and central plains in the US. In the UK, power prices hit another ATH yesterday. Happily, we haven't seen a significant rise in the European nat gas futures, which in contrary kicked off the week downbeat. But crude oil rallied as much as 2.60% on Monday on several factors that could however not lead to sustainable gains in the mid-run. Listen to find out more!

Friday's US PPI print was soft, but not soft enough to meet market expectations. The US dollar spiked following the data, closed the week on a strong footage in America and opened the week on a strong footage in Asia. Trend and momentum indicators turned positive last week, and the dollar could gain more field before two important events that will mark the trading week: US November CPI on Wednesday, and the FOMC decision on Wednesday. It's important to remember that there is a gap between what the Fed says it will do, and what the market thinks, and prices the Fed will do, even a tiny hawkish message could already weigh on the mood before Xmas. Elsewhere, the European Central Bank (ECB), the Bank of England (BoE), the Swiss National Bank (SNB) and Norges Bank are all due to raise interest rates this Thursday, and most of them are expected to follow the Fed with a 50bp hike. How could it impact the euro, sterling and the franc? Listen to find out more!

The US will release its November PPI figure today and expectations are low. The consensus of analyst estimates on Bloomberg survey shows that the US PPI is expected to have slowed to 7.2% in November from 8% printed a month earlier. The core PPI is also seen down from 6.7% to 5.9%. If this is the case, if the factory gate inflation in the US slowed last month – which would also hint at a potentially slower CPI data next Tuesday before the FOMC decision – we could see the risk assets shrug off some of this week's weakness. The S&P500 could rebound back to its 200-DMA and close the week above the 4000 mark. But if the US PPI figure is higher than expected – which is well possible given that the low expectations are harder to beat, then we will probably see the US stocks sink back in the red. In the FX, the US dollar index remains under a decent selling pressure against many majors. The US dollar index hasn't extended losses below last week's lows but remained clearly offered into its 200-DMA this week, meaning that the conviction that the US dollar should fall sustainably strengthens among traders. A US PPI figure in line, or ideally softer-than-expected, could boost the US dollar bears, and help the dollar close the week at fresh lows since summer. Whereas disappointment on the PPI front will likely give a boost to the dollar, as it would boost the hawkish Fed expectations and the rate bets. In commodities, gold is flirting with the $1800 per ounce this morning, while the barrel of American crude extended losses to $71 per barrel. Trend and momentum indicators remain comfortably bearish, inviting traders to sell the tops for a further fall in oil prices in the short run. A fall below the $70 psychological level could pave the way for a further decline to $65. Listen to find out more!

Stocks fell for a fifth day, but the sovereign bonds gained, a hint that the market catalyzer shifted from the hawkish Federal Reserve (Fed) pricing – where stocks and bonds fall at the same time, to recession fears, where stocks remain under pressure, while investors seek refuge in safer sovereign assets. The falling yields kept the US dollar under pressure below the critical 200-DMA, which stands at 105.75. One big move of the day was oil. The barrel of American crude slipped below the $73 floor and fell to $71.70 on the back of rising recession fears. And note that we have started seeing a structural change in the oil markets. Crude price curve was in backwardation up until a month ago. But over the past weeks we started seeing the front-end of the price curve falling and even going back to contango. I discuss in this episode what that means for oil prices. Elsewhere, news that China increased its bullion reserves for the first time in three years have a boost to gold and silver. The mint ratio fell below 80, but gold could still be a better choice for those preparing their portfolios for recession. Listen to find out more!

