ukraine

The Commodities Feed: Oil pushes higher on rising tensions

Oil extended its upward rally this morning amid continuing tensions in the Middle East. Reports of drone attacks by Ukraine against facilities on the Baltic coast – a key oil export route for Russia, has further supported the oil market.

 

Energy: Brent holds above US$80/bbl

    The oil market continued to rally this morning with ICE Brent trading around US$80.4/bbl as of the time of writing. The heightened geopolitical tensions have continued to provide support to the oil market with the recent reports of more airstrikes by the US and UK against the Houthis in Yemen. Meanwhile, drone strikes by Ukraine have shut down a Novatek PJSC gas-condensate terminal on the Baltic coast over the weekend, raising concerns for the oil exports from Russia’s western ports.   North Dakota’s pipeline authority estimates that oil production in the region was down around 250-300Mbbl/d as of 22 January due to the operational challenges

Swissquote MarketTalk: A Look At XAUUSD, Swiss Secrets, Tesla And More

Russia And Ukraine Conflict Fuelling Markets. Awaiting The US PPI And UK Inflation Indicators

Swissquote Bank Swissquote Bank 14.02.2022 11:11
The week starts on quite a tense note as the tensions between Ukraine and Russia don’t seem to be headed in the right direction with reports on Friday hinting at the possibility of a Russian invasion before ‘the end of the Beijing Olympics’. European equities are deep in the red, with FTSE 100 somehow doing less bad than the others on rising energy and commodity prices, but the Euro Stoxx is already down 2.33% and the DAX by 2.85%. US crudes flirts with the $95 per barrel, and gold welcomes decent safe-haven capital. While US sovereigns, energy and gold are the favorite destinations for those who are seeking protection in the actual environment, any relief on the Ukrainian front could send the recent gains in oil and gold crumbling. On the economic agenda: US PPI and FOMC minutes will be closely watched. We know that engineering a policy that would bring inflation down to the 2% target in the US would also bring an unnecessary stress on the market and on the economy. Would that help cooling the Fed hawks? Watch the full episode to find out more! 0:00 Intro 0:26 Market update 2:19 Rising oil also fears central bank hawks 3:28 Gold, the safe haven 4:48 Bitcoin under pressure 5:42 Economic calendar: US PPI, FOMC minutes, UK, CAD, JP inflation 8:04 Corporate calendar: Nvidia, Walmart, Roblox Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
Swissquote MarketTalk: A Look At XAUUSD, Swiss Secrets, Tesla And More

Reviewing Effects Of Easing The Conflict And Awaiting US PPI

Swissquote Bank Swissquote Bank 15.02.2022 13:24
There is a certain relief in the Ukraine-Russia crisis as the two sides seem willing to continue their diplomatic efforts to avoid a military action. The latter could help reversing a part of yesterday’s aggressive selloff in the European markets, and the FTSE 100 could outperform its peers on the back of firm energy and oil prices. Base case: no war Ukrainian president criticized news giving a date for a potential Russian invasion and said that it could eventually drop its dream to become part of NATO, as a powerful sign of its commitment to de-escalate the tensions at its Russian border. US producer prices: The S&P500 slid 0.38% and closed just near the 4400 mark, the Dow dropped near 0.50%, as Nasdaq closed Monday’s session flat. Today, the inflation talk continues with the US producer prices due later in the session. Analysts expect a certain easing in the PPI index to 9.1% from last month’s surprise to 9.7%. Given the rise in oil and commodity prices, there is a higher chance of seeing a positive than a negative surprise. Any positive surprise could send the PPI index above the 10% psychological mark and keep the bears in charge of the market, regardless of a more hopeful mood due to the diplomatic efforts between Russia and Ukraine. Watch the full episode to find out more! 0:00 Intro 0:24 Market update 2:48 FTSE led higher by energy, mining stocks 4:54 S&P500, Nasdaq futures rebound, but PPI data is a risk 7:23 Super Bowl advertisements pointed at cryptocurrencies! 8:21 EURUSD: opportunity for ECB hawks? Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
Tension Beetween Ukraine And Russia Definetely Shaped News In Recent Days

Tension Beetween Ukraine And Russia Definetely Shaped News In Recent Days

Marc Chandler Marc Chandler 16.02.2022 15:43
February 16, 2022  $USD, BOJ, Canada, China, Currency Movement, EMU, FOMC, Trade, UK Overview: Hope that the geopolitical tensions in Eastern Europe are de-escalating is underpinning risk appetites.  The large bourses in the Asia Pacific region but China were all up more than 1% and Europe's Stoxx 600 gapped higher, but has come back to close the gap, with communications and financial sectors the largest drags.  US futures have softened over the past couple of hours.  The 10-year Treasury yield is hovering around 2.04%, while European yields are a little softer.  In the foreign exchange market, the risk-on means the dollar, yen, and Swiss franc are underperforming, while the Canadian and Australian dollars are leading the advance.  Most emerging market currencies are firmer, and the JP Morgan Emerging Market Currency Index is edging higher for the third consecutive session.  Gold and oil are stabilizing after yesterday's downside reversals.  After dipping below $1845 yesterday, the yellow metal is approaching $1860.  March WTI is recovering from yesterday's $90.65 low to resurface above $93.00.  API estimated that US crude inventories fell by 1.1 mln barrels and the drawdown at Cushing was more than twice as much.   US natural gas prices are higher for a third session and around 13% for the week.  Europe's benchmark has steadied after collapsing 16% yesterday.  Iron ore bounced almost 3.5% to snap an 11% slide over the past three sessions, while copper is edging higher.   Asia Pacific While many countries are combatting price pressures, China is moving in the opposite direction.  Falling food prices helped the January CPI slow to 0.9% year-over-year from 1.5%.  Pork prices fell by more than 40% year-over-year and fresh vegetable prices dropped 4.1%.   Excluding food and energy prices, the core CPI was unchanged at 1.2% year-over-year.  Falling coal, steel, and other industrial goods prices say the PPI eased from 10.3% at the end of last year to 9.1% in January.  Both the price gauges were lower than expected and underscore the scope for further official support.  Many expect rate cuts and a reduction in required reserves to be delivered with Q2 a favorite timeframe.   The Bank of Japan conducted its normally scheduled bond buying operation today. The offer-to-cover rose to over 5x, the highest since last October, reflecting the greater willingness to sell the bonds to the BOJ.  There may have been some extra interest to sell 20-year bonds ahead of tomorrow's auction.  BOJ Governor Kuroda was clear.  The offer to buy unlimited amounts of 10-year bonds to defend the yield-curve-control cap of 0.25% can be made again.  The BOJ has no intention to abandon it or widen the band for the 10-year yield.  The IMF has previously suggested targeting a short-term rate, but Kuroda showed no interest.  While a strong reception at tomorrow's auction may buy some time, the pressures emanating from the rise in global rates suggests a running battle with the BOJ will continue.   The US dollar has been confined to about a 20-pip range above JPY115.60.  It is too narrow of a range to persist.  The upside looks blocked around JPY116.00 and is reinforced by the expiration of a nearly $1 bln option there today.  On the downside, the JPY115.30-JPY115.40 may limit a pullback.  The Australian dollar tested the $0.7185 area, the high before the weekend and US warning that a Russian invasion of Ukraine could happen any day.   This area corresponds to the (61.8%) retracement objective of the slide from last week's high set near $0.7250.  It appears to have stalled there and a test of nearby support in the $0.7140-$0.7150 area appears likely ahead of the jobs report first things tomorrow in Australia. The US dollar fell by a little more than 0.25% against the Chinese yuan yesterday, the most in two months, and slipped a little further today.  The market may have been encouraged by the PBOC's dollar reference rate, which for the second consecutive session was slightly below market expectations (of the median forecast in the Bloomberg survey).  Today's reference rate was set at CNY6.3463 vs. expectations for CNY6.3465.  Europe Understandably, the focus is on geopolitics and monetary policy, but the eurozone trade balance is at an important junction.  Yesterday, the EMU reported its largest monthly trade deficit (9.7 bln euros) in 19-years, mostly due to the surge in the cost of energy.  For last year as a whole, it recorded an average monthly surplus of about 10.2 bln euros, down from 18.7 bln in 2020 and 16.5 bln average in 2019. Last year's average was the smallest since 2012.   After the four largest EMU members report larger than expected declines in December industrial output, the median forecast in Bloomberg's survey for a 0.3% increase seemed wide of the mark.  Consider that German output fell by 0.3% (median forecast 0.5%), French output fell by 0.2% (median forecast 0.5%), and Italy's fall by 1.0%, which was only slightly more than expected. Spain was the biggest disappointment. It collapsed by 2.6% while the median forecasted a 0.5% decline.  Nevertheless, the Eurostat reported a 1.2% jump in December industrial output and appears to use different national figures.   UK January inflation gauges were slightly firmer than expected.  CPIH, which includes owner equivalent housing costs edged up to 4.9% from a year ago.  It was at 4.8% in December.  The month-over-month decline in CPI of 0.1% was slightly less than expected. The core measure rose 4.4% after a 4.2% pace at the end of last year.  Output producer prices accelerated to 9.9% from 9.3%, dashing forecasts of a decline (to 9.1%).  Input prices rose 13.6% from a year ago. This has also been a quickening if not for the upward revision of the December series to 13.8% from 13.5%.  Today's inflation report will not change many minds about the outlook for next month's meeting. The swaps market continues to show a better than even chance of a 50 bp rate hike on March 17.   The euro extended its recovery to $1.1395 in late Asian turnover today.  Recall that the geopolitics and widening rate differential had pushed it to about $1.1280 at the start of the week.  The upside looks blocked at $1.1400 by a one-billion-euro option that expires today and another a little larger at $1.1425.  Initial support is seen in the $1.1340-$1.1350 area.  Below there, support may be near $1.1320.  Sterling remains mired in a $1.35-$1.36 range.  It briefly slipped to below $1.3490 on an intrasession basis yesterday but quickly rebounded.  It has not settled outside this range this month.   America After the recent price data, the US economic news turns to the real sector today with consumption and production news.  Helped by a jump in prices and auto sales, retail sales are expected to have recouped December's 1.9% drop.  Auto and gasoline likely accounted for around half the projected increase.  The core measure, which excludes autos, gasoline, building materials, and food services are expected to have risen by 1.4%, the median forecast in Bloomberg's survey.  After dropping 3.1% in December, it may be a little disappointing. Next week, the more comprehensive consumption expenditures will be reported.  Like the headline retail sales, the PCE is expected to fully recover the 0.6% decline at the end of last year.  Industrial output is expected to have risen by 0.5% last month.  It fell by 0.1% in December.  However, parts of manufacturing remain disrupted and factory output is forecast to have risen by 0.2% after falling by 0.3%.  Perhaps, an under-appreciated component in industrial output is the surge in shale output from the Permian Basin.  It hit a new record high for the third consecutive month and was above 5 mln barrels a day for the first time since 2007 when the time series began.  America's seven major shale areas are ramping up output and is expected to reach 8.7 mln barrels a day next month.  That said, there are two medium-term challenges that ought to be monitored.  First, output per well is falling.  It is now back to August 2020 levels.  This means more wells are needed for the same level of output.  Second, the inventory left in the ground as in drilled but not completed wells has been trending lower and is now the lowest since 2014.  Late in the session, the FOMC minutes from last month's meeting will be released. Recall the statement was not as hawkish as Chair Powell comments.  Powell sought maximum flexibility and the market, with the help of some Fed officials (see Bullard) and the jump in CPI, read into that flexibility a sign of more aggressive monetary policy.  On the eve of Powell's press conference, the Fed funds futures had discounted around a 50% chance of a March hike and almost four hikes this year.  Now the Fed funds market is discounting almost a 2/3 probability of a 50 bp hike in March and is divided between six and seven hikes this year.  The swaps market is pricing in two hikes next year and a cut in 2024.   Canada reports January CPI figures.  It appears that after the US reported a stronger than expected increase, some economists tweaked their Canadian forecasts higher.  In January 2021, Canada's CPI rose by 0.6%.  The median forecast (Bloomberg survey) now looks for a 0.6% increase last month.  This will keep the year-over-year rate steady at 4.8%.  The underlying measures may also be broadly stable.  Note that last February through May, Canada's CPI rose by 0.5% each month.  Still, it may not impact expectations for monetary policy.  The swaps market has nearly 175 bp of tightening priced in for this year--seven hikes. The market sees a terminal rate of about 2.5%, which Bank of Canada Governor Macklem says may be higher.   The upper end of the US dollar's range against the Canadian dollar held earlier this week near CAD1.28. The greenback is being pushed lower now and is back near the pre-weekend/pre-US warning low (~CAD1.2670).  The lower end of the range is around CAD1.2650-CAD1.2660.  Last week, there was an intrasession spike to almost CAD1.2635. However, the intrasession momentum indicators are stretched, warning of the risk that the greenback bounces in early North American turnover.  The CAD1.2700-CAD1.2720 may serve as a nearby cap.  The US dollar remains soft against the Mexican peso.  The deputy governor of the central bank made it seem as if the Fed delivers a 50 bp hike by mid-March, it would be matched by Banxico at its meeting on March 24. The greenback has been testing the 200-day moving average, which comes in today near MXN20.34.  Yesterday's bounce off it has been particularly shallow, suggesting that the bids are being absorbed. A break would target this year's low around MXN20.28. Below there, the greenback could fall toward MXN20.10-MXN20.15.     Disclaimer
Equities Of Europe Are Under Pressure

Speaking Of nVidia Stock, S&P500 (SPX), The Conflict In Eastern Europe And GBP State

Swissquote Bank Swissquote Bank 17.02.2022 10:42
Good mood didn’t last long as the US didn’t let the tensions de-escalate insisting that Russia is certainly not pulling back its troops but is rather increasing its presence at the Ukrainian border. The US warning hit the investor appetite at yesterday’s session and reversed the earlier week gains in stock indices. As a result, the safe have flows boosted gold, again, as crude oil remained steady around the $92 per barrel. US equities were soft but the S&P500 erased a part of losses at a late-session rally after the release of the Federal Reserve (Fed) minutes, the pricing on the fed funds front flipped to give more chance for a 25bp hike in March, instead of a 50-bp hike. In the FX markets, the US dollar remains strong, while the pound-dollar is eking out gains above the 1.35 mark as the high inflation in the UK keeps the Bank of England (BoE) hawks in charge of the market. Bitcoin is pointed as a risk to the global financial stability, as Fidelity launches Europe's cheapest Bitcoin ETP. In the individual stocks, Nvidia’s strong results didn’t boost the share price in the afterhours trading, Virgin Galactic couldn’t extend Tuesday’s days on worries that they may have some execution problems sending people to the moon and Roblox tanked 26% on softer results. Watch the full episode to find out more! 0:00 Intro 0:28 Ukraine update 1:22 Gold up, but gains vulnerable 1:54 US equities fine with the hawkish Fed minutes 3:38 Sterling gains on soaring inflation expectations 4:54 Cryptocurrencies: a risk to financial stability? 6:04 Why strong results don't boost appetite in Nvidia? 7:35 Why the space travel doesn't seduce investors? 8:34 And why Roblox is not in a good place to reverse losses? Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
US IPO Activity Chart