Wed, 07 Dec 2022 09:07:00 +0000 https://markettalk.podigee.io/394-a-potential-oil-buyers-league-would-be-a-disaster-for-opec b5ea785264765b52f19398192248a63b 394 full no Swissquote

Stocks fell and the US dollar strengthened on Monday on a stronger than expected ISM services read in the US, which came in above expectations, and hinted that the economic activity, at least in the US services sector continues growing, and growing un-ideally faster-than-expected despite the Federal Reserve's (Fed) efforts to cool it down. In the FX, the Aussie was slightly better bid after the Reserve Bank of Australia (RBA) raised its rates by another 25bp today, and took the rates to levels last seen a decade ago. But elsewhere, the US dollar strengthened as a result of the hawkish Fed rectification. The dollar index first eased to a fresh low since June, then rebounded. It has way to recover above its 200-DMA, which may mean that some majors, including EURUSD and Cable could return below their 200-DMA as well. Yet, even if we see rebounds in the US dollar, the medium to long term direction of the dollar will likely be the south in the coming months. The EURUSD could recover to 1.10, Cable to 1.30. More stretched… Vontobel sees the USDJPY's fair value at 100, and Standard Chartered predict Bitcoin could fall another 70%, and spur a 30% rally in gold! Listen to find out more!

US stocks fell on Friday, after the latest data showed that Americans got more jobs in November, and more importantly they got a better pay. More, and better paid jobs fueled US inflation expectations, boosted the Fed hawks, and brought forward the idea that the Fed could be attracted by another, a fifth 75bp hike in the December meeting, US equities fell and the dollar gained, but the post-NFP pricing fully disappeared. The US dollar kicked off the week on a weak footage – a pricing that raises some red flags! In energy, the weekend was rather eventless, as OPEC decided to maintain its daily output restriction unchanged at 2mio barrels per day at Sunday's meeting, which could be seen as a negative development for the bulls. But there are two price-supportive developments that could limit losses below the $80pb. Listen to find out more!

Sentiment was mixed at yesterday's trading session. Equity bulls were timid, while the dollar bears were in charge of the market after the latest PCE data, which is the Fed's favorite gauge of inflation showed that the core PCE index slowed more than expected in October. The softening inflation sent the US dollar index tumbling below its 200-DMA for the first time since summer 2021. The US dollar index slipped below its major 38.2% Fibonacci retracement on 2021-2022 rally, and stepped into the bearish consolidation zone. Finally! Trading in equities was much less festive than the FX yesterday, as the ISM manufacturing index warned that the US manufacturing activity fell below 50, the contraction zone, for the first time since summer 2020. Today, the much-expected jobs data should determine whether the S&P500 deserves to quit the ytd negative trend, or stay in it. How strong, or soft the NFP data should be to keep the equity rally going? Listen to find out more!

Thu, 01 Dec 2022 08:53:00 +0000 https://markettalk.podigee.io/390-what-did-powell-say-vs-what-did-investors-hear af6c7aa19f37b4a0d9f5f4e63ec6160b 390 full no Swissquote

Appetite in Asian equities improved on hints that China could ease the excessive Covid curbs as a response to angry anti-Covid protests, but appetite for rest of the market was limited before a deluge of US economic data and Federal Reserve (Fed) President Jerome Powell's speech due between today and the end of the week. Investors will be watching the latest US GDP update, the JOLTS job openings, ADP report today, the US PCE, personal income and spending on Thursday, and US NFP and unemployment rate on Friday. Soft inflation and not too strong data is what the market needs to keep positive. But in all cases, it's possible that we won't see US equities extend gains by much, and we can see the S&P500 headed lower from the 200-DMA, which also coincides with the year-to-date descending channel top. Good news is that both a softer Fed due to a potentially softening inflation, or soft economic data in the US, should be negative for the US dollar, and could finally help the dollar ease against major currencies, hence ease the strong-dollar-led-high-inflation in the rest of the world. Due today, investors will have their eyes set on the Eurozone's preliminary inflation data for November. Who knows, maybe we will see a figure below 10%, in which case, the EURUSD could make another attempt above the 200-DMA which stands near 1.0370. But as I always say, the US data, and Jerome Powell will say the last word on the overall direction in currency markets. Strong US data, and hawkish Fed comments could immediately turn the winds in favour of a stronger dollar yet again. Listen to find out more!