US Seems To Be Unsure If Russia Ceased Actions, Gold Goes Up

Marc Chandler Marc Chandler 17.02.2022 13:03
February 17, 2022  $USD, Australia, Canada, Currency Movement, Japan, Norway, Oil, Russia Overview: US intelligence claims that Russia is still mobilizing for an attack on Ukraine is sapping risk appetites and lifting gold to its highest level since last June around $1885-$1890.  Asia Pacific equities advanced, except in Japan.  Europe's Stoxx 600 is nursing a small loss, while US futures are off around 0.4%-0.6%.  The 10-year US Treasury yield is hovering slightly above 2.0%.  European benchmark yields are 2-4 bp lower.   The Scandis and euro are bearing the brunt of the risk-off move among the major currencies, while the Antipodeans, yen, Swiss franc, and sterling have pushed higher.  Emerging market currencies are mostly lower, led by Russia and central European currencies, but the JP Morgan Emerging Market Currency is edging higher for the fourth consecutive session, recovering from earlier weakness.  Hungary left its one-week repo rate steady at 4.3% and Turkey is expected to also stand pat (14%).   April WTI is retracing most of yesterday's 1.8% gain and is straddling $90 a barrel.  US natural gas is falling for the first time this week.  Europe's benchmark is up about 10% since Tuesday's 16% slide.  Iron ore slumped 7% after it rose 3.2% yesterday.  Copper is slipping for the first session in four.  Asia Pacific Japan reported weaker than expected exports and stronger than expected imports drove the trade deficit to JPY2.19 trillion. It was a third larger than expected.  Seasonally, Japan's January trade balance always (20-years-plus) deteriorated from December.  Yet, there is something more going on.  Rising energy and commodity prices more generally are deteriorating Japan's terms of trade.  It shares that with the eurozone that reported its largest trade deficit in 13 years earlier this week. EMU's trade balance also typically deteriorates in January from December, but surge in energy prices appears to have aggravated the seasonal pattern.  Meanwhile, nearly every day that passes now means that a significant disruption of Russia's gas supplies could have a diminishing impact on Europe as spring approaches.  Australia's jobs market held up better than expected last month.  It created almost 18k jobs.  The market expected a flat report.  The positions created were all part-time posts, while full-time positions fell by 17k after increasing 41k in December.  Australia grew an average of almost 3 full-time jobs last year after losing a little more than 8k a month in 2020.  While the unemployment rate was steady at 4.2%, the participation rate ticked up to 66.2% from 66.1%.  The virus (sick-leave) and extended time-off (vacations) saw the hours worked fall 8.8% month-over-month.  Australia's employment report is unlikely to impact expectations.  The market continues to price in the first hike around mid-year.  Rather than ratify market expectations, the central bank continues to pushback.  The US dollar slipped through JPY115.00 for the first time since February 7.  The low was recorded in early European turnover.  The intraday momentum indicators are stretched, but a break of the JPY114.90 could see JPY114.60.  There is an option for nearly $1.1 bln struck there that expires today.  The JPY115.20 area may offer the immediate cap.  The Australian dollar was initially sold from around $0.7210 down to $0.7150 before finding good bids.  It recovered back to session highs before stalling.  It is straddling the $0.7200 area in late morning turnover in Europe, leaving it little changed on the day.   The greenback briefly and shallowly slipped through CNY6.33 and rebounded to almost CNY6.34.  For the third session in a row, the PBOC set the dollar's reference rate a little softer than expected (CNY6.3321 vs. CNY6.3325, median projection in Bloomberg's forecast).   Europe The US claims that rather than withdraw troops as previously reported, Russia has mobilized another 7k troops.  Moscow denies it.  Russia is involved in military exercises.  The operations in the Crimea appeared to have ended, but the ones with Belarus are expected to last through the weekend. It seems like Russian troop movement next week may be more telling.  The G7 foreign ministers are meeting on Saturday.   NATO chief Stoltenberg's term ends in October.  He will serve out his term before heading home to lead the central bank.  Norges Bank Olsen's term ends next month.  Deputy Governor Ida Bache who vied for the top job will act as interim head until Stoltenberg is ready.  The Norges Bank Governor also leads the $1.3 trillion sovereign wealth fund.  Last month, the central bank signaled its intention to hike rates in March.  The swaps market has 100 bp of tightening priced in over the next 12 months.   The euro was sold slightly through $1.1325 in Asia after holding below $1.14 yesterday.  The $1.1380-$1.1400 area looks to still cap upticks. The 1.7 bln euro in options struck in the $1.1435-$1.1450 area look set to roll-off today.  If uncertainty over Russia's intentions is a negative for the euro, the narrowing of the US two-year premium over Germany for the third consecutive session is a supportive development.  Sterling is bid.  It is trading above $1.36, which it has not settled above in nearly a month. The intrasession high this month was set near $1.3645.   The UK reports January retail sales tomorrow and a bounce is expected after January's large fall.  The euro has fallen to back to around GBP0.8350 near where it bottomed on Monday.  America How prices respond to fundamental news is often revealing.  Yesterday, the US reports stronger than expected January retail sales and industrial output figures.  But the two-year yield fell five basis points and the implied yield of December Fed funds futures contract shed 4.5 bp.  The two-year yield is another 3.5 bp lower today and is about 1.5 bp lower on the week (slightly above 1.48%).  With today's five basis point slippage, the December Fed funds futures implies an average effective yield of 1.53% at the end of the year, which is about 6.5 bp lower than where it finished last week after the US warned of a possible Russian attack on Ukraine in days.  Europe, Russia, and Iran are seemingly more optimistic than the US a deal with Iran may be near. With OPEC+ struggling to fulfill their commitments to boost output by 400k barrels a day and low inventories among many of the large consuming countries, new supply from Iran would help ease address the global shortage that has lifted price to almost $100 a barrel.  Saudi Arabia is believed to have about 2 mln barrels a day in spare capacity is reluctant to jeopardize the six-year agreement under the OPEC+ framework. The US EIA reported an unexpected build of US oil inventories yesterday, but Cushing saw an almost 2 milt barrel draw.  The US reports January housing starts and permits.  Both are expected to have softened but remain at historically elevated levels.  Although adverse weather may have impacted starts, the concern is rising rates and commodity prices (e.g., March lumber has risen by around 25% this month alone) will weaken demand.  The US also sees the Philadelphia Fed's manufacturing survey and weekly initial jobless claims.   Canada's January CPI surprised on the upside yesterday.  The 5.1% year-over-year headline pace was the highest since 1991, while the monthly increase of 0.9% was the largest since January 2017.  Gasoline prices rose 3.2%, meat jumped a little more than 10%, and homeowner equivalent expenses jumped 13.5%.  The Bank of Canada is set to hike rates on March 2.  The market has about a 1-in-3 chance of a 50 bp move discounted.  For about a week, the US offered a premium over Canada for two-year money, but it slipped back into a discount yesterday and is a little larger today.  Oil is firmer, but the general risk-off mood, given the uncertainties in Eastern Europe, weighs on the Loonie.  Meanwhile, the Canadian police have sent written warnings to hundreds who decamped in Ottawa.  It appears to be a prelude to arrests. The US dollar remains confined to a CAD1.2650-CAD1.2660 to CAD1.2800 trading range.  It approached the lower end of the range yesterday and is checking out the air above CAD1.27 near midday in Europe.  The greenback finally took out the 200-day moving average against the Mexican peso.  It is trading at its lowest level since last October (~MXN20.25-MXN20.26).  There is little chart support ahead of MXN20.12.  Still, the intrasession momentum indicators are stretched, warning against chasing it in early North American activity.    A bounce can carry the dollar back to the MXN20.30-MXN20.33 area.     Disclaimer
Incredible Price Of Crude Oil, A Look At Cryptomarket, Dollar Index (DXY) And ECB

Swissquote MarketTalk: A Look At XAUUSD, Swiss Secrets, Tesla And More

Swissquote Bank Swissquote Bank 21.02.2022 11:00
The week starts with some comfort regarding the Ukrainian crisis on news that Biden and Putin agreed to meet. US futures are in the positive after having closed the week on a bearish tone. Gold traded a touch below the $1910 this morning but eased below the $1900 mark on encouraging Ukraine-Russai news. Oil slipped below the $90 per barrel on Friday and is now steady a touch above that level. In Switzerland, the sentiment is soft due to the Swiss Secrets that broke in over the weekend. The latest news will likely weigh on Credit Suisse and send a broader shockwave to the Swiss bank, but the medium-term implications for the other Swiss banks should remain limited. US indices closed last week on a negative note. The S&P500 slid 0.72% and Nasdaq lost 1.23%. Nasdaq is now walking with big steps toward a death cross formation on its daily chart, which could further increase the bearish pressure on the stock price. The macro environment isn’t necessarily supportive of the equity markets this year. The hawkish Fed expectations, an imminent rate hike, combined with the prospects of an early and maybe an aggressive shrinking of the Fed’s balance sheet are not appetizing for risk investors. Yet, we begin the week having mostly ruled out the possibility of seeing a 50bp hike in March meeting. Happy Monday! Watch the full episode to find out more! 0:00 Intro 0:26 Ukraine update 1:52 The Swiss Secrets: a big deal? 4:27 Gold, oil ease on encouraging Ukraine news 5:41 Nasdaq: death cross formation ahead! 8:06 Tesla at crossroads 8:43 Other EV makers under pressure 10:07 Nikola, Moderna, Block & Alibaba earnings to watch this week Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
How the Russia-Ukraine crisis has reflected on the financial market so far

How the Russia-Ukraine crisis has reflected on the financial market so far

8 eightcap 8 eightcap 23.02.2022 12:11
Over the last several weeks, traders would have heard of and watched the unfolding Ukraine crisis. Russia built up a mass of troops and military hardware on the border, which started sending shockwaves through the markets that an invasion and new European conflict could be developing. This is not the first time we have seen Russian aggression towards Ukraine. In 2014 we all watched as Russia annexed Crimea after Moscow said it supported the liberty and backing the people’s free will as they wanted to rejoin Russia and break away from Ukraine. During this round, the situation felt and looked different due to the sheer build-up of the Russian military. Ukraine requesting to join NATO and the possibility of U.S./NАТО bases being built in Ukraine look like a flashpoint for the Russian side. Despite talks and negotiations, Russia continued to amass military close to the border, feeding invasion fears. Reasons continued to put out by the Kremlin, scheduled military exercises with Belarus. These failed to settle nerves as Western leaders continued to put forward prosed crippling sanctions that would be imposed if Russia invaded. The worst seemed possible late last week, and reports emerged of explosions and fighting in the two eastern parts of Ukraine. Russian tank numbers also increased, and we all thought it was just a matter of when we would see a Russian invasion. Biden offered Putin a summit only if he hadn’t invaded at the final hour. This is off the table now that Russia has once again pulled off another Crimea to a degree. Yesterday we heard that the two Eastern areas of Ukraine had voiced their right to become independent. The Kremlin supported them immediately and advised it had crossed the border to support a peaceful transition with a peacekeeping mission. In other words, a proxy invasion. President Biden has called this an invasion of Ukraine and announced sweeping sanctions on the Russian bank VEB and its military bank and cuts them out of any USD transactions. Individual sanctions, Biden said the adult children and members of Putin’s inner circle “share the corrupt gains of the Kremlin’s policies, and so they ought to share in the pain as well.” The sanctions on Russia’s sovereign debt expand upon Biden’s existing restrictions set in 2021 and prohibit American banks from trading shares in and or lending to several significant Russian sovereign debt funds. Prime Minister Johnson also made good on his threat of sanctions. The first tranche of sanctions would target Rossiya, IS Bank, General Bank, Promsvyazbank and the Black Sea Bank. The new sanctions also include three “very high net worth” individuals: Gennady Timchenko, Boris Rotenberg and Igor Rotenberg. Germany has halted approval of the Nord Stream 2 pipeline due to Russia’s actions, and the EU has agreed on sanctions to hurt Russia. The crisis had a significant impact on the markets. As you would expect, we have seen plenty of movement away from risk markets, but it hasn’t been totally black and white. Energy, oil has been driven higher during the crisis, and we’ve watched USOUSD (WTI) jump by 28% in the last three months. Price trading at $96 this week. Spot gas surged this week, hitting 6.70 but has pulled back to 4.31. Russia is a major energy supplier to Europe. This is a major card they hold. Traders will be watching oil and gas as any new aggression could cause oil to spike. We could even see $100 or higher reached again. The markets are a funny beast, and if they see the situation as calm, don’t be surprised if we continue to see price pullback. Sky-high oil prices could impact the FED. Crude prices can drive up inflation and slow down the global economy. A surge in oil could cause the Fed to rethink its pace of hiking due to growth concerns. FX, the USD and JPY have seen phases of demand during the crisis, but they have been far from dominant. Looking at this month’s trade so far, we can see that mainly the EUR has been most affected with falls to the two safe-havens. The GBP has been flat, and the AUD has been stronger. The AUD rallied yesterday as the situation developed and so far looks to be ignoring the situation. If we had seen an all-out invasion and this could still be a possibility, we would expect a traditional reaction on FX with the USD and JPY rallying on safe-haven demand. Gold has seen strong demand during the crisis. Traders jumping back into the metal as it moves back to a safe haven. This is not strange. Gold has always had multiple functions in the market, and in times of war or crisis, traders can look to it over fiat. Looking at the current month on the monthly chart, we can see this clearly in action as price has jumped by over 5%. The weekly shows a triangle breakout, but we will need to watch ongoing developments to see if buyer momentum remains. The Ukrainian crisis has hit stock indexes that could have been seen as overvalued. The Dax, in particular, has been hit hard. U.S. and Asian indexes haven’t been spared with heavy selling over the last two weeks. Markets fought back yesterday after the SP500 touched correction territory, and as mentioned above, traders will be focusing on the escalation of the crisis. If the situation intensifies, we would be looking for further lows, and if things continue to calm down, we could see counter-rallies and ranges set up. Cryptocurrencies have traded mainly lower during the crisis. Clearly, we can see at this point that they’re viewed as risk assets and are acting accordingly. It hasn’t been all one-way traffic, Kyber has added 38% YTD and so far has resisted the falls we have seen on the top 10 and top 25 indexes. Coins have been firmer since Tuesday’s updates, following other risk markets higher. Polkadot, Cardando were two top ten coins that hit new lows for 2022 before value buying returned this week. Again, we see the fortunes of most coins tied to risk demand. If things escalate, we will be looking for further declines across the top 10 and 25. The post How the Russia-Ukraine crisis has reflected on the financial market so far appeared first on Eightcap.
Incredible Price Of Crude Oil, A Look At Cryptomarket, Dollar Index (DXY) And ECB

Bitcoin As A Safe Heaven For Russia? Sanctions, USOIL Nears Levels Of 2014

Swissquote Bank Swissquote Bank 25.02.2022 11:31
Markets are trading with increased volatility and the price moves become unpredictable. Risks remain tilted to the downside, and price rallies may remain short-lived. The direct impact of the Ukrainian crisis to US equities could be limited, but the indirect impact, which is the rising energy prices could take a severe toll. This is why the war’s biggest threat to the American companies is inflation. The barrel of US crude traded above the $100 mark yesterday then eased back to around $96 as Joe Biden said the US will release its strategic oil reserves to ease the pressure at the pump. Also, there is increased possibility of a nuclear deal with Iran to unlock the Iranian oil potential - which would provide up to 800’000 barrels of additional supply per day. Bitcoin on the other hand gained on rumours that big Russian money could flow into the coin to avoid the US sanctions. Could it be? What would be the risks and implications of such a migration? Here is the link to the Bloomberg article: https://www.bloomberg.com/news/articl... Watch the full episode to find out more! 0:00 Intro 0:31 Ukraine update 1:44 Market update 2:30 Bitcoin: a safe haven for big Russian money? 5:47 Why US equities rallied & are gains sustainable? 7:50 Oil rallies past $100 and eases. What’s next? Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
Intraday Market Analysis – USD Consolidates Gains - 04.03.2022

Intraday Market Analysis – USD Consolidates Gains - 04.03.2022

John Benjamin John Benjamin 04.03.2022 09:19
USDJPY tests supply areaThe Japanese yen stalled after an increase in January’s unemployment rate.The pair’s rally above the supply zone around 115.80 has put the US dollar back on track. The general direction remains up despite its choppiness. 114.40 has proved to be solid support and kept the bulls in the game.A close above 115.80 would extend the rally to the double top (116.30), a major resistance on the daily chart. Meanwhile, an overbought RSI caused a limited pullback, with 115.10 as fresh support.NZDUSD breaks resistanceThe New Zealand dollar recovers amid commodity price rallies.After the pair found support near last September’s lows (0.6530), a bullish MA cross on the daily chart suggests that sentiment could be turning around. A bullish breakout above the recent high (0.6810) would further boost buyers’ confidence and lift offers to January’s high at 0.6890.On the downside, 0.6730 is the first support if buyers struggle to gather more interest. 0.6675 would be a second layer to keep the current rebound intact.UK 100 lacks supportThe FTSE 100 slipped after the second round of talks between Russia and Ukraine ended without much result.The index met stiff selling pressure at 7560 then fell below the critical floor at 7170. Increasingly bearish sentiment triggered a new round of sell-off to the psychological level of 7000 from last November.A deeper correction would lead to a retest of 6850, dampening the market mood in the medium-term. On the upside, the bulls must clear 7300 and 7450 to reclaim control of the direction.
WTI Crude Oil Speculator bets see largest 1-week rise since 2020 on Russia Invasion

WTI Crude Oil Speculator bets see largest 1-week rise since 2020 on Russia Invasion

Invest Macro Invest Macro 05.03.2022 18:06
By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday March 1st and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. Highlighting the COT energy data is this week’s jump in the WTI Crude Oil futures bets. The speculative net position in the WTI Crude Oil futures rose this week for the first time in the past six weeks and had the largest one-week gain of the past sixty-six weeks, dating back to November 24th of 2020. The WTI Crude contract had been seeing a weakness in speculator positions despite the ramping up of the Russia-Ukraine situation as spec positions had fallen for six straight weeks before this week’s turnaround. Crude oil prices have surged on the Russian invasion of Ukraine with oil closing this week right below the $116 per barrel level which marks the highest price close since 2008. Joining WTI Crude Oil (29,622 contracts) in gaining this week were Brent Crude Oil (19,648 contracts) and Natural Gas (4,220 contracts) while Heating Oil (-9,228 contracts), Gasoline (-1,144 contracts) and the Bloomberg Commodity Index (-709 contracts) saw falling contracts. Data Snapshot of Commodity Market Traders | Columns Legend Mar-01-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index WTI Crude 2,028,476 25 368,663 14 -410,955 79 42,292 75 Gold 615,600 51 257,622 70 -285,809 30 28,187 44 Silver 157,391 23 44,948 67 -57,150 43 12,202 14 Copper 195,398 23 22,093 58 -29,380 39 7,287 67 Palladium 7,242 4 -904 16 423 79 481 73 Platinum 65,383 31 16,890 26 -24,196 74 7,306 64 Natural Gas 1,112,832 3 -126,409 41 90,088 59 36,321 71 Brent 198,920 39 -6,707 100 4,004 0 2,703 46 Heating Oil 349,618 31 6,455 52 -32,434 37 25,979 88 Soybeans 758,796 35 218,907 84 -189,233 21 -29,674 21 Corn 1,484,670 18 460,938 89 -427,812 11 -33,126 24 Coffee 252,545 24 61,906 94 -66,290 8 4,384 19 Sugar 816,211 0 84,539 54 -105,323 48 20,784 34 Wheat 372,124 19 6,443 52 303 41 -6,746 69   WTI Crude Oil Futures: The WTI Crude Oil Futures large speculator standing this week was a net position of 368,663 contracts in the data reported through Tuesday. This was a weekly boost of 29,622 contracts from the previous week which had a total of 339,041 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 14.0 percent. The commercials are Bullish with a score of 79.1 percent and the small traders (not shown in chart) are Bullish with a score of 74.6 percent. WTI Crude Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 22.9 36.0 4.9 – Percent of Open Interest Shorts: 4.8 56.2 2.8 – Net Position: 368,663 -410,955 42,292 – Gross Longs: 465,365 729,585 99,568 – Gross Shorts: 96,702 1,140,540 57,276 – Long to Short Ratio: 4.8 to 1 0.6 to 1 1.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 14.0 79.1 74.6 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -6.7 6.4 1.4   Brent Crude Oil Futures: The Brent Crude Oil Futures large speculator standing this week was a net position of -6,707 contracts in the data reported through Tuesday. This was a weekly rise of 19,648 contracts from the previous week which had a total of -26,355 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bearish with a score of 45.8 percent. Brent Crude Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 23.1 40.9 4.2 – Percent of Open Interest Shorts: 26.5 38.9 2.9 – Net Position: -6,707 4,004 2,703 – Gross Longs: 45,940 81,376 8,390 – Gross Shorts: 52,647 77,372 5,687 – Long to Short Ratio: 0.9 to 1 1.1 to 1 1.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 100.0 0.0 45.8 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 22.7 -21.9 -4.0   Natural Gas Futures: The Natural Gas Futures large speculator standing this week was a net position of -126,409 contracts in the data reported through Tuesday. This was a weekly rise of 4,220 contracts from the previous week which had a total of -130,629 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.6 percent. The commercials are Bullish with a score of 59.3 percent and the small traders (not shown in chart) are Bullish with a score of 70.9 percent. Natural Gas Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 22.1 43.6 5.3 – Percent of Open Interest Shorts: 33.4 35.5 2.1 – Net Position: -126,409 90,088 36,321 – Gross Longs: 245,502 484,644 59,416 – Gross Shorts: 371,911 394,556 23,095 – Long to Short Ratio: 0.7 to 1 1.2 to 1 2.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 40.6 59.3 70.9 – Strength Index Reading (3 Year Range): Bearish Bullish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -2.5 1.2 11.2   Gasoline Blendstock Futures: The Gasoline Blendstock Futures large speculator standing this week was a net position of 62,443 contracts in the data reported through Tuesday. This was a weekly lowering of -1,144 contracts from the previous week which had a total of 63,587 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 33.6 percent. The commercials are Bullish with a score of 64.5 percent and the small traders (not shown in chart) are Bullish with a score of 71.4 percent. Nasdaq Mini Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 26.8 50.4 6.3 – Percent of Open Interest Shorts: 9.6 70.4 3.6 – Net Position: 62,443 -72,465 10,022 – Gross Longs: 97,185 182,352 22,896 – Gross Shorts: 34,742 254,817 12,874 – Long to Short Ratio: 2.8 to 1 0.7 to 1 1.8 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 33.6 64.5 71.4 – Strength Index Reading (3 Year Range): Bearish Bullish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 1.7 -5.2 21.2   #2 Heating Oil NY-Harbor Futures: The #2 Heating Oil NY-Harbor Futures large speculator standing this week was a net position of 6,455 contracts in the data reported through Tuesday. This was a weekly reduction of -9,228 contracts from the previous week which had a total of 15,683 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 51.9 percent. The commercials are Bearish with a score of 36.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 88.4 percent. Heating Oil Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 17.0 50.8 14.4 – Percent of Open Interest Shorts: 15.1 60.1 6.9 – Net Position: 6,455 -32,434 25,979 – Gross Longs: 59,340 177,626 50,210 – Gross Shorts: 52,885 210,060 24,231 – Long to Short Ratio: 1.1 to 1 0.8 to 1 2.1 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 51.9 36.7 88.4 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 4.2 -10.3 23.6   Bloomberg Commodity Index Futures: The Bloomberg Commodity Index Futures large speculator standing this week was a net position of -12,876 contracts in the data reported through Tuesday. This was a weekly lowering of -709 contracts from the previous week which had a total of -12,167 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 58.2 percent. The commercials are Bearish with a score of 36.9 percent and the small traders (not shown in chart) are Bullish with a score of 73.8 percent. Bloomberg Index Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 63.4 29.1 3.9 – Percent of Open Interest Shorts: 94.6 1.6 0.2 – Net Position: -12,876 11,345 1,531 – Gross Longs: 26,144 12,001 1,605 – Gross Shorts: 39,020 656 74 – Long to Short Ratio: 0.7 to 1 18.3 to 1 21.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 58.2 36.9 73.8 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 13.0 -16.8 34.1   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.
Ukraine’s Defense Shines ‒ and So Does Gold

Ukraine’s Defense Shines ‒ and So Does Gold

Arkadiusz Sieron Arkadiusz Sieron 08.03.2022 17:37
  Russian forces have made minimal progress against Ukraine in recent days. Unlike the invader, gold rallied very quickly and achieved its long-awaited target - $2000! Nobody expected the Russian inquisition! Nobody expected such a fierce Ukrainian defense, either. Of course, the situation is still very dramatic. Russian troops continued their offensive and – although the pace slowed down considerably – they managed to make some progress, especially in southern Ukraine, by bolstering air defense and supplies. The invaders are probably preparing for the decisive assault on Kyiv. Where Russian soldiers can’t break the defense, they bomb civilian infrastructure and attack ordinary people, including targeting evacuation corridors, to spread terror. Several Ukrainian cities are besieged and their inhabitants lack basic necessities. The humanitarian crisis intensifies. However, Russian forces made minimal ground advances over recent days, and it’s highly unlikely that Russia has successfully achieved its planned objectives to date. According to the Pentagon, nearly all of the Russian troops that were amassed on Ukraine’s border are already fighting inside the country. Meanwhile, the international legion was formed and started its fight for Ukraine. Moreover, Western countries have recently supplied Ukraine with many hi-tech military arms and equipment, including helicopters, anti-tank weapons, and anti-aircraft missiles, which could be crucial in boosting the Ukrainian defense.   Implications for Gold What does the war in Ukraine imply for the precious metals? Well, gold is shining almost as brightly as the Ukrainian defense. As the chart below shows, the price of the yellow metal has surged above $1,980 on Monday (March 7, 2022), the highest level since August 2020. What’s more, as the next chart shows, during today’s early trading, gold has soared above $2,020 for a while, reaching almost an all-time high. In my most recent report, I wrote: “as long as the war continues, the yellow metal may shine (…). The continuation or escalation of Russia’s military actions could provide support for gold prices.” This is exactly what we’ve been observing. This is not surprising. The war has increased the safe-haven demand for gold, while investors have become more risk-averse and have continued selling equities. As you can see in the chart below, the S&P 500 Index has plunged more than 12% since its peak in early January. Some of the released funds went to the gold market. What’s more, the credit spreads have widened, while the real interest rates have declined. Both these trends are fundamentally positive for the yellow metal. Another bullish driver of gold prices is inflation. It’s already high, and the war in Ukraine will only add to the upward pressure. The oil price has jumped above $120 per barrel, almost reaching a record peak. Higher energy prices would translate into higher CPI readings in the near future. Other commodities are also surging. For example, the Food Price Index calculated by the Food and Agriculture Organization of the United Nations has soared above 140 in February, which is a new all-time high, as the chart below shows. Higher commodity prices could lead to social unrest, as was the case with the Arab Spring or recent protests in Kazakhstan. Higher energy prices and inflation imply slower real GDP growth and more stagflationary conditions. As a reminder, in 2008 we saw rapidly rising commodities, which probably contributed to the Great Recession. In such an environment, it’s far from clear that the Fed will be very hawkish. It will probably hike the federal funds rate in March, as expected, but it may soften its stance later amid the conflict between Ukraine and the West with Russia and elevated geopolitical risks. The more dovish Fed should also be supportive of gold prices. However, when the fighting cools off, the fear will subside, and we could see a correction in the gold market. Both sides are exhausted by the conflict and don’t want to continue it forever. The Russian side has already softened its stance a bit during the most recent round of negotiations, as it probably realized that a military breakthrough was unlikely. Hence, when the conflict ends, gold’s current tailwind could turn into a headwind. Having said that, the impact of the conflict may not be as short-lived this time. I'm referring to the relatively harsh sanctions and high energy prices that may last for some time after the war is over. . The same applies to a more hawkish stance toward Russia and European governments’ actions to become less dependent on Russian gas and oil. A lot depends on how the conflict will be resolved, and whether it brings us Cold War 2.0. However, two things are certain: the world has already changed geopolitically, and at the beginning of this new era, the fundamental outlook for gold has turned more bullish than before the war. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
The War Is on for Two Weeks. How Does It Affect Gold?

The War Is on for Two Weeks. How Does It Affect Gold?

Arkadiusz Sieron Arkadiusz Sieron 10.03.2022 17:21
  With each day of the Russian invasion, gold confirms its status as the safe-haven asset. Its long-term outlook has become more bullish than before the war. Two weeks have passed since the Russian attack on Ukraine. Two weeks of the first full-scale war in Europe in the 21th century, something I still can’t believe is happening. Two weeks of completely senseless conflict between close Slavic nations, unleashed without any reasonable justification and only for the sake of Putin’s imperial dreams and his vision of Soviet Reunion. Two weeks of destruction, terror, and death that captured the souls of thousands of soldiers and hundreds of civilians, including dozens of children. Just yesterday, Russian forces bombed a maternity hospital in southern Ukraine. I used to be a fan of Russian literature and classic music (who doesn’t like Tolstoy or Tchaikovsky?), but the systematic bombing of civilian areas (and the use of thermobaric missiles) makes me doubt whether the Russians really belong to the family of civilized nations. Now, for the warzone report. The country’s capital and largest cities remain in the hands of the Ukrainians. Russian forces are drawing reserves, deploying conscript troops to Ukraine to replace great losses. They are still trying to encircle Kyiv. They are also strengthening their presence around the city of Mykolaiv in southern Ukraine. However, the Ukrainian army heroically holds back enemy attacks in all directions. The defense is so effective that the large Russian column north-west of Kyiv has made little progress in over a week, while Russian air activity has significantly decreased in recent days.   Implications for Gold How has the war, that has been going on for already two weeks, affected the gold market so far? Well, as the chart below shows, the military conflict was generally positive for the yellow metal, boosting its price from $1,905 to $1989, or about 4.4%. Please note that initially the price of gold jumped, only to decline after a while, and only then rallied, reaching almost $2,040 on Tuesday (March 8, 2022). However, the price has retreated since then, below the key level of $2,000. This is partially a normal correction after an impressive upward move. It’s also possible that the markets are starting to smell the end of the war. You see, Russian forces can’t break through the Ukrainian defense. They can continue besieging cities, but the continuation of the invasion entails significant costs, and Russia’s economy is already sinking. Hence, they can either escalate the conflict in a desperate attempt to conquer Kyiv – according to the White House, Russia could conduct a chemical or biological weapon attack in Ukraine – or try to negotiate the ceasefire. In recent days, the President of Ukraine, Volodymyr Zelensky, said he was open to a compromise with Russia. Today, the Russian and Ukrainian foreign ministers met in Turkey for the first time since the horror started (unfortunately, without any agreement). However, although gold prices may consolidate for a while or even fall if the prospects of the de-escalation increase, the long-term fundamentals have turned more bullish. As you can see in the chart below, the real interest rates decreased amid the prospects of higher inflation and slower economic growth. Russia and Ukraine are key exporters of many commodities, including oil, which would increase the production costs and bring us closer to stagflation. What’s next, risk aversion increased significantly, which is supportive of safe-haven assets such as gold. After all, Putin’s decision to invade Ukraine is a turning point in modern history, which ends a period of civilized relations with Russia and relative safety in the world. Although Russia’s army discredited itself in Ukraine, the country still has nuclear weapons able to destroy the globe. As you can see in the chart below, both the credit spreads (represented here by the ICE BofA US High Yield Index Option-Adjusted Spread) and the CBOE volatility index (also called “the fear index”) rose considerably in the last two weeks. Hence, the long-term outlook for gold is more bullish than before the invasion. The short-term future is more uncertain, as there might be periods of consolidation and even corrections if the conflict de-escalates or ends. However, given the lack of any decisions during today’s talks between Ukrainian and Russian foreign ministers and the continuation of the military actions, gold may rally further. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Fed Expectations Amid Mixed Data: Wishful Thinking or Practical Pause?