The week started with a selloff across global equities. Unrest in China due to protests against the Covid zero policy combined with the Federal Reserve (Fed) members' hawkish comments led to an early week selloff in both Asian, European and US equities. In cryptocurrencies, it was another day of bankruptcy news. This time, the crypto lender BlockFi, which had strong ties with FTX announced to file for bankruptcy. Bitcoin eased but didn't damage important support on the news, while Coinbase dived another 4%. Elsewhere, the S&P500 lost 1.54% on Monday, as Nasdaq slid 1.43%. The US dollar traded up and down as US crude fell to $73pb then rebounded to flirt with the $80pb this morning, despite the Chinese slowdown worries. Expectation that OPEC would use the Chinese unrest as excuse to restrict outlook boosted bulls' appetite. There is still hope that Fed President Jerome Powell talks about slower rate hikes at his speech this week, but again, his words shouldn't be heard halfway through. The Fed is willing to slow the pace of rate hikes to avoid going too far. But if they slow down, it's also because they want to go higher than 5%. Listen to find out more!

Massive anti-Covid protests in the biggest Chinese cities marked the weekend. So, the week kicked off on a bad mood in the Asian markets. Australian and Chinese stock markets were painted in red. The Hang Seng index dived more than 2% in Hong Kong, and crude oil has already lost more than 3% at the time of writing. In the US, the record Black Day sales could hammer the joy around a potential Federal Reserve (Fed) pivot on softening US economy. The US shoppers spent more than $9 billion in online sales on Friday, and Cyber Monday is also expected to be a record-breaking one, with more than $11 billion to be spent. This is not exactly what you expect to hear when you think that the US will enter a consumer-led recession in couple of weeks from now… The US dollar kicked off the week on a bullish note. The EURUSD slipped below the 200-DMA, near 1.0380. The S&P500 index closed last week at the highest levels since mid-September, and stands a couple of points from the year-to-date descending channel top, which could bring topsellers in, especially if strong data revives the idea that the Fed has no reason to stop hiking its interest rates. Listen to find out more!

Markets were quiet yesterday, as the US was closed for Thanksgiving. European markets mostly surfed on the positive reaction from the US equities to the Federal Reserve (Fed) minutes released a day earlier. The German DAX advanced to a fresh 5-month high, as the French CAC40 hit a fresh 7-month high, thanks to the euro's appreciation against the greenback, which somehow eases the inflationary pressures for the European companies, along with the falling energy prices. Elsewhere, the latest minutes from the European Central Bank (ECB) released yesterday revealed that ‘a few' officials favored a smaller rate increase, than the 75bp that the bank delivered last month, citing the other monetary tightening measures that would help restricting the monetary conditions. The Swedish Riksbank raised its interest rates by 75bp yesterday and said that the monetary tightening will continue to tame inflation in Sweden. The Korean Central Bank raised its interest rates by another 25bp to the highest levels since 2012 and the won gained, whereas the Turkish Central Bank CUT its policy rate by another 150bp points, but said that the easing is perhaps enough at 9%, and that risks on inflation – which stands around 85% officially, and 185% unofficially – increase from here. In China, the central bank signals lower reserve ratios for banks, and conducts reverse repo operations to boost liquidity in the system, as news of fresh Covid restriction measures creep in. The Chinese news certainly prevent oil bulls from jumping in the market right now, and the American crude consolidates below $80pb this morning, with solid offers seen at $82/85 range. In Switzerland, Credit Suisse continues making the headlines. The stock price flirts with all-time-lows, as UBS sees its share price extend gains as outflows from CS reportedly benefit UBS. Listen to find out more!

US stocks spent most of yesterday's session hesitating between slight gains and slight losses, then the release of the latest Federal Reserve (Fed) minutes helped the bulls take the upper hand, as the minutes confirmed that a ‘substantial majority' of Fed members thought it was a good idea to slow down the pace of the rate hikes. The S&P500 gained around 0.60% while Nasdaq jumped around 1%. The US 10-year yield eased, as the US dollar sold off quite aggressively across the board We saw a decent price action yesterday was oil, and that was well before the Fed minutes. The barrel of American crude dropped up to 5% yesterday on news that the Europeans would set the price cap for Russian oil to around $65 to $70 per barrel, levels at which Russian oil is already exchanged. On individual stocks, Tesla was one of the biggest gainers of yesterday's session as Citi and Morgan Stanley revised their views higher, but that rally was maybe… exaggerated. Listen to find out more!

The OECD said the global economy will avoid a recession this year, and next year, and that unemployment rates won't skyrocket. That was the good news. But growth will be low and slow, and inflation will remain high, keeping central bank policies tight. That was the bad news The S&P500 gained, as strong earnings from retailers improved sentiment before Thanksgiving. Energy stocks performed well on the back of a sustained recovery in crude oil. Shell rallied 5% on announcement that the company will be reviewing its investment in the UK to avoid paying windfall taxes to the British government. BP rallied 6.52%. In central bank news, the Reserve Bank of New Zealand (RBNZ) raised its rates by 75bp as expected today. The US dollar softened, and the EURUSD rebounded past 1.0320 in the middle of mixed comments about what the European Central Bank (ECB) should do at its next meeting. In precious metals, gold slid yesterday despite a softer US dollar, and softer yields. In China, stocks were not looking good as Beijing and Shanghai put stricter rules to slow the Covid contagion, again! But Alibaba rebounded almost 4% in HK today, on news that Ant Group would pay a fine over a billion USD. In cryptocurrencies, traders remain on the edge, on news that a ‘substantial amount' of FTX assets have either been stolen or are missing. Bitcoin however resists. The price of a coin recovered above $16K yesterday, but risks remain tilted to the downside. Listen to find out more!

Tue, 22 Nov 2022 08:46:00 +0000 https://markettalk.podigee.io/383-should-you-sell-tesla-just-because-you-dont-like-elon-musk 7a4a723e23c1dbde0c282f67b1f2ffc3 383 full no Swissquote

Stocks in Asia fell this Monday on news that China reported its first death in six months from Covid on Sunday, and two other deaths followed. The news spurred fear that the government could make a U-turn on its decision of easing the strict Covid zero rules, and wreak havoc in Chinese markets, yet again. Elsewhere, the US-inflation-data boosted rally faded last week, on the back of a too-strong-to-be-happy retail sales print, and a couple of hawkish comments from Federal Reserve (Fed) Presidents, including a chart from Mr. Bullard where the Fed's terminal rate stretched up to 7%! This week, investors will focus on interest rate hikes and the US Black Friday sales. The Reserve Bank of New Zealand is expected to raise its rates by another 75bp on Wednesday, the Fed will reveal the minutes from its latest meeting a little bit later that day, and the US will find out how much and of what people will be buying this Black Friday, after the Chinese Alibaba kept its 11.11 sales secret this year, and we had a devastating Q3 earnings and a gloomy guidance from Target last week. In commodities, the barrel of US crude slipped below the $80 psychological level last week, below the post-pandemic ascending trend base. In the FX, the US dollar kicks off the week on a positive footage, on the back of a retreat in dovish Fed expectations. In cryptocurrencies, contagion news from the FTX collapse continues making the headlines in cryptocurrencies. According to the latest news, FTX owes more than $3 billion to its unsecured creditors, and crypto.com, Binance and OKX suspended deposits of dollar-backed stablecoins, USDC and Tether before last weekend. In sports, the world's most expensive World Cup kicked off this weekend in the middle of the Qatari desert, with a lot of unusual news, speculation and backlash about the CO2 emissions and limited sales of alcohol, among other criticism. Investors hope sports betting and beverage companies would see a boost from the event… Listen to find out more!

Inflation in Japan soared to the highest levels in more than 30 years, to 3.7% in October, up from 3% printed a month earlier High inflation print sure revived the Bank of Japan (BoJ) hawks, and the calls for a policy rate hike, and kept the dollar-yen below the 140 level, but it's unsure whether the BoJ will give up on its ultra-soft policy stance. Therefore, if the US dollar picks up momentum, which will certainly be the case, the USDJPY could easily rebound back above its 50-DMA, which stands near 145. And the reason I think the US dollar will recover is because most Fed members remain relatively hawkish regarding the Fed's policy tightening. Plus, option traders are building topside structure over the one-month tenor that covers the next US inflation report and the Fed's next policy meeting in December. So, the ambiance in the stock markets is not as cheery as it was at the end of last week. In the UK, the autumn budget statement went happily eventless. Gilts rallied, pound saw limited sell-off, while energy companies' reaction to windfall taxes remained muted. Listen to find out more!