Japanese Yen (JPY) Being Healed, Nikkei Has Added 11%, Wheat Has Decreased By Ca. 8%

Marc Chandler Marc Chandler 30.03.2022 14:18
March 30, 2022  $USD, BOJ, China, Currency Movement, German, Inflation, Japan, Russia, Spain, Ukraine, Yield Curve Overview:  A pullback in US yields yesterday and the Bank of Japan's stepped-up efforts to defend the Yield Curve Control policy helped extend the yen's recovery.  This spurred profit-taking on Japanese stocks, where the Nikkei had rallied around 11% over the past two weeks.  Hong Kong, China, and Taiwan led the regional advance.  However, facing a surge in inflation (Spain and German states) and a jump in European natural gas prices (~9%) is snapping the Stoxx 600's three-day advance.  US futures are trading with a heavier bias.  The US 10-year yield has edged a little higher to 2.40%, while the two-year that briefly traded above the 10-year yield yesterday is off about four basis points.  European benchmark yields are 3-6 bp higher.  The greenback is trading lower against all of the major currencies, led by the yen's recovery.  After poking above JPY125 to start the week, the dollar fell to around JPY121.30 today before steadying.  The Canadian and Australian dollars are the laggards with minor gains.  Among emerging market currencies, the Turkish lira is the notable exception, and is posting a modest decline.  Gold appeared to post a bullish hammer pattern yesterday but there has not been much follow-through and the yellow metal is in around a $6 range on either side of $1922.  May WTI is also in a narrow range--mostly $105-$107 today. Copper and iron ore are trading firmer.  Wheat is still soft after losing around 8% over the past couple of sessions.   Asia Pacific The Bank of Japan stepped-up its efforts to cap interest rates earlier today.  It increased the amount of bonds it bought at its regular scheduled operation.  It offered to buy JPY600 bln (instead of JPY450 bln) 3–5-year bond, and JPY725 bln (instead of JPY425 bln) of 5-10-year bonds, in addition to the pre-announced defense of the 0.25% cap on the 10-year bond.  It did not increase the amount of longer-term bonds.  Tomorrow, the BOJ is expected to announce next quarters asset purchase plans.  Although BOJ Governor Kuroda, who met with Prime Minister Kishida earlier today, does not seem concerned about the yen's weakness, Finance Minister Suzuki seemed more cautious.  He suggested continuing to check if the yen's weakness is harming the economy.  For example, the weaker yen is aggravating the surge in energy prices, which Kishida was to cushion the blow to households and businesses. If intervention is best understood as an escalation ladder, as we suggest, then this might be seen as a low rung.  Separately, Japan reported that retail sales fell by 0.8% in February, which was more than twice the decline expected by the median forecast in Bloomberg's survey.  It also drove the year-over-year rate below zero (-0.8%) for the first time since last September.  Beijing has offered some economic support for Shanghai, but the surge in Covid there, and lockdowns there and elsewhere, are seeing economists slash growth forecast and lift inflation projections.  China's March PMI will be released tomorrow. A poor report is expected, and the risks are on the downside.  Thus far, though, officials have used targeted measures and have not provided the overall economy with new support. The dollar did not trade for long above JPY125 on Monday, but it seems to have completed something and the greenback has traded down to JPY121.30 today.   The (38.2%) retracement of this month's rally is around JPY121.10 and the next retracement (50%) is a little below JPY120.  Month-end and fiscal-year end considerations may also be at work but is often used as a catch-all narrative.  Note that reports suggested that Japanese retail accounts were beginning to buy yen toward the end of last week.  The Australian dollar bounced off four-day lows slightly below $0.7460 yesterday and settled above $0.7500.  It is firm today but below this year's high set Monday near $0.7540.  It still feels like it is consolidating.  The broad US dollar weakness was evident against the Chinese yuan today.  It is trading nearly 0.25% lower, the most in about two weeks.  The greenback is trading at a nine-day low near the 20-day moving average, slightly below CNY6.35.  That is also around the middle of this month's range (~CNY6.3080-CNY6.3860).  The PBOC set the dollar's reference rate at CNY6.3566.  The median projection in Bloomberg's survey was CNY6.3560.   Europe The common narrative now is that Putin initially anticipated a quick overwhelming victory over Ukraine and as it has stalled, he is falling back on Plan B.  Plan B is to secure the territorial claims of the two separatist regions and later incorporate them into Russia. Russia is curtailing the use of Hryvnia in the occupied areas and introducing the rouble. This military objective has not been met. Turning Clausewitz on his head, the political negotiations are a continuation of the war by other means. Putin has already achieved a key strategic goal; Ukraine will foreswear joining NATO.  One cannot help but wonder that if Zelenskiy accepted this more than a month ago, the course of events may have been different. The date for the next round of negotiations have not been set.  In a war, the losing side is more anxious for negotiations by definition. After consolidating its forces and enlarging the field of control of the separatist regions, Russia can then be in a position to negotiate.  This seems to be the key to the timeline that can lead to a sustainable cease-fire.  The cost of rebuilding Ukraine, which had serious developmental challenges before the war, will fall to the EU, IMF, World Bank, and UN.   A surge in eurozone inflation was expected, but the Spanish and German state figures are over the top. The market (Bloomberg median forecast) was for a strong 1.3% monthly increase in Spain, instead the national figure jumped 3%. The harmonized measure surged 3.9% this month and lifted the year-over-year rate to 9.8% from 7.6% in February.  Details are sparse in the initial estimate, but the Economic Minister suggested that three-quarters of the rise was due to food and energy.  Still, the core rate rose by 0.4% on the month. Most of the German states reporting CPI figures today showed a 2.6%-2.7% month-over-month increase in their CPI. The national and harmonized figures are due shortly.  There seems to be upside risk to the expectations that the year-over-year rate of the harmonized measures (HICP) will accelerate to 6.8% from 5.5% in February.  The aggregate preliminary estimate for the euro area is due Friday.  The euro rallied yesterday on the hopes that the Russian invasion of Ukraine may be near the endgame and is extending the gains today amid further positioning squaring.  We note that that the US premium over Germany on two-year money has reversed sharply lower.  It peaked on Monday above 245 bp and is testing 230 bp today.  The German two-year yield is up around seven basis points today and is again trying to secure a foothold above zero for the first time since 2014.  Yesterday's attempt was rebuffed.  The surging inflation will strengthen the hawks’ hands, many of whom see scope for two hikes this year that could bring the deposit rate to zero. The euro is trading at its best level since March 1, which was the last time it traded above $1.12. Its gains have now retraced a little more than half of this month's decline (~$1.1150).  The next technical target is the $1.1200-$1.1230 area.  Sterling is a laggard.  It is trading inside yesterday's range (~$1.3050-$1.3160). There may be scope for additional gains, albeit marginal, as the intraday momentum indicators are stretched.  We suspect the $1.3180-$1.3200 cap may suffice today.   America The US 2-10-year yield curve briefly inverted yesterday before finishing around three basis points.  It is drawing a great deal of attention, but like any statistic it needs to be placed in a context. Few believe the US is recession-bound.  The median forecast in Bloomberg's survey has the US economy growing 3.5% this year and 2.3% next year.  This is still above the Fed's estimates of the long-term growth trend (1.6%-2.2%.). The most pessimistic forecasts in Bloomberg's survey do have growth less than 1% this year or next.  That said, there are those who are warning of a recession, including ourselves, and the yield curve did not enter the picture.  Interest rates are not waiting for the Fed's meetings to increase, as the 93 bp increase in the 2-year yield this month.  The halving of the deficit (as a percentage of GDP) this year still strikes us as an under-appreciated drag.  The rise in energy and food prices cuts the purchasing power of households.  US inflation expectations are not just a function of what the Fed is or is not doing.  The correlation of the change in the 10-year breakeven (the difference between the yield of the inflation protected security and the conventional note) and oil (the front-month light sweet crude oil contact, WTI) over the past 30-days is nearly 0.65, the highest in seven months. The 60-day correlation is almost 0.55, a five month-high. The price of May WTI has risen by almost 25% ($20 a barrel) net since the US warned that a Russian attack could happen at any moment on February 11.  OPEC+ meets tomorrow and there still seems little chance that it will boost output.  Most of OPEC's spare capacity is in Saudi Arabia (~1.6 mln barrels a day) and the UAE (~1.3 mln barrels a day).   Today's ADP private sector jobs estimate is the data highlight. We remind that it is not a particularly useful guide to the BLS estimate for the particular month, though it gets the larger trend fairly right.  The median estimate for Friday's nonfarm payroll report has crept up in recent days to stand at 490k. The US also reports another revision to Q4 21 GDP.  It may be left at 7.0%.  With Q1 22 nearly over, the market will not be sensitive to Q4 data.  The economy is expected to have slowed to around 1.0%-1.5% this year from 7% last.  The Fed's Barkin and George speak today. While George is a voting member of the FOMC this year, Barkin, like Harker and Bostic, who spoke yesterday, do not.   Mexico reports February unemployment today.  It may have ticked up slightly.  Canada's economic calendar is light, but there is much talk about Ontario's imposition of a 20% tax on foreign purchases and real estate in the province.  The "speculation levy" is meant to slow the surge in house prices. Lastly, late yesterday Chile hiked its overnight target rate 150 bp to 7.0%.  This was a bit less than expected and the central bank indicated that it may not need to make such big moves going forward. Latam countries hiked rates early and many aggressively, and ideas that the tightening cycles may end later this year appears to be encouraging flows into local bond markets.  That said, the swaps market has about 300 bp of additional hikes over the next six months before a cut in rates toward the end of the year or early 2023.    The US dollar is near the recent trough against the Canadian dollar (~CAD1.2465-CAD1.2475).  Below there is the year's low around CAD1.2450.  A break targets the CAD1.2400 area. However, the intraday momentum indicators suggest the greenback may bounce first in early North American activity and a retest of CAD1.2500-CAD1.2515 would not be surprising.  Meanwhile, the greenback is slipping to new lows for the year against the Mexican peso (~MXN19.9120).  The next notable chart support is closer to MXN19.85, a shelf from last September. Here, too, the intraday momentum indicators favor a US dollar bounce in the North American morning.     Disclaimer
Ukrainian IBOX BANK increases the amount of its authorized capital and becomes a second-tier bank

Ukrainian IBOX BANK increases the amount of its authorized capital and becomes a second-tier bank

Finance Press Release Finance Press Release 28.04.2022 08:35
The Committee on Supervision and Regulation of Banks and Payment Systems of the National Bank of Ukraine confirmed the implementation of all economic standards by IBOX BANK, which allow the financial institution to become a second-tier bank. This information was published after the approval of the new edition of the charter of IBOX BANK by the National Bank. The charter was updated in connection with the increase of the authorized capital to the amount of UAH 741 million. Over the past few years, IBOX BANK's assets have grown almost fourfold "Despite the war, the bank capitalizes all income and becomes a second-tier bank. By making such investments we contribute to the stability of Ukraine's economy in the conditions of a military state. By choosing a proper sequence of implementation of our strategy and scaling we are able to show significant growth in all major indicators. Over the past few years, IBOX BANK's assets have grown almost fourfold, which contributed to the growth and transformation into a medium-sized bank," said Alona Shevtsova, shareholder and Chairman of the Supervisory Board of IBOX BANK. Read next: Zuckerberg Didn't Shock Market! Meta Platforms Inc. (FB) Q1 Earnings Announcement Expected Whilst GlaxoSmithKline (GSK) Delivers Favorable Figures | FXMAG.COM Such an increase in the authorized capital of IBOX BANK confirms the unwavering faith of shareholders in the economy of Ukraine On February 28, 2022, the shareholders of IBOX BANK invested more than 500 million UAH in order to support the development of the bank. Such an increase in the authorized capital of IBOX BANK confirms the unwavering faith of shareholders in the economy of Ukraine, and the stability of the banking system, which will become the backbone of the country's renewal after Ukraine's victory over the army of the invader. The shareholders of IBOX BANK believe in Ukraine and in our victory over the enemy," said Petr Melnyk, Chairman of the Board of IBOX BANK "Despite the open military aggression against Ukraine, as well as a wide range of military actions, IBOX BANK conducts full-fledged activities in extremely difficult conditions. The shareholders of IBOX BANK believe in Ukraine and in our victory over the enemy," said Petr Melnyk, Chairman of the Board of IBOX BANK. Read next: Meme coins: (SHIB) What Is Shiba Inu Token? Shiba Inu Coin Price. What Makes This Altcoin So Special? Clever Methods Used To Give High Crypto Returns | FXMAG.COM IBOX BANK has been operating in the Ukrainian financial market since 1993. Already by the end of 2021, the National Bank of Ukraine named IBOX BANK one of the most profitable banks in Ukraine. Over the past year, the loan and investment portfolio showed an increase of 67%, while the balance sheet capital increased by 136%. As a result, all financial indicators increased by 378% at the end of last year (compared to 2020). We would like to remind the audience that last year IBOX BANK continued to expand its branch network, and offered new card products, including solutions developed with Moneyveo. Apple Pay, Google Pay, and Garmin Pay contactless payments have been launched together with Visa. In December 2021, IBOX BANK launched a mobile application for smartphones on Android and iOS.
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

Gas Price Has Increased As The Transportation Had Been Limited Because Of The Ukrainian War, NYMEX WTI Went Below $100 Yesterday, But The End Fuel Crisis And Supply Chain Issues May Be Far From Now | ING Economics

ING Economics ING Economics 11.05.2022 15:01
Your daily roundup of commodities news and ING views Gas storage tank Energy Oil sold off with risk assets on Monday, but it failed to follow equities higher yesterday. Instead, downward pressure on the market continued, which saw NYMEX WTI settle below US$100/bbl. Growth concerns continue to weigh on commodities, and a stronger USD only adds further downward pressure to the complex. This weakness has continued in early trading this morning after the API reported that US crude oil inventories increased by 1.62MMbbls - the market was expecting a small draw. In addition, API numbers also showed an increase in refined product inventories. Gasoline and distillate fuel oil inventories increased by 823Mbbls and 662Mbbls respectively. If today’s EIA report shows similar numbers, it would be the first weekly increase for US gasoline inventories since late March and the first for distillates since early April. However, the middle distillate market is still very tight and so we would expect US heating oil cracks to remain well supported. In fact, middle distillate cracks around the world should remain well supported, given the tightness in the market and concerns over Russian gasoil exports. The EIA released its latest Short Term Energy Outlook yesterday. The report cut expectations for US oil production growth for 2022 from around 833Mbbls/d to 731Mbbls/d, which implies US oil output averaging 11.91MMbbls/d this year. However, for 2023, supply is expected to grow by 940Mbbls/d (largely unchanged from last month), which would see US output hitting a record 12.85MMbbls/d. Obviously, the biggest concern for the global oil market is around supply in the short to medium term, given the uncertainty over Russian supply. And the downward revisions to 2022 output estimates will do little to ease these concerns. European natural gas prices showed some strength yesterday. TTF rallied by more than 5%, settling close to EUR99/MWh. This strength came after Ukraine’s gas grid operator (GTSOU) declared force majeure on the transit of Russian gas through Sokhranivka, which accounts for about a third of Russian gas transited via Ukraine. GTSOU has said that it is not possible to continue operations through Sokhranivka due to Russia's military aggression in the region. GTSOU said that gas can be rerouted through Sudzha (another entry point), Gazprom has reportedly said that this is not technically possible. Dutch gas network operator, Gasunie has said that it has contracted a second FSRU (floating storage and regasification unit) for the next 5 years, which would allow it to regas LNG imports at Eemshaven in the north of Groningen. The FSRU is expected to arrive in the third quarter of this year, and along with another FSRU already contracted, would provide a total of 8bcm of regasification capacity at Eemshaven. This regasification capacity would exceed the roughly 6bcm of natural gas that the Netherlands imports from Russia every year. The big question though is if there is enough LNG supply to fully use this capacity, particularly with Germany also securing 4 FSRUs, with an annual capacity of as much as 29bcm. Some of this capacity in Germany is also expected to come into operation ahead of the next winter.   Metals Base metals continued to decline in London amid fragile market sentiment. Copper initially rallied but was unable to hold onto these gains at the close. Shanghai is going into the hardest phase of lockdowns, weighing heavily on sentiment as local authorities vow to bring the Covid wave under control at the community level by the end of this week. Meanwhile, the China Car Passenger Association (CAPM) confirmed that retail passenger vehicle sales plunged by 36% in April, its biggest monthly decline since March 2020. LME aluminium prices continue to fall and have largely ignored a steep decline in on-warrant stocks and a large number of cancelled warrants from Asia, signalling further declines. As of Tuesday, on-warrant stocks have fallen to a record low of 294kt, whilst total closing stocks dropped to 560kt - the lowest since 2005. Antaike has reported that China’s aluminium demand fell 5.5% YoY to 3.3mt last month (the biggest decline since March 2020), primarily impacted by the closure of auto producers due to Covid-related lockdowns. In contrast, the impact on Chinese supply has been rather limited so far, with operating capacity rising to 40.31mt by the end of April. As we also pointed out yesterday, Antaike also believes that the recent Covid outbreak has had a larger impact on demand than the early 2020 lockdowns. Agriculture Data from Brazil’s sugar industry group, UNICA show that sugar production in Center-South Brazil increased to 934kt over the 2nd half of April 2022 compared to only around 127kt over the first half of April as more mills started operations; although it is still significantly lower than the 1.52mt of sugar produced over the same period last season. Sugar cane crushing was down around 20% YoY to 23.8mt over the period with the sugar mix falling to 37.2% compared to 44.5% a year ago. Cumulative sugar production so far this season in CS-Brazil is down around 51% YoY to 1.1mt, reflecting a slow start to the crushing season. High energy prices continue to be supportive for ethanol production with mills allocating more cane towards biofuel supply. TagsSugar Russia-Ukraine Natural gas EIA Covid-19 China   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Rates Reversal: US Long Yields on the Rise as Curve Dis-Inverts