Thu, 17 Nov 2022 09:17:00 +0000 https://markettalk.podigee.io/380-brits-will-hate-austerity-but-investors-may-like-it f69c4ba63ca94394560a40cd014b3b50 380 full no Swissquote

US stocks extended rally yesterday, as the unexpected easing in producer prices beefed up the optimism that the Federal Reserve (Fed) would soften the monetary tightening and the better-than-expected New York Empire State Manufacturing index hinted that the US economy is holding up well. News that Russian missiles fell to Poland somehow killed a part of that falling-inflation, resilient growth optimism. But escalation of the tensions has been avoided so far, with US President Joe Biden saying that the missile was ‘unlikely' fired from Russia. On the index level, the geopolitical fears remained short-lived, and the S&P500 finally rebounded to close the session a touch below the 4000 psychological mark. On the individual level, TSM jumped on Warren Buffet and Apple news, as Walmart gained on earnings, revenue beat and $20-billion buyback. In energy, US crude gained on the geopolitical concerns after the Poland attack, and on a more-than-5-million-barrel decline in US oil inventories last week. In the FX, the US dollar eased after the mixture of soft PPI and solid Empire Manufacturing revived the dovish Fed expectations. The EURUSD traded briefly above its 200-DMA, and Cable hit the 1.20 for the first time since this summer. On the data front, UK inflation data showed that inflation in the UK hit 11.1% in October vs 10.7% penciled in by analysts, revived the hawkish Bank of England (BoE) expectations but not GBP-appetite. Listen to find out more!

Equities saw some profit taking in last week's post-US inflation rally, as some Federal Reserve (Fed) officials reminded investors that the 7.7% inflation is still high and that the Fed would continue fighting to bring it lower. In geopolitics, yesterday's meeting between Jow Biden and Xi Jinping went well. US-listed Chinese stocks extended gains. In energy, American crude dived on the news that OPEC cut its oil demand outlook and warned of uncertainties around global growth. In earnings, big US retailers Walmart and Home Depot are due to release earnings today And in fun news, Donald Trump will make an important announcement! Whoo!

It has been an ugly weekend for cryptocurrencies, even though the selloff remained relatively contained in the sector giants like Bitcoin, compared to the size of the bad news that flew in last Friday. Market mood outside crypto is extremely joyful after last week's inflation data surprised investors to the downside and China announced to relax Covid measures, and boost its shattered property sector. Although the US inflation remains relatively high to contain a perhaps premature bull run on dovish Fed expectations, news from China could help keeping the mood nice and sweet. We will yet discover if the latest news will be enough to get international investors back on board of a Chinese dream that has been shot to the ground by the very Xi Jinping. Joe Biden and Xi Jinping will talk today on the sidelines of the G20 summit in Bali. Talks could go either way; they could either boost, or hit risk appetite in Chinese, and global assets. Other than that, investors will watch the Q3 earnings from Nvidia, and some US and Chinese retail giants throughout this week! Listen to find out more!

The US headline inflation fell to 7.7% in October, versus 8.0% expected by analysts and from 8.2% printed a month earlier, core inflation fell more than expected as well. And because soft inflation is the only thing that matters to the Federal Reserve (Fed), and to the Fed expectations, we saw a jaw-dropping repositioning in the markets posterior to the release. Equities skyrocketed, the US yields and the US dollar tanked on the expectation that the Fed may be content with a lower end rate to call victory in its fight against inflation. Investors reacted to the latest US inflation data as if a miracle happened, but did they overreact? US is closed today, but there is a last piece of data, the University of Michigan's consumer sentiment index, that could temper joy into the weekend, as it is expected to have further eased this month. But who cares, inflation is what matters the most. Listen to the full episode to find out more!

Less aggressive support for the Republicans, and more importantly, looming uncertainty, are the major factors that weighed on investor sentiment yesterday. The S&P500 slid more than 2%, Dow Jones lost 1.95%, while Nasdaq dumped 2.40%. The selloff was also fueled by the shaking crypto markets, and perhaps some investors taking risk off the table before the US inflation data, due today. In cryptos, watching, what used to be the world's 4th biggest crypto exchange go under the water, triggered panic across the sector, getting investors to question, whether FTX is an isolated case, or this is just the tip of the iceberg, and if and how many of the cryptocurrency exchanges may haves similar insolvency problems, that are only waiting to get revealed. In FX & commodities, US dollar rebounded yesterday on the back of a better-than-expected Democrat results, and some repositioning before today's inflation data, gold held ground above $1700 per ounce, while US crude fell on China Covid news and weekly rise in US oil inventories. On the geopolitical front, news that Russia announced to pull out troops from Kherson triggered mild, and short-lived gains in equities. On the data front, investors hold their breath before the US inflation data due today. Headline inflation in the US is expected to have eased from 8.2%, to 8% in October, and core inflation is seen softer at 6.5%, compared to 6.6% printed a month earlier. PS: in six of the prior seven months, inflation exceeded expectations. So, there is a good chance that it's the case this time around as well. Listen to find out more!

US stocks gained, the US yields and the dollar slid on the expectation that a divided landscape from the US midterms would support stocks, and soften the dollar. From an investor point of view, a Republican win in both chambers is a good outcome for the stocks. And even a divided government, which we will sure get, is better for the stocks than a Democratic win. In cryptocurrencies, there is a drama going on between Binance and FTX, which are two big cryptocurrency exchanges, and that's causing a renewed trouble across the crypto sector. Bitcoin fell 10%, below the $20K mark, Ethereum fell near 15%, although the October support hasn't been damaged yet, and more volatile and more speculation-sensitive tokens fell even sharper. Dogecoin for example lost 20%. What will happen from here? Listen to find out more!

Investors are tense and undecided into the US midterm elections today. Joe Biden had a rough time since he is in office: he Covid pandemic, the war in Ukraine, the global energy crisis, the skyrocketing inflation, a pitilessly tighter Federal Reserve (Fed) policy, rising mortgage rates… all these factors will weight on the wrong side of the balance for Democrats at today's election. The consensus expectation is a divided government between White House and Congress. Republicans are favoured to take the House and have at least 50/50 seats at Senate. What does that mean for the US monetary and fiscal policies, the financial markets, and the dollar? Listen to find out more!

Week starts with blurred sentiment on the back of mixed US jobs data, and soft Chinese trade figures. Chinese exports and imports unexpectedly shrank in October; this was the first synchronized drop since May 2020. US jobs data was mixed, and triggered mixed market reaction, a rally that may not last long into the inflation data. This week, US midterm elections & latest CPI update will be the major talking point. On the corporate calendar, Disney, Occidental Petroleum and Rivian are among companies that are due to go to the earnings confessional this week. Listen to find out more!

Investors got the policy pivot they were looking for this week; unfortunately, not from the Federal Reserve (Fed), but from the Bank of England (BoE) instead. In a confusing way, the Bank of England raised its interest rate by 75bp yesterday, but announced that the city analysts have got the BoE's terminal rate wrong, and that the future rate hikes from the BoE will be softer, given that the economic situation is alarming. Sterling dived, while gilt yields were steady to lower. Elsewhere, in an extended market reaction to Wednesday's Fed decision, the US dollar gained across the board, as investors repositioned for a more aggressive Fed tightening. The thing that could throw cold water on burning hot Fed expectations is soft jobs data from the US. That's also the only thing that could save the rest of the world from the worsening Fed aggression: rapidly deteriorating economic conditions in the US. Due today, the NFP is expected to reveal 200'000 new nonfarm jobs in October, for an average hourly pay rise steady around 0.3%. Listen to find out more!