Inflation - Poland: Consumption boom and upward price pressures continue | ING Economics

ING Economics ING Economics 23.05.2022 16:30
April retail sales growth was supported by low base effects, “consumption smoothing” by domestic consumers as well as purchases by and for refugees from Ukraine. Construction output growth eased and has serious headwinds ahead. In June, the MPC may hike the main policy rate by 100bp in order to curb inflationary pressure A tight labour market should keep CPI inflation elevated in Poland Strong retail sales from a low reference base The consumer boom continues. In April, retail sales jumped by 19.0% year-on-year (ING: 16.7% YoY; consensus: 16.1% YoY). Such a strong annual growth was facilitated by a low reference base from April 2021, but that is not the only explanation for the strong reading. Retail sales, %YoY Source: GUS.   Buoyant consumer spending is supported by solid domestic demand. Soaring prices have not significantly reduced purchases as consumers continue to spend despite higher price levels. The monthly seasonally-adjusted real data for different sales categories looks robust. This is all happening despite high inflation, very poor consumer sentiment, and uncertainty caused by war. Demand for goods is fuelled by rising wages and fiscal expansion, including tax cuts.   The inflow of refugees from Ukraine is an additional boost to consumption, particularly in sales of clothing and footwear (up by 121.4% YoY). The high volatility of sales in this category is also linked to the lifting of Covid-19 restrictions.   Implied retail sales deflator increased to 12.1% YoY in April from 11.3% YoY in March. Consumer demand remains robust and high price pressures persist. Construction activity slows amid declining home sales Signs from construction are clearly less optimistic as activity softened visibly last month. Construction output rose by 9.3% YoY vs. an increase of 27.6% YoY in March (ING: 16.6%YoY; consensus: 18.7%YoY). Seasonally-adjusted data points to a 5.1% MoM decline. The decline in activity was broad-based, however, the smallest monthly drop was reported in civil engineering, due to ongoing spending of local and EU funds on infrastructure. The coming months will be tough for residential construction due to: (1) the hit to housing demand from higher interest rates and more restrictive regulations, (2) the sharp upswing in prices of materials, (3) mounting shortages of labour, including outflows of Ukrainian workers and (4) elevated uncertainty linked to the war in Ukraine. Construction output, 2015=100 (S.A.) Source: GUS. Bottom line The beginning of 2Q22 brings buoyant consumer demand and persistently high price pressures. Retail sales data, although somewhat distorted by a low reference base, points to strong consumer demand. This could fuel second-round effects (producers passing higher costs onto output prices). The scale of upward pressure on producers’ costs is reflected in the PPI index, which jumped by 23% YoY in April, so companies have higher costs, which should drive up inflation in coming months.   Data on retail sales, PPI and wages provide strong arguments for further interest rate hikes. The MPC should take further policy action in order to prevent inflation from spiralling. In June, the MPC may hike the main policy rate by 100bp. We still see the NBP reference rate at 7.5% this year and the terminal rate at 8.5%, with upside risk. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Eurozone Bank Lending Under Strain as Higher Rates Bite

USD Stucked! Russia Blocks The Oil For Europe Over The Payment Issues. Market Newsfeed

Saxo Strategy Team Saxo Strategy Team 10.08.2022 13:00
Summary:  Market sentiment weakened again yesterday, with the US Nasdaq 100 index interacting with the pivotal 13,000 area that was so pivotal on the way up ahead of today’s US July CPI release, which could prove important in either confirming or rejecting the complacent market’s expectations that a slowing economy and peaking inflation will allow the Fed to moderate its rate hike path after the September meeting. A surprisingly strong core CPI reading would likely unsettle the market today.   Our trading focus   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US interest rates are moving higher again and US equities lower with the S&P 500 at 4,124 yesterday with today’s price action testing the 100-day moving average around the 4,110 level. The past week has delivered more negative earnings surprises and weak outlooks impacting sentiment and the geopolitical risk picture is not helping either. In the event of a worse than expected US CPI release today we could take out the recent trading range in S&P 500 futures to the downside and begin the journey back to 4,000. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hang Seng Tech Index (HSTECH.I) fell 3%. China internet stocks declined across the aboard, losing 2-4%. Shares of EV manufacturers plunged 4-8% despite the China Passenger Car Association raised its 2022 EV sales estimate yesterday to 6mn, 9% higher from its previous estimate. Hang Seng Index plunged 2.4% and CSI300 fell 1.1%. USD decision time The USD remains largely stuck in neutral and may remain so unless or until some incoming input jolts the US treasury market and the complacent view that the US is set to peak its policy rate in December, with the potential to ease by perhaps mid-next year. Technical signs of a broad USD recovery, whether on yields pulling higher or due to a sudden cratering in market sentiment on concerns for the economic outlook or worsening liquidity as the Fed QT schedule is set to continue for now regardless of incoming data, would include USDJPY pulling above 136.00, EURUSD dropping down through 1.0100 and AUDUSD back down below 0.6900. Today’s July US CPI could prove a catalyst for a directional move in the greenback in either direction. Gold (XAUUSD) briefly tested a key area of resistance above $1800 on Tuesday ... before retracing lower as the recent support from rising silver and copper prices faded. With the dollar and yields seeing small gains ahead of today’s US CPI print, and with key resistance levels in all three metals looming, traders decided to book some profit. The market is looking for US inflation to ease from 9.1% to 8.8% and the outcome will have an impact on rate hike expectations from the Fed with a a higher-than-expected number potentially adding some downward pressure on metal prices. Silver (XAGUSD), as highlighted in recent updates, has been outshining Gold and in the process managing to mount a challenge above its 50-day moving average, now support at $20.33 with focus on resistance at $20.85.  Crude oil Crude oil prices rose on Tuesday on news pipeline flows of crude oil from Russia via Ukraine to Europe had been halted over a payment dispute of transit fees. The line, however, is expected to reopen within days but it nevertheless highlights and supports the current price divergence between WTI futures stuck around $90, amid rising US stockpiles and slowing gasoline demand, and Brent which trades above $96. The API reported a 2.2-million-barrel increase in US stockpiles last week with stocks at Cushing, the key storage hub, also rising. The official government inventory report is due today, with surveys pointing to a much smaller build at just 250k barrels. In addition, the market will be paying close attention to implied gasoline demand with recent data showing a slowdown. Also focus on China as lockdowns return, US CPI and Thursday’s Oil Market Reports from OPEC and the IEA. Grains eye Friday’s WASDE report US grain futures led by soybeans and corn trade higher on the week in response to worsening crop conditions. Just like central Europe, soaring heat and drought have raised concerns about lower production and yields. USDA will publish its monthly supply and demand estimates on Friday and given the current conditions a smaller yield could tighten the ending stock situation. The crop condition report, published every Monday by the USDA throughout the growing season, shows the proportion of the US crop being rated in a good to excellent condition. Last week the rating for corn dropped by 3% to 58% versus 64% a year ago. US Treasuries (IEF, TLT) US 10-year yields are poised in an important area ahead of the pivotal 3.00% level that would suggest a more determined attempt for yields to try toward the cycle top at 3.50%. Of late, the yield curve inversion has been the primary focus as long yields remain subdued relative to the front end of the curve, a development that could deepen if inflation remains higher than expected while economic activity slows. The three-year T-note auction yesterday saw solid demand, while today sees an auction of 10-year Treasuries.   Newsfeed   Taiwan officials want Foxconn to withdraw investment in Chinese chip company Foxconn announced a $800 million investment in mainland China’s Tsinghua Unigroup last month, but national security officials want the company to drop the investment, likely in connection with recent US-China confrontation in the wake of the visit to Taiwan from US House Speaker Pelosi and the ensuing Chinese military exercises around Taiwan. US Q2 Unit Labor costs remain high at 10.8%, while productivity weak at –4.6% These number suggest a very tight labor market as companies are beset with rising costs for work and less output per unit of worker effort. This number was down from the Q1 levels, but in many past cycles, rising labor costs and falling productivity often precede a powerful deceleration in the labor market as companies slow hiring (and once the recession hits begin firing employees which registers as lower unit costs and rising productivity). Japan PPI shows continued input price pressures Japan’s July producer prices came in slightly above expectations at 8.6% y/y (vs. estimates of 8.4% y/y) while the m/m figure was as expected at 0.4%. The continued surge reflects that Japanese businesses are waddling high input price pressures, and these are likely to get passed on to the consumers, suggesting further increases in CPI remain likely. The government is also set to announce a cabinet reshuffle today, and households may see increased measures to help relieve the price pressures. That will continue to ease the pressure on the Bank of Japan to tighten policy. Chipmaker warnings continue, with Micron warning of ‘challenging’ conditions After Nvidia, now Micron has issued warning of a possible revenue miss in the current quarter and ‘challenging’ memory conditions. The company officials said that they expect the revenue for the fiscal fourth quarter, which ends in August, “may come in at or below the low end of the revenue guidance range provided in our June 30 earnings call.” The company had called for $6.8-7.6bn in revenue in its June earnings report. Moreover, they also guided for a tough next quarter as well as shipments could fall on a sequential basis, given the inventory build-up with their customers. Vestas Q2 result miss estimates The world’s largest wind turbine maker has posted Q2 revenue of €3.3bn vs est. €3.5bn and EBIT of €-182mn vs est. €-119mn. The company is issuing a fiscal year revenue outlook of €14.5-16bn vs est. €15.2bn. Coinbase misses in revenue issues weak guidance Q2 revenue missed by 5% against estimates and the user metric MTU was lowered to 7-9mn from previously 5-15mn against estimates of 8.7mn. The crypto exchange is saying that retail investors are getting more inactive on cryptocurrencies due to the recent violent selloff. China’s PPI inflation eased while CPI picked up in July China’s PPI came in at 4.2% y/y in July, notably lower from June’s 6.1%).   The decline was mainly a result of lower energy and material prices.  The declines of PPI in the mining and processing sectors were most drastic and those in downstream industries were more moderate.  CPI rose to 2.7% y/y in July from 2.5% in June, less than what the consensus predicted.  Food inflation jumped to 6.3% y/y while the rise in prices of non-food items moderated to 1.9%, core CPI, which excludes food and energy, rose 0.8% y/y in July, down from June’s 1.0%. China issues white paper on its stance on Taiwan Despite extending the military drills near Taiwan beyond the originally schedule, in a less confrontational white paper released today, the Taiwan Affairs office and the Information Office of China’s State Council reiterated China’s commitment to “work with the greatest sincerity” and exert “utmost efforts to achieve peaceful reunification”.  The paper further says that China “will only be forced to take drastic measures” if “separatist elements or external forces” ever cross China’s red lines.    What are we watching next?   US CPI due today: the core in focus The highly watched US inflation data is due to be released today, and the debate on inflation peaking vs. higher-for-longer will be revived. Meanwhile, the Fed has recently stayed away from providing forward guidance, which has now made all the data points ahead of the September 21 FOMC meeting a lot more important to predict the path of Fed rates from here. Bloomberg consensus expects inflation to slow down from 9.1% YoY in June to 8.8% YoY last month. The core print will gather greater attention to assess stickiness and breadth of price pressures. Will any surprise just be noise given that we have another print for August due ahead of the next FOMC meeting, os is this market looking for an excuse to be surprised as it has maintained a rather persistent view that US inflation data will soon roll over and see a Fed set to stop tightening after the December FOMC meeting? Fed’s Evans will take the hot seat today Chicago President Charles Evans discusses the economy and monetary policy today. Evans is not a voter this year, but he votes in 2023. He said last week a 50bps rate hike is a reasonable assessment for the September meeting, but 75bps is a possibility too if inflation does not improve. He expects 25bps from there on until Q2 2023 and sees a policy rate between 3.75-4% in 2023, which is in line with Fed’s median view of 3.8% for 2023, but above the 3.1% that the market is currently pricing in. Earnings to watch Today’s US earnings in focus are marked in bold with the most important earnings release being Walt Disney and Coupang. Disney is expected to deliver revenue growth of 23% y/y with operating margins lower q/q as the company is still facing input cost headwinds. Coupang, which is the largest e-commerce platform in South Korea, is expected to deliver revenue growth of 13% y/y and another operating loss as e-commerce platforms are facing slowing demand and still significant input cost pressures. Today: Commonwealth Bank of Australia, Vestas Wind Systems, Genmab, E.ON, Honda Motor, Prudential, Aviva, Walt Disney, Coupang, Illumina Thursday: KBC Group, Brookfield Asset Management, Orsted, Novozymes, Siemens, Hapag-Lloyd, RWE, China Mobile, Antofagasta, Zurich Insurance Group, NIO, Rivian Automotive Friday: Flutter Entertainment, Baidu Economic calendar highlights for today (times GMT) 0700 – Czech Jul. CPI 1230 – US Jul. CPI 1430 – US Weekly DoE Crude Oil and Product Inventories 1500 – US Fed’s Evans (non-voter) to speak 1600 – UK Bank of England economist Pill to peak 1700 – US Treasury to auction 10-year notes 1800 – US Fed’s Kashkari (non-voter) to speak 2301 – UK Jul. RICS House Price Balance 0100 – Australia Aug. Consumer Inflation Expectations Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-aug-10-2022-10082022
Volume Of Crude Oil Rose For The Second Session In A Row

The Cheapest Oil In Six Months!!! How Will It Affect The Global Economics?

Conotoxia Comments Conotoxia Comments 16.08.2022 11:55
The price of WTI crude oil remained below $90 per barrel at the beginning of the week, the level before Russia's attack on Ukraine. Oil today is the cheapest in six months. It seems that the topic of a global economic slowdown or recession and how long it may last may be important for the oil market. Chinese and U.S. economic data seem to show a weaker condition in both economies and thus could affect the decline in oil demand. This, in turn, could put downward pressure on prices. According to published data, factory activity in China declined enough in July to force the central bank to cut lending rates to keep demand from collapsing. In the United States, on the other hand, the market may have been taken by surprise by the second-largest drop in the history of the New York Empire State Manufacturing Index. The above indicators may affect the market from the demand side, but this is only one part of the puzzle. On the supply side, long-awaited changes may be brewing. Once the embargo is lifted, oil from Iran may start flowing into the market again. Iran has responded to the European Union's proposal. It may seek to re-implement the 2015 nuclear agreement. The EU is also calling on the US to show more flexibility in implementing the agreement. Saudi Arabia may also be preparing to increase its oil supply. The chairman of Saudi Aramco, the state-owned oil giant, stated over the weekend that his company is ready to increase production to 12 million barrels per day, the company's current production capacity limit. Only a decision by the Saudi Arabian government is needed to increase production. According to the EIA agency's forecast, the United States can also increase its production. US oil production in the August forecast averages 11.9 million barrels per day (b/d) in 2022. It could rise to 12.7 million b/d in 2023. If this forecast comes true, the US could set a production record next year. The current one is 12.3 million b/d and was set in 2019.   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Source: Oil near six-month lows
Lowest China's Yield Level In 2 Years!? Dollar (USD) Is Disturbing Gold In It's Challenge

Lowest China's Yield Level In 2 Years!? Dollar (USD) Is Disturbing Gold In It's Challenge

Marc Chandler Marc Chandler 16.08.2022 11:44
Overview: Equities were mostly higher in the Asia Pacific region, though Chinese and Hong Kong markets eased, and South Korea and India were closed for national holidays. Despite new Chinese exercises off the coast of Taiwan following another US congressional visit, Taiwan’s Taiex gained almost 0.85%. Europe’s Stoxx 600 is advancing for the fourth consecutive session, while US futures are paring the pre-weekend rally. Following disappointing data and a surprise cut in the one-year medium-term lending facility, China’s 10-year yield fell to 2.66%, its lowest in two years. The US 10-year is soft near 2.83%, while European yields are mostly 2-4 bp lower. Italian bonds are bucking the trend and the 10-year yield is a little higher. The Antipodeans and Norwegian krone are off more than 1%, but all the major currencies are weaker against the greenback, but the Japanese yen, which is practically flat. Most emerging market currencies are lower too. The Hong Kong Dollar, which has been supported by the HKMA, strengthened before the weekend, and is consolidating those gains today. Gold tested the $1800 level again but has been sold in the wake of the stronger dollar and is at a five-day low near $1778. The poor data from China raises questions about demand, and September WTI is off 3.6% after falling 2.4% before the weekend. It is near $88.60, while last week’s five-month lows were set near $87.00. US natgas is almost 2% lower, while Europe’s benchmark is up 2.7% to easily recoup the slippage of the past two sessions. China’s disappointment is weighing on industrial metal prices. Iron ore tumbled 4% and September copper is off nearly 3%. September wheat snapped a four-day advance before the weekend and is off 2.3% today.  Asia Pacific With a set of disappointing of data, China surprised with a 10-bp reduction in the benchmark one-year lending facility rate to 2.75%  It is the first cut since January. It also cut the yield on the seven-day repo rate to 2.0% from 2.1%. The string of poor news began before the weekend with a larger-than-expect in July lending figures. However, those lending figures probably need to be put in the context of the surge seen in June as lenders scramble to meet quota. Today's July data was simply weak. Industrial output and retail sales slowed sequentially year-over-year, whereas economists had projected modest increases. New home prices eased by 0.11%, and residential property sales fell 31.4% year-over-year after 31.8% decline in June. Property investment fell 6.4% year-over-year, year-to-date measures following a 5.4% drop in June. Fix asset investment also slowed. The one exception to the string of disappointment was small slippage in the surveyed unemployment rate to 5.4% from 5.5%. Incongruous, though on the other hand, the jobless rate for 16–24-year-olds rose to a record 19.9%. Japan reported a Q2 GDP that missed estimates, but the revisions lifted Q1 GDP out of contraction  The world's second-largest economy grew by 2.2% at an annualized pace in Q2. While this was a bit disappointing, Q1 was revised from a 0.5% fall in output to a 0.1% expansion. Consumption (1.1%) rebounded (Q1 revised to 0.3% from 0.1%) as did business spending (1.4% vs. -0.3% in Q1, which was originally reported as -0.7%). Net exports were flat after taking 0.5% off Q1 GDP. Inventories, as expected, were unwound. After contributing 0.5% to Q1 GDP, they took 0.4% off Q2 growth. Deflationary forces were ironically still evident. The GDP deflator fell 0.4% year-over-year, almost the same as in Q1 (-0.5%). Separately, Japan reported industrial surged by 9.2% in June, up from the preliminary estimate of 8.9%. It follows a two-month slide (-7.5% in May and -1.5% in April) that seemed to reflect the delayed impact of the lockdowns in China. The US dollar is little changed against the Japanese yen and is trading within the pre-weekend range (~JPY132.90-JPY133.90). It finished last week slightly above JPY133.40 and a higher closer today would be the third gain in a row, the longest advance in over a month. The weakness of Chinese data seemed to take a toll on the Australian dollar, which has been sold to three-day lows in the European morning near $0.7045. It stalled last week near $0.7140 and in front of the 200-day moving average (~$0.7150). A break of $0.7035 could signal a return to $0.7000, and possibly $0.6970. The greenback gapped higher against the Chinese yuan and reached almost CNY6.7690, nearly a two-week high. The pre-weekend high was about CNY6.7465 and today's low is around CNY6.7495. The PBOC set the dollar's reference rate at CNY6.7410, a little above the Bloomberg survey median of CNY6.7399. Note that a new US congressional delegation is visiting Taiwan and China has renewed drills around the island. The Taiwan dollar softened a little and traded at a three-day low. Europe Turkey's sovereign debt rating was cut a notch by Moody's to B3 from B2  That is equivalent to B-, a step below Fitch (B) and two below S&P (B+). Moody's did change its outlook to stable from negative. The rating agency cited the deterioration of the current account, which it now sees around 6% of GDP, three times larger than projected before Russia invaded Ukraine. The Turkish lira is the worst performing currency this year, with a 27.5% decline after last year's 45% depreciation. Turkey's two-year yield fell below 20% today for the first time in nine months, helped ostensibly by Russia's recent cash transfer. The dollar is firm against the lira, bumping against TRY17.97. The water level at an important junction on the Rhine River has fallen below the key 30-centimeter threshold (~12 inches) and could remain low through most of the week, according to reports of the latest German government estimate  Separately, Germany announced that its gas storage facility is 75% full, two weeks ahead of plan. The next target is 85% by October 1 and 95% on November 1. Reports from France show its nuclear reactors were operating at 48% of capacity, down from 50% before the weekend. A couple of reactors were shut down for scheduled maintenance on Saturday.  Ahead of Norway' rate decision on Thursday, the government reported a record trade surplus last month  The NOK229 bln (~$23.8 bln). The volume of natural gas exports surged more than four-times from a year earlier. Mainland exports, led by fish and electricity, rose by more than 20%. The value of Norway's electricity exports increased three-fold from a year ago. With rising price pressures (headline CPI rose to 6.8% in July and the underlying rate stands at 4.5%) and strong demand, the central bank is expected to hike the deposit rate by 50 bp to 1.75%. The euro stalled near $1.0370 last week after the softer than expected US CPI  It was pushed through the lows set that day in the European morning to trade below $1.02 for the first time since last Tuesday. There appears to be little support ahead of $1.0160. However, the retreat has extended the intraday momentum indicators. The $1.0220 area may now offer initial resistance. Sterling peaked last week near $1.2275 and eased for the past two sessions before breaking down to $1.2050 today. The intraday momentum indicators are stretched here too. The $1.2100 area may offer a sufficient cap on a bounce. A break of $1.20 could confirm a double top that would project back to the lows. America The Congressional Budget Office estimates that the Inflation Reduction Act reduces the budget deficit but will have a negligible effect on inflation  Yet, starting with the ISM gauge of prices paid for services, followed by the CPI, PPI, and import/export prices, the last string of data points came in consistently softer than expected. In addition, anecdotal reports suggest the Big Box stores are cutting prices to reduce inventories. Energy is important for the medium-term trajectory of measured inflation, but the core rate will prove sticky unless shelter cost increases begin to slow. While the Democrats scored two legislative victories with the approval of the Chips and Science Act and the Inflation Reduction Act, the impact on the poll ahead of the November midterm election seems minor at best. Even before the search-and-seizure of documents still in former President Trump's residence, PredictIt.Org "wagers" had turned to favor the Democratic Party holding the Senate but losing the House of Representatives. In terms of the Republican nomination for 2024, it has been back-and-forth over the last few months, and recently Florida Governor DeSantis narrowly pulled ahead of Trump. The two new laws may face international pushback aside from the domestic impact  The EU warned last week that the domestic content requirement to earn subsidies for electric vehicles appears to discriminate against European producers. The Inflation Reduction Act offers $7500 for the purchases of electric cars if the battery is built in North America or if the minerals are mined or recycled there. The EU electric vehicle subsidies are available for domestic and foreign producers alike. On the other hand, the Chips and Science Act offers billions of dollars to attract chip production and design to the US. However, it requires that companies drawing the subsidies could help upgrade China's capacity for a decade. Japan and Taiwan will likely go along. It fits into their domestic political agenda. However, South Korea may be a different kettle of fish. Hong Kong and China together accounted for around 60% of South Korea's chip exports last year. Samsung has one overseas memory chip facility. It is in China and produces about 40% of the Galaxy phones' NAND flash output. Pelosi's apparent farewell trip to Asia, including Taiwan, was not well received in South Korea. President Yoon Suk Yeol did not interrupt his staycation in Seoul to meet the US Speaker. Nor was the foreign minister sent. This is not to cast aspersions on South Korea's commitment to regional security, simply that it is not without limits. Today's economic calendar features the August Empire State manufacturing survey  A small decline is expected. The June TIC data is out as the markets close today. Today is also the anniversary of the US ending Bretton Woods by severing the last links between gold and the dollar in 1971. Canada reports manufacturing sales and wholesale trade, but the most market-sensitive data point may be the existing home sales, which are expected to have declined for the fifth consecutive month. Canada reports July CPI tomorrow (Bloomberg survey median forecast sees headline CPI slowing to 7.6% from 8.1% in June).  The Canadian dollar is under pressure  The US dollar has jumped above CAD1.2900 in Europe after finishing last week near CAD1.2780. Last week's high was set near CAD1.2950, where a $655 mln option is set to expire today. A move above CAD1.2920 could target CAD1.2975-CAD1.3000 over the next day or day. A combination of weaker equities, thin markets, and a short-term market leaning the wrong way after the likely drivers today. The greenback posted its lowest close in two months against the Mexican peso before the weekend near MXN19.85. However, it is rebounding today and testing the MXN20.00 area Initial resistance may be encountered around MXN20.05, but we are looking for a move toward MXN20.20 in the coming days. Mexico's economic calendar is light this week, and the highlight is the June retail sales report at the end of the week.    Disclaimer Source: China Disappoints and Surprises with Rate Cut
Walmart And Home Depot Did Better Than Expected. S&P 500 Reaches The 4,3k Level

Walmart And Home Depot Did Better Than Expected. S&P 500 Reaches The 4,3k Level

Saxo Strategy Team Saxo Strategy Team 17.08.2022 08:35
Summary:  S&P500 index broke above the key 4,300 resistance level while the NASDAQ pushed lower amid mixed economic data and better-than-feared earnings from Walmart and Home Depot. US housing data continues to worsen, but the focus now turns to FOMC minutes due later today, as well as the US retail sales which will be next test of the strength of the US consumer. Asia session may have trouble finding a clear direction, but Australia’s wage price index and RBNZ’s rate hike may help to provide some bounce. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. equities were mixed. Tech names had an initial pullback, followed by short-coverings that narrowed the loss of the Nasdaq 100 to 0.23% at the close. S&P500 edged up 0.19% to 4,305 on better-than-feared results from retailers, moving towards its 200-day moving average (4,326). Walmart (WMT:xnys) and Home Depot (HD:xnys) reported Q2 results beating analyst estimates. Walmart gained 5% on strong same-store sales growth and a deceleration in inventory growth. Home Depot climbed 4% after reporting better than expected EPS and same-store sales but with an acceleration in inventory buildup. The declines in housing starts and building permits released on Monday and the downbeat comments about the U.S. housing market from the management of Compass (COMP:xnys), an online real estate brokerage, highlighted the challenges faced in the housing sector.  Short-end U.S. treasury yields rose as the long-end little changed The bigger than expected increases in July industrial production (+0.6% MoM), manufacturing production (+0.7% MoM), and business equipment production (+0.6%) triggered some selling in the short-end of U.S. treasury curve, pushing the 2-year yield 8 bps higher to 3.25% as 10-year yield edged up 1bp.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) China internet stocks were sold off on Tuesday afternoon after Reuters ran a story suggesting that Tencent (00700:xhkg) plans to divest its 17% stake (USD24 billion) in Meituan (03690:xhkg).  The shares of Meituan collapsed 9% while Tencent gained 0.9%.  After the close of the Hong Kong market, Chinese media, citing sources “close to the matter” suggested that the divesture story is not true. However, the ADRs of Meituan managed to recover only 1.7% in New York trading. The newswire story also triggered selling on Kuaishou (01024:xhkg), -4.4%, which has Tencent as a major investor. The decline in internet stocks dragged the Hang Seng Index 1% lower. On the other hand, Chinese developers soared on another newswire report that state-owned China Bond Insurance is going to provide guarantees to new onshore debts issued by several “high quality” developers, including Country Garden (02007:xhkg) +9%, Longfor (00960:xhkg) +12%, CIFI (00884:xhkg) +12.9%, and Seazen (01030:xhkg) +7.6%.  Shares of Chinese property management services also surged higher.  GBPUSD bounced off the 1.2000 support, NZD eyeing RBNZ A mixed overnight session for FX as the US yields wobbled. Risk sentiment held up with the mixed US data accompanied by a less bad outcome in the US retailer earnings than what was expected. This made the safe-haven yen a clear underperformer, and USDJPY rose back above 134. But a clear trend in the pair is still missing and a break above 135 is needed to reverse the downtrend. Cable got lower to remain in close sight of the 1.2000 big figure, but rose above 1.2100 subsequently. UK CPI report due today may confirm the need for further BOE action after labor data showed wage pressures. NZDUSD remains near lows of 0.6320 but may see a knee-jerk higher if RBNZ surprises on the hawkish side. Crude oil prices (CLU2 & LCOV2) Crude oil prices remain under pressure due to the prospect of Iran nuclear deal, and printed fresh lows since the Ukraine invasion. Some respite was seen in early Asian session, and WTI futures were last seen at $87/barrel and Brent is below $93. The EU submitted a final proposal to salvage the Iran nuclear deal, and prospects of more energy supply are dampening the price momentum. It has been reported that Iran’s response was constructive, and they are now consulting with the US on a way ahead for the protracted talks. The API reported crude inventories fell by 448,000 barrels last week, while gasoline stockpiles increased by more than 4 million barrels. Government data is due later Wednesday. European Dutch TTF benchmark gas futures (TTFMU2) touched €250/MWh, but has cooled off slightly recently, but still signals the heavy price that Europe is paying for the dependence on Russian gas. Copper holding up well despite China slowdown concerns Despite reports of weaker financing and activity data from China earlier this week, Copper remains well supported and registered only modest declines. BHP’s results provided some offset, as did the supply side issues in Europe. Only a break below the key 350 support will turn the focus lower. Meanwhile, zinc rallied amid concerns of smelter closures in Europe. What to consider? US housing scare broadens, industrial production upbeat Housing starts fell 9.6% in July to 1.446 mn, well beneath the prior 1.599 mn and the expected 1.537 mn. Housing starts are now down for five consecutive months, and suggest a cooling housing market in the wake of higher borrowing costs and higher inflation. Meanwhile, building permits declined 1.3% in July to 1.674 mn from 1.696 mn, but printed above the expected 1.65 mn. There will be potentially more scaling back in construction activity as demand weakens and inventory levels rise. On the other hand, industrial production was better than expected at 0.6% m/m (prev: -0.2%) possibly underpinned by holiday demand but the outlook is still murky amid persistent inflation and supply chain issues. US retailer earnings come in better than feared Walmart (WMT:xnys) and Home Depot (HD:xnys) reported better-than-feared results on Tuesday. Walmart’s Q2 revenues came in at USD152.9 billion (+8.4% YoY, consensus USD150.5bn). Same-store sales increased 8.4% YoY (vs consensus +6.0% YoY).  EPS of USD1.77, down 0.8% from a year ago quarter but better than the consensus estimate of USD1.63. While inventories increased 25.5% in Q2, the rate of increase has moderated from the prior quarter’s +32.0%. The company cited falls in gas prices, market share gain in grocery, and back-to-school shopping key reasons behind the strength in sales.  Home Depot reported Q2 revenues of USD43.9 billion (vs consensus USD43.4bn), +6.5% YoY.  Same-store sales grew 5.8%, beating analyst estimates (+4.9%).  EPS rose 11.5% to $5.05, ahead of analyst estimates (USD4.95). However, inventories grew 38% YoY in Q2, which was an acceleration from the prior quarter. The management cited inflation and pulling forward inventory purchases given supply chain challenges as reasons for the larger inventory build-up. Target (TGT:xnys) is scheduled to report on Wednesday. Eyes on US retail sales US retail sales will be next test of the US consumer after less bad retailer earnings last night. Retail sales should have been more resilient given the lower prices at pump improved the spending power of the average American household, and Amazon Prime Day in the month possibly attracted bargain hunters as well. However, consensus expectations are modest at 0.1% m/m compared to last month’s 1.0%. A cooling labor market in the UK UK labor market showed signs of cooling as job vacancies fell for the first time since August 2020 and real wages dropped at the fastest pace in history. Unemployment rate was steady at 3.8%, and the number of people in employment grew by 160,000 in the April-June period as against 256,000 expected. There was also a sprinkle of good news, with the number of employees on payrolls rising 73,000 in July, almost triple the pace expected. Also, wage growth was strong at 4.7% in the June quarter from 4.4% in the three months to May, which may be key for the BOE amid persistent wage pressures. Australia Q2 Wage Index to determine future RBA rate hike size? The RBA Minutes out on Tuesday showed a central bank that is trying to navigate a “narrow path” for keeping the Australian economy on an “even keel”. The RBA has often singled out wages as an important risk for whether inflation risks becoming more embedded and on that note, today sees the release of the Q2 Wage Index, expected to come in at 2.7% year-on-year after 2.4% in Q1. A softer data point may have the market pulling back expectations for another 50 basis point rate hike at the next RBA meeting after the three consecutive moves of that size. The market is about 50-50 on the size of the RBA hike in September, pricing a 35bps move. RBNZ set to decelerate its guidance after another 50 basis point move today? The Reserve Bank of New Zealand is expected to hike its official cash rate another 50 basis points tonight, taking the policy rate to 3.00%. With business and consumer sentiment surveys in the dumps in New Zealand and oil prices retreating sharply the RBNZ, one of the earliest among developed economies to tighten monetary policy starting late last year, may be set for more cautious forward guidance and a wait and see attitude, although wages did rise in Q2 at their second fastest pace (+2.3% QoQ) in decades. The market is uncertain on the future course of RBNZ policy, pricing 45bps for the October meeting after today’s 50bps hike and another 37bps for the November meeting. FOMC minutes to be parsed for hints on future Fed moves The Federal Reserve had lifted rates by 75bps to bring the Fed Funds rate at the level that they consider is neutral at the July meeting, but stayed away from providing any forward guidance. Meeting minutes will be out today, and member comments will be watched closely for any hints on the expectation for September rate hike or the terminal Fed rate. The hot jobs report and the cooling inflation number has further confused the markets since the Fed meeting, even as Fed speakers continue to push against any expectations of rate cuts at least in ‘early’ 2023. We only have Kansas City Fed President Esther George (voter in 2022) and Minneapolis Fed President Kashkari (non-voter in 2022) speaking this week at separate events on Thursday, so the bigger focus will remain on Jackson Hole next week for any updated Fed views.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 17, 2022
German Business Confidence Dips, ECB's Lagarde Hosts Central Banking Conference in Portugal, EUR/USD Drifts Higher