Jerome Powell abated the latest risk rally yesterday, saying that the rate hikes will slow down, but the levels will go higher. Equities sold off, the yields jumped, the dollar gained, and hopes of seeing the end of the market turmoil got completely dashed. The US 2-year yield soared to 4.90%. The Dow Jones lost more than 1.50%, the S&P500 dived 2.50% and Nasdaq fell more than 3%. In the FX, the prospect of higher terminal rate from the Fed boosted the USD appetite. The dollar index gained yesterday, as the EURUSD slipped again below its 50-DMA, Cable slipped below 1.14, the dollar-franc is back above parity, the dollar-yen is set for another advance to 150 on the back of the diverging rate prospects between the Fed that is now set to increase rates slower, but higher, and the Bank of Japan (BoJ), set to do nothing, for now. Gold is also under the pressure of a stronger US dollar and the higher US yields. Bitcoin, on the other hand, is surprisingly resilient to the broad risk selloff. The barrel of American crude rose to $90, as the latest EIA data showed that the US crude inventories fell by more than 3-million-barrel last week, much faster than a 200'000 barrel decline expected by analysts. Today, the Bank of England (BoE) is also expected to raise rates by 75bp today, but that expectation is down from around 100-150bp hike expected when Liz Truss was busy shaking the financial markets with her crazy mini budget. The BoE should no longer act twice as aggressively to compensate for the actions of an irresponsible government, but it still must fight the rising inflation in Britain. Listen to find out more!

Jay Powell will probably hammer the dovish hopes, and the latest risk rally when he speaks following the FOMC decision today. In preparation for an unpleasantly hawkish Fed statement today, the US 3-month yield spiked above the 4.20% mark, the level it was normally supposed to be in 18 months, the 2-year yield returned above the 4.50% mark, the US dollar index advanced and the US equities sold off, as yields jumped. The ADP report is due a couple of hours before the Fed decision, and is expected to have eased below 200'000 in October. Any positive surprise will likely further boost the Fed hawks, and dampen the mood in risk assets. In China, stocks extend gains on an unverified social media post that China will end its Covid measures. The Chinese foreign ministry spokesman said he was unaware of the plan. Disneyland in Shanghai was shut with people in it, after a Covid case was found in the park… I wouldn't cry victory just yet! In Britain, the first day of bond selling from the Bank of England was a success. The BoE sold 1$750 million worth of bonds, demand exceeded offer, gilt yields pulled lower and sterling was steady. Airbnb fell 5% post-market on disappointing Q4 outlook, Sony jumped near 10% in NY as softer yen helped boosting sales, BP announced the second biggest quarterly results, while Abiomed jumped 50% after Johnson & Johnson announced to buy the company. Listen to find out more!

Equities fell and bond yields rose, as the hawkish Federal Reserve (Fed) fears resurfaced before Wednesday's FOMC decision. The Fed starts its two-day meeting, and could call the end of the aggressive rate tightening and signal slower rate hikes to enter the final phase of policy tightening, before pausing. But the Fed will not want to throw the foundation of a market rally, which could play against its fight against inflation. In the Eurozone, inflation hit a record high of 10.7% in October, versus 10.2% expected by analysts, and the European Central Bank (ECB) Chief Christine Lagarde said that inflation came from nowhere, ignoring a decade-and-a-half of aggressive bond buying that threw the foundations of the present spike in inflation, boosted by the pandemic, the war and a global energy crisis The Eurozone yields spiked on expectation that higher inflation would mean higher ECB rate hikes in the future. But the euro didn't gain, as currency traders priced in the rising recession fears that come along with the higher interest rates. In Australia, the Reserve Bank of Australia (RBA) raised the interest rates by 25bp as expected and said there will be more rate hikes. In Switzerland, the Swiss National Bank announced a 142 billion franc loss in the first nine months of the year; melting currency valuations, especially the melting euro, was to blame. In precious metals, gold remains under pressure. The $1615 is the next important support. If the US dollar strengthens as a result of a sufficiently hawkish Fed statement this week, gold bears could pull out the $1615 support and tip a toe into the $1500s for the first time since April 2020. Listen to find out more!