Fed's Plan Is To Push For More Rate Hikes To Boost Dollar (USD)!?

Saxo Strategy Team Saxo Strategy Team 19.08.2022 10:37
Summary:  Better than expected economic data continued to support sentiment in US in contrast to Europe, where ECB’s Schnabel's warning on the growth/inflation picture aggravated concerns. Fed speakers meanwhile continued to push for more rate hikes this year, aiding dollar strength despite lack of a clear direction in long end yields. EUR and GBP broke below key support levels, but oil prices climbed higher amid improving demand outlook but sustained supply issues. Focus now on Jackson Hole next week. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  In its second lightest volume session of the year, U.S. equities edged modestly higher, S&P 500 +0.23%, Nasdaq 100 +0.26%. As WTI crude climbed 2.7%, rebounding back above $90, the energy space was a top gainer aside from technology. Exxon Mobil (XOM:xnys) gained 2.4%.  Cisco (CSCO:xnas) surged 5.8% after reporting better-than-expected revenues. Nvidia (NVDA:xnas), +2.4% was another top contributor to the gain of the S&P 500 on Wednesday.  95% of S&P 500 companies have reported Q2 results, with about three-quarters of them managing to beat analyst estimates. On Friday there is a large number of options set to expire.  The U.S. treasury yield curve bull steepened on goldilocks hope The U.S. 2-10-year curve steepened 7bps to -32bps, driven by a 9bp decline in the 2-year yield.  In spite of hawkish Fed official comments and the August Philadelphia Fed Index bouncing back to positive territory, the market took note of the falls in the prices paid diffusion index and the prices received index from the survey and sent the short-end yields lower.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Both Hang Seng Index and CSI300 declined about 0.8%.  Tencent (00700:xhkg) rose 3.1% after reporting results that beat estimates as a result of better cost control and adverting revenues. Other China internet stocks traded lower, Bilibili (09626:xhkg) -4.2%, Baidu (09888:xhkg) -4.5%, Alibaba (09988:xhkg) -2.1%, JD.COM (09618:xhkg) -2.5%. The surge of Covid cases in China to a three-month high and the Hainan outbreak unabated after a 2-week lockdown, pressured consumer stocks.  Great Wall Motor (02333:xhkg) led the charge lower in autos, plunging near 6%.  Other automakers fell 2% to 4%.  Geely (00175:xhkg) fell 3.1% after reporting 1H earnings missing estimates.  A share Chinese liquor names declined, Kweichow Moutai (600519:xssc) -1.2%, Wuliangye Yibin (000858:xsec) -1.6%. Chinese brewers were outliner gainers in the consumer space, China Resources Beer (00291:xhkg) +4.8%, Tsingtao Brewery (00168:xhkg) +1.9%. Chinese property developers traded lower with Country Garden (02007:xhkg) losing the most, -5.2% , after warning that 1H earnings may have been down as much as 70%. The China Banking and Insurance Regulatory Commission (CBIRC) is looking at the quality of real estate loan portfolios at some financial institutions.  EURUSD and GBPUSD break through key support levels Dollar strength prevailed into the end of the week with upbeat US economic data and a continued hawkish Fedspeak which continued to suggest more Fed rate hikes remain in the pipeline compared to what the market is currently pricing in. EUR and GBP were the biggest loser, with both of them breaking below key support levels. EURUSD slid below 1.0100 handle while GBPUSD broke below 1.2000 despite a selling in EGBs and Gilts. USDJPY also broke above 136 in early Asian trading hours despite lack of a clear direction in US 10-year yields and a slide in 2-year yields. AUDUSD testing a break below 0.6900 as NZDUSD drops below 0.6240. Crude oil prices (CLU2 & LCOV2) Oil prices reversed their drop with WTI futures back above $90/barrel and Brent futures above $96. Upbeat US economic data has supported the demand side sentiment in recent days. Moreover, President Xi’s comment that China will continue to open up the domestic economy also aided the demand equation. Supply concerns, meanwhile, were aggravated by geopolitical tension around a potential incident at the Zaporizhzhia nuclear plant in Ukraine. Meanwhile, Shell hinted at reducing the capacity of Rhineland oil refinery due to the lower water level on the Rhine river and said the situation regarding supply is challenging but carefully managed. Gold (XAUUSD) still facing mixed signals The fate of gold has been turned lower again this week with the yellow metal facing decline of 2.5% so far in the week and breaking below the $1759 support, the 38.2% retracement of the July to August bounce. Stronger dollar, along with Fed’s continued hawkish rhetoric, weighed. Silver (XAGUSD) is also below the key support at $19.50, retracing half of its recent gains. The short-term direction has been driven by speculators reducing bullish bets, but with inflation remaining higher-for-longer, the precious metals can continue to see upside in the long run. What to consider? Existing home sales flags another red for the US housing market US existing home sales fell in July for a sixth straight month to 4.81 mn from 5.11 mn, now at the slowest pace since May 2020, and beneath the expected 4.89 mn. Inventory levels again continued to be a big concern, with supply rising to 3.3 months equivalent from 2.9 in June. This continues to suggest that the weakening demand momentum and high inventory levels may weigh on construction activity. US economic data continues to be upbeat The Philly Fed survey outperformed expectations, with the headline index rising to +6.2 (exp. -5.0, prev. -12.3), while prices paid fell to 43.6 (prev. 52.2) and prices received dropped to 23.3 (prev. 30.3). new orders were still negative at -5.1, but considerably better than last month’s -24.8 and employment came in at 24.1 from 19.4 previously. While this may be a good signal, survey data tends to be volatile and a long-term trend is key to make any reasonable conclusions. Jobless claims also slid to 250k still suggesting that the labor market remains tight. Fed speakers push for more rate hikes St. Louis Federal Reserve President James Bullard flagged another 75 basis point rate hike at the September meeting and hinted at 3.75-4% Fed funds rate by the end of the year with more front-loading in 2022. Fed’s George, much like Fed’s Daly, said that last month’s inflation is not a victory and hardly comforting. Bullard and George vote in 2022. Fed’s Kahskari said that he is not sure if the Fed can avoid a recession and that there is more work to be done to bring inflation down, but noted economic fundamentals are strong. Overall, all messages remain old and eyes remain on Fed Chair Powell speaking at the Jackson Hole conference on August 25. Japan’s inflation came in as-expected Japan’s nationwide CPI for July accelerated to 2.6% y/y, as expected, from 2.4% y/y in June. The core measure was up 2.4% y/y from 2.2% previously, staying above the Bank of Japan’s 2% target and coming in at the strongest levels since 2008. Upside pressures remain as Japan continues to face a deeper energy crisis threat into the winter with LNG supplies possibly getting diverted to Europe for better prices. Still, Bank of Japan may continue to hold its dovish yield curve control policy unless wage inflation surprises consistently to the upside. Cisco’s revenues came in flat, beating a previously feared decline Cisco Systems reports July 2022 quarter revenues of USD13.1 billion, down 0.2% YoY but better than the consensus of a 3% decline.  Net income came in at USD3.4 billion, -3.2% YoY but more than 1 percentage point above consensus.  The fall in product order was also smaller than feared.  The company guided the fiscal year 2023 revenue growth of +4% to +6%, ahead of the 3% expected and FY23 EPS of USD3.49 to USD3.56, in line with expectations as gross margin pressures are expected to offset the impact of higher sales.  NetEase’s Q2 results beat NetEase (09999:xhkg/NTES:xnas) reported above-consensus Q2 revenues, +13% YoY, and net profit from continuing operations, +28%.  PC online game revenues were above expectations, driven by Naraka Bladepoint content updates and the launch of Xbox version.  Mobile game segment performance was in line.  Geely Automobile 1H earnings missed estimates on higher costs Chinese automaker Geely reported higher-than-expected revenue growth of 29%YoY in 1H22 but a 35% YoY decline in net profit which was worse than analyst estimates.  The weakness in profit was mainly a result of a 2.6 percentage point compression of gross margin to 14.6% due to higher material costs and production disruption, higher research and development costs, and the initial ramping-up of production of the Zeekr model.  The company maintains its sales volume target of 1.65 million units, an growth of 24% YoY, for the full year of 2022.    For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 19, 2022
Ukraine Saves The Day For The World As The Corridor Shipping Crops Is Opened. Other Countries Harvest Is Quite Low Therefore To Weather Issues

Ukraine Saves The Day For The World As The Corridor Shipping Crops Is Opened. Other Countries Harvest Is Quite Low Therefore To Weather Issues

Saxo Strategy Team Saxo Strategy Team 19.08.2022 11:33
Summary:  Equity markets managed a quiet session yesterday, a day when the focus is elsewhere, especially on the surging US dollar as EURUSD is on its way to threatening parity once again, GBPUSD plunged well below 1.2000 and the Chinese renminbi is perched at its weakest levels against the US dollar for the cycle. Also in play are the range highs in longer US treasury yields, with any significant pull to the upside in yields likely to spell the end to the recent extended bout of market complacency.   What is our trading focus?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures bounced back a bit yesterday potentially impacted by the July US retail sales showing that the consumer is holding up in nominal terms. The key market to watch for equity investors is the US Treasury market as the US 10-year yield seems to be on a trajectory to hit 3%. In this case we would expect a drop in S&P 500 futures to test the 4,200 level and if we get pushed higher in VIX above the 20 level then US equities could accelerate to the downside. Fed’s Bullard comments that he is leaning towards a 75 basis point rate hike at the September meeting should also negatively equities here relative to the expectations. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hang Seng Index edged up by 0.4% and CSI300 was little changed. As WTI Crude bounced back above $90/brl, energy stocks outperformed, rising 2-4%. Technology names in Hong Kong gained with Hang Seng Tech Index (HSTECH.I) up 0.6%. Investors are expecting Chinese banks to cut loan prime rates on Monday, following the central bank’s rate cut earlier this week. The China Banking and Insurance Regulatory Commission (CBIRC) is looking at the quality of real estate loan portfolios and reviewing lending practices at some Chinese banks. The shares of NetEase (09999:xhkg/NTES:xnas) dropped more than 3% despite reporting above-consensus Q2 revenue up 13% y/y, and net profit from continuing operations up 28%.  PC online game revenue was above expectations, driven by Naraka Bladepoint content updates and the launch of Xbox version. Mobile game segment performance was in line. USD pairs as the USD rally intensifies The US dollar rally is finding its legs after follow up action yesterday that took EURUSD below the key range low of 1.0100, setting up a run at the psychologically pivotal parity, while GBPUSD slipped well south of the key 1.2000 and USDJPY ripped up through 135.50 resistance. An accelerator of that move may be applied if US long treasury yields pull come further unmoored from the recent range and pull toward 3.00%+. A complete sweep of USD strength would arrive with a significant USDCNH move as discussed below, and the US dollar “wrecking ball” will likely become a key focus and driver of risk sentiment as it is the premiere measure of global liquidity. The next key event risk for the US dollar arrives with next Friday’s Jackson Hole symposium speech from Fed Chair Powell. USDCNH The exchange rate is trading at the highs of the cycle this morning, and all traders should keep an eye out here for whether China allows a significant move in the exchange rate toward 7.00, and particularly whether CNH weakness more than mirrors USD strength (in other words, if CNH is trading lower versus a basket of currencies), which would point to a more determined devaluation move that could spook risk sentiment globally, something we have seen in the past when China shows signs of shifting its exchange rate regime from passive management versus the USD. Crude oil Crude oil (CLU2 & LCOV2) remains on track for a weekly loss with talks of an Iran nuclear deal and global demand concerns being partly offset by signs of robust demand for fuel products. Not least diesel which is seeing increasing demand from energy consumers switching from punitively expensive gas. Earlier in the week Dutch TTF benchmark gas at one point traded above $400 per barrel crude oil equivalent. So far this month the EU diesel crack spread, the margin refineries achieve when turning crude into diesel, has jumped by more than 40% while stateside, the equivalent spread is up around 25%, both pointing to a crude-supportive strength in demand. US natural gas US natural gas (NGU2) ended a touch lower on Thursday after trading within a 7% range. It almost reached a fresh multi-year high at $9.66/MMBtu after spiking on a lower-than-expected stock build before attention turned to production which is currently up 4.8% y/y and cooler temperatures across the country lowering what until recently had driven very strong demand from utilities. LNG shipments out of Freeport, the stricken export plant may suffer further delays, thereby keeping more gas at home. Stockpiles trail the 5-yr avg. by 13%. US Treasuries (TLT, IEF) The focus on US Treasury yields may be set to intensify if the 10-year treasury benchmark yield, trading near 2.90% this morning, comes unmoored from its recent range and trades toward 3.00%, possibly on the Fed’s increase in the pace of its quantitative tightening and/or on US economic data in the coming week(s). Yesterday’s US jobless claims data was better than expected and the August Philadelphia Fed’s business survey was far more positive than expected, suggesting expansion after the volatile Empire Fed survey a few days earlier posted a negative reading.   What is going on?   Global wheat prices continue to tumble ... with a record Russian crop, continued flows of Ukrainian grain and the stronger dollar pushing down prices. The recently opened corridor from Ukraine has so far this month seen more than 500,000 tons of crops being shipped, and while it's still far below the normal pace it has nevertheless provided some relief at a time where troubled weather has created a mixed picture elsewhere. The Chicago wheat (ZWZ2) futures contract touch a January on Thursday after breaking $7.75/bu support while the Paris Milling (EBMZ2) wheat traded near the lowest since March. Existing home sales flags another red for the US housing market while other US economic data continues to be upbeat US existing home sales fell in July for a sixth straight month to 4.81 mn from 5.11 mn, now at the slowest pace since May 2020, and beneath the expected 4.89 mn. Inventory levels again continued to be a big concern, with supply rising to 3.3 months equivalent from 2.9 in June. This continues to suggest that the weakening demand momentum and high inventory levels may weigh on construction activity. The Philly Fed survey meanwhile outperformed expectations, with the headline index rising to +6.2 (exp. -5.0, prev. -12.3), while prices paid fell to 43.6 (prev. 52.2) and prices received dropped to 23.3 (prev. 30.3). New orders were still negative at -5.1, but considerably better than last month’s -24.8 and employment came in at 24.1 from 19.4 previously Fed speakers push for more rate hikes St. Louis Federal Reserve President James Bullard 2.6% with more front-loading in 2022. Fed’s George, much like Fed’s Daly, said that last month’s inflation is not a victory and hardly comforting. Bullard and George vote in 2022. Fed’s Kashkari said that he is not sure if the Fed can avoid a recession and that there is more work to be done to bring inflation down, but noted economic fundamentals are strong. Overall, all messages remain old and eyes remain on Fed Chair Powell speaking at the Jackson Hole conference on August 26, next Friday.  Japan’s inflation came in as expected Japan’s nationwide CPI for July accelerated to 2.6% y/y, as expected, from 2.4% y/y in June. The core measure was up 2.4% y/y from 2.2% previously, staying above the Bank of Japan’s 2% target and coming in at the strongest levels since 2008. Upside pressures remain as Japan continues to face a deeper energy crisis threat into the winter with LNG supplies possibly getting diverted to Europe for better prices. Still, Bank of Japan may continue to hold its dovish yield curve control policy unless wage inflation surprises consistently to the upside.   What are we watching next?   Strong US dollar to unsettle markets – and Jackson Hole Fed conference next week? The US dollar continues to pull higher here, threatening the cycle highs versus sterling, the euro and on the comeback trail against the Japanese yen as well. The US dollar is a barometer of global liquidity, and a continued rise would eventually snuff out the improvement in financial conditions we have seen since the June lows in equity markets, particularly if longer US treasury yields are also unmoored from their recent range and rise back to 3.00% or higher.  The focus on the strong US dollar will intensify should the USDCNH exchange rate, which has pulled to the highs of the cycle above 6.80, lurch toward 7.00 in coming sessions as it would indicate that China is unwilling to allow its currency to track USD direction. As well, the Fed seems bent on pushing back against market expectations for Fed rate cuts next year and may have to spell this out a bit more forcefully at next week’s Jackson Hole conference starting on Thursday (Fed Chair Powell to speak Friday). Earnings to watch The two earnings releases to watch today are from Xiaomi and Deere. The Chinese consumer is challenged over falling real estate prices and input cost pressures on food and energy, and as a result consumer stocks have been doing bad this year. Xiaomi is one the biggest sellers of smartphones in China and is expected to report a 20% drop in revenue compared to last year. Deere sits in the booming agricultural sector, being one of the biggest manufacturers of farming equipment, and analysts expect a 12% gain in revenue in FY22 Q3 (ending 31 July).   Today: China Merchants Bank, CNOOC, Shenzhen Mindray, Xiaomi, Deere Economic calendar highlights for today (times GMT) 1230 – Canada Jun. Retail Sales 1300 – US Fed’s Barkin (Non-voter) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 19, 2022
Commodities: Deglobalization, Green Transformation, Urbanization And Other Things That Got Involved