Despite the broadly disappointing Big Tech earnings, and the heavy selloff we saw in most Big Tech stocks, US equities ended last week on a positive note, thanks to record profits from US Big Oil companies, and a much better than expected reaction to Apple results. American crude consolidates above the 50-DMA, but failed to clear the $90 offers last week, as recession fears prevent a further rally from developing. This week, attention shifts to Federal Reserve (Fed), expected to raise rates by another 75bp. The Reserve Bank of Australia (RBA) and the Bank of England (BoE) are also expected to hike by 25bp, and 75bp respectively. Elsewhere, news is not great. Russia decided to pull out of a deal to allow Ukrainian crop shipments; wheat futures jumped more than 5% this morning. China's manufacturing and services PMI slipped below 50, to the contraction zone in October due to Covid restrictions in major cities, and many cities are still dealing with lockdown measures, and Xi Jinping made sure to emphasize that he will continue to fight… the virus. In Brazil, Lula won the election bearing Bolsonaro by less than 2 percentage points. The latter said he refuses the defeat, which means that we will see some more political uncertainty in Brazil in the coming weeks. Listen to find out more!

An ugly week of Big Tech earnings is coming to an end, having wipe out hopes of seeing earnings boost gains across the stock markets. Yesterday, Meta plunged more than 24%; Nasdaq 100 lost almost 2%. And today won't be any better, as Apple and Amazon also lost in the afterhours trading. Amazon lost up to 20%! US Big Tech rather killed joy this week, so all eyes are on Big Oil to reverse mood. Exxon Mobil and Chevron will be reporting earnings this Friday and are expected to announce stunning earnings. On the data front, investors didn't know what to do with the mixed US GDP data yesterday. The latest GDP update showed that the US economy grew 2.6% in the Q3, exports boosted the headline figure, while imports fell - meaning that the domestic demand from the US weakened despite a significant appreciation of the US dollar. On the central banks front, the European Central Bank (ECB) hiked the interest rates by 75bp at yesterday's meeting, as the stubborn Bank of Japan (BoJ) maintained its interest rate unchanged at -0.10% at today's meeting, while revising the 2022 inflation forecast significantly higher from 2.3% to 2.9%. Today, investors will be watching one last thing on the macro front before the weekly closing bell – and that's the September PCE index, along with the personal income and spending data. Any weakness could further weigh on the dollar before we close the week, and before next week's FOMC meeting. Listen to find out more!

Yesterday wasn't not a good day for the US Big Tech. Google dived almost 10% after reporting disappointing results, while Microsoft sank almost 8%. Nasdaq bounced 2% lower after having tested the major 38.2% Fibonacci retracement, a touch below the 11700. And don't expect the things to look better today. Meta dived another 20% in the afterhours trading, after announcing disappointed results. On the macro front, however, the Bank of Canada (BoC) surprised with a softer-than-expected rate hike, and US home sales fell almost 11% in September. The US dollar index dived below its 50-DMA yesterday. The EURUSD rallied above parity, as Cable advanced past 1.16. Focus shifts to US GDP dat, the European Central Bank (ECB) decision, Apple & Amazon earnings today. Listen to find out more!

Most US indices rallied yesterday on the back of soft economic data from the US, but the sentiment reversed after the Q3 results from Google and Microsoft failed to please. Both stocks fell in the afterhours trading. Rest of the earnings were mixed. Meta is the next US giant to announce earnings, and expectations are rather… low. The US 2-year yield has been easing after hitting a fresh 15-year high last week, as the US 10-year yield fell to 4.05%. The dollar index tanked around 1%, both the EURUSD and Cable advanced past their 50-DMA, which were acting as strong resistance since the start of the year, especially since the start of the war in Ukraine. The USDCAD fell to a 3-week low, as the Bank of Canada (BoC) prepares to deliver another jumbo rate hike today. The BoC could deliver a 75bp hike, which would further fuel the odds of recession in Canada by next year. It's important to note that the common denominator of the latest FX moves is the softer US dollar. And the downside moves in dollar and the US yields depend on Fed expectations – whatever the other central banks do seem accessory to the main dollar story. The Fed expectations have been shaped by softish data, and some softish comments from the Fed officials recently. But there is nothing official pointing at a potential softening tone from the Fed just yet. Hence, the recent fall in the US dollar, and rebound in equities may not last. Gains remain vulnerable. And very much so, as the latest results from the US tech giants failed to make the investors smile yesterday. Listen to find out more!