Commodities: Deglobalization, Green Transformation, Urbanization And Other Things That Got Involved

Ole Hansen Ole Hansen 19.08.2022 15:50
Summary:  Commodities traded with a softer bias this week as the focus continued to rest on global macro-economic developments, in some cases reducing the impact of otherwise supportive micro developments, such as the fall in inventories seen across several individual commodities. Overall, however, we do not alter our long-term views about commodities and their ability to move higher over time, with some of the main reasons being underinvestment, urbanization, green transformation, sanctions on Russia and deglobalization. Commodities traded with a softer bias this week as the focus continued to rest on global macro-economic developments, in some cases reducing the impact of otherwise supportive micro developments, such as the fall in inventories seen across several individual commodities. The dollar found renewed strength and bond yields rose while the month-long bear-market bounce across US stocks showed signs of running out of steam.The trigger being comments from Federal Reserve officials reiterating their resolve to continue hiking rates until inflation eases back to their yet-to-be revised higher long-term target of around 2%. Those comments put to rest expectations that a string of recent weak economic data would encourage the Fed to reduce the projected pace of future rate hikes.The result of these developments being an elevated risk of a global economic slowdown gathering pace as the battle against inflation remains far from won, not least considering the risk of persistent high energy prices, from gasoline and diesel to coal and especially gas. A clear sign that the battle between macro and micro developments continues, the result of which is likely to be a prolonged period of uncertainty with regards to the short- and medium-term outlook.Overall, however, these developments do not alter our long-term views about commodities and their ability to move higher over time. In my quarterly webinar, held earlier this week, I highlighted some of the reasons why we see the so-called old economy, or tangible assets, performing well over the coming years, driven by underinvestment, urbanization, green transformation, sanctions on Russia and deglobalization. Returning to this past week’s performance, we find the 2.3% drop in the Bloomberg Commodity Index, seen above, being in line with the rise in the dollar where gains were recorded against all the ten currencies, including the Chinese renminbi, represented in the index. It is worth noting that EU TTF gas and power prices, which jumped around 23% and 20% respectively, and Paris Milling wheat, which slumped, are not members of the mentioned commodity index.Overall gains in energy led by the refined products of diesel and US natural gas were more than offset by losses across the other sectors, most notably grains led by the slump in global wheat prices and precious metals which took a hit from the mentioned dollar and yield rise. Combating inflation and its impact on growth remains top of mind Apart from China’s slowing growth outlook due to its zero-Covid policy and housing market crisis hitting industrial metals, the most important driver for commodities recently has been the macro-economic outlook currently being dictated by the way in which central banks around the world have been stepping up efforts to curb runaway inflation by forcing down economic activity through aggressively tightening monetary conditions. This process is ongoing and the longer the process takes to succeed, the bigger the risk of an economic fallout. US inflation expectations in a year have already seen a dramatic slump but despite this the medium- and long-term expectations remain anchored around 3%, still well above the Fed’s 2% target.Even reaching the 3% level at this point looks challenging, not least considering elevated input costs from energy. Failure to achieve the target remains the biggest short-term risk to commodity prices with higher rates killing growth, while eroding risk appetite as stock markets resume their decline. These developments, however, remain one of the reasons why we find gold and eventually also silver attractive as hedges against a so-called policy mistake. Global wheat prices tumble The prospect for a record Russian crop and continued flows of Ukrainian grain together with the stronger dollar helped push prices lower in Paris and Chicago. The recently opened corridor from Ukraine has so far this month seen more than 500,000 tons of crops being shipped, and while it's still far below the normal pace, it has nevertheless provided some relief at a time where troubled weather has created a mixed picture elsewhere. The Chicago wheat futures contract touched a January low after breaking $7.75/bu support while the Paris Milling (EBMZ2) wheat traded near the lowest since March. With most of the uncertainties driving panic buying back in March now removed, calmer conditions should return with the biggest unknown still the war in Ukraine and with that the country’s ability to produce and export key food commodities from corn and wheat to sunflower oil. EU gas reaches $73/MMBtu or $415 per barrel of oil equivalent Natural gas in Europe headed for the longest run of weekly gains this year, intensifying the pain for industries and households, while at the same time increasingly threatening to push economies across the region into recession. The recent jump on top of already elevated prices of gas and power, due to low supplies from Russia, has been driven by an August heatwave raising demand while lowering water levels on the river Rhine. This development has increasingly prevented the safe passage of barges transporting coal, diesel and other essentials, while refineries such as Shell’s Rhineland oil refinery in Germany have been forced to cut production. In addition, half of Europe’s zinc and aluminum smelting capacity has been shut, thereby adding support to these metals at a time the market is worried about the demand outlook.An abundance of rain and lower temperatures may in the short term remove some of the recent price strength but overall, the coming winter months remain a major worry from a supply perspective. Not least considering the risk of increased competition from Asia for LNG shipments. Refinery margin jump lends fresh support to crude oil Crude oil, in a downtrend since June, is showing signs of selling fatigue with the technical outlook turning more price friendly while fresh fundamental developments are adding some support as well. Worries about an economic slowdown driven by China’s troubled handling of Covid outbreaks and its property sector problems as well as rapidly rising interest rates were the main drivers behind the selling since March across other commodity sectors before eventually also catching up with crude oil around the middle of June. Since then, the price of Brent has gone through a $28 dollar top to bottom correction. While the macro-economic outlook is still challenged, recent developments within the oil market, so-called micro developments, have raised the risk of a rebound. The mentioned energy crisis in Europe continues to strengthen, the result being surging gas prices making fuel-based products increasingly attractive. This gas-to-fuel switch was specifically mentioned by the IEA in their latest update as the reason for raising their 2022 global oil demand growth forecast by 380k barrels per day to 2.1 million barrels per day. Since the report was published, the incentive to switch has increased even more, adding more upward pressure on refinery margins. While pockets of demand weakness have emerged in recent months, we do not expect these to materially impact on our overall price-supportive outlook. Supply-side uncertainties remain too elevated to ignore, not least considering the soon-to-expire releases of crude oil from US Strategic Reserves and the EU embargo of Russian oil fast approaching. In addition, the previously mentioned increased demand for fuel-based products to replace expensive gas. With this in mind, we maintain our $95 to $115 range forecast for the third quarter. Gold and silver struggle amid rising dollar and yields Both metals, especially silver, were heading for a weekly loss after hawkish sounding comments from several FOMC members helped boost the dollar while sending US ten-year bond yields higher towards 3%. It was the lull in both that helped trigger the recovery in recent weeks, and with stock markets having rallied as well during the same time, the demand for gold has mostly been driven by momentum following speculators in the futures market. The turnaround this past week has, as a result of speculators' positioning, been driven by the need to reduce bullish bets following a two-week buying spree which lifted the net futures long by 63k lots or 6.3 million ounces, the strongest pace of buying in six months. ETF holdings meanwhile have slumped to a six-month low, an indication that investors, for now, trust the FOMC’s ability to bring down inflation within a relatively short timeframe. An investor having doubts about this should maintain a long position as a hedge against a policy mistake. Some investors may feel hard done by gold’s negative year-to-date performance in dollars, but taking into account it had to deal with the biggest jump in real yields since 2013 and a surging dollar, its performance, especially for non-dollar investors relative to the losses in bonds and stocks, remains acceptable. In other words, a hedge in gold against a policy mistake or other unforeseen geopolitical events has so far been almost cost free.   Source: WCU: Bearish macro, bullish micro regime persists
Gold Has A Chance For Further Downside Movement - 30.12.2022

Gold Is At Risk Of Being Liquidated!? Ukraine Shipment Accelerates

Ole Hansen Ole Hansen 22.08.2022 13:47
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to August 16. A week that potentially saw a cycle peak in US stocks and where the dollar and treasury yields both traded calmly before pushing higher. Commodities meanwhile continued their recent recovery with funds being net buyers of most contracts, the major exceptions being gold and crude oil Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to August 16. A week that potentially saw a cycle peak in US stocks with the S&P 500 reversing lower after reaching a four-month high, and where the dollar and treasury yields both traded calm before pushing higher. Commodities meanwhile continued their recent recovery with all sectors, except precious metals and grains recording gains. Commodities Hedge funds were net buyers for a third week with the total net long across the 24 major commodity futures tracked in this update rising by 14% to reach a seven week high at 988k lots. Some 56% below the recent peak reached in late February before Russia’s attack on Ukraine drove an across-the-board volatility spike which forced funds to reduce their exposure. Since then and up until early July, worries about a global economic slowdown, caused by a succession of rapid rate hikes in order to kill inflation, was one of the key reasons for the slump in speculative length.Returning to last week, the 123k lot increase was split equally between new longs being added and short positions being scaled back, and overall the net increase was broad led by natural gas, sugar, cattle and grains with most of the selling being concentrated in crude oil and gold. Energy: Weeks of crude oil selling continued with the combined net long in WTI and Brent falling by 26k lots to 278k lots, the lowest belief in rising prices since April 2020. Back then the market had only just began recovering the Covid related energy shock which briefly sent prices spiraling lower. While funds continued to sell crude oil in anticipation of an economic slowdown the refined product market was sending another signal with refinery margins on the rise again, partly due surging gas prices making refined alternatives, such as diesel, look cheap. As a result, the net long in ICE gas oil was lifted by 24% to 62k lots while RBOB gasoline and to a lesser extent ULSD also saw net buying. The net short in Henry Hub natural gas futures was cut by 55% as the price jumped by 19%. Metals: Renewed weakness across investment metals triggered a mixed response from traders with gold seeing a small reduction in recently established longs while continued short covering reduced bearish bets in silver, platinum and palladium. With gold resuming its down move after failing to find support above $1800, the metal has been left exposed to long liquidation from funds which in the previous two weeks had bought 63.3k lots. Copper’s small 1% gain on the week supported some additional short covering, but overall the net short has stayed relatively stable around 16k lots for the past six weeks. Agriculture: Speculators were net buyers of grains despite continued price weakness following the latest supply and demand report from the US Department of Agriculture on August 12, and after shipments of grains from Ukraine continued to pick up speed. From a near record high above 800k lots on April 19, the net long across six major crop futures went on to slump by 64% before buyers began dipping their toes back in to the market some three weeks ago. Buying was concentrated in bean oil and corn while the wheat sector remained challenged with the net long in Kansas wheat falling to a 2-year low. The four major softs contract saw strong buying led by sugar after funds flipped their position back to a 13.4k lots net long. The cocoa short was reduced by 10% while the coffee long received a 25% boost. Cotton’s 18% surge during the week helped lift the long by 35% to 44.7k lots.     Forex A mixed week in forex left the speculative dollar long close to unchanged against ten IMM futures and the DXY. Selling of euro saw the net short reach a fresh 2-1/2-year high at 42.8k lots or €5.3 billion equivalent while renewed selling of JPY, despite trading higher during the reporting week, made up most of the increase in dollar length. Against these we saw short covering reduce CHF, GBP and MXN short while CAD net long reached a 14-month high.    What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Source: COT: Gold and oil left out as funds return to commodities
Japan's Prime Minister Tested Covid Positive. Gazprom Confirmed Gas Shipment Would Be Stopped!

Japan's Prime Minister Tested Covid Positive. Gazprom Confirmed Gas Shipment Would Be Stopped!

Marc Chandler Marc Chandler 22.08.2022 16:28
Overview: The euro traded below parity for the second time this year and sterling extended last week’s 2.5% slide. While the dollar is higher against nearly all the emerging market currencies, it is more mixed against the majors. The European currencies have suffered the most, except the Norwegian krone. The dollar-bloc and yen are also slightly firmer. The week has begun off with a risk-off bias. Nearly all the large Asia Pacific equity markets were sold. Chinese indices were a notable exception following a cut in the loan prime rates. Europe’s Stoxx 600 is off by around 1.20%, the most in a month. US futures are more than 1% lower. The Asia Pacific yield rose partly in catch-up to the pre-weekend advance in US yields, while today, US and European benchmark 10-year yields are slightly lower. The UK Gilt stands out with a small gain. Gold is being sold for the sixth consecutive session and has approached the (61.8%) retracement of the rally from last month’s low (~$1680) that is found near $1730. October WTI is soft below $90, but still inside the previous session’s range. US natgas is up 2.4% to build on the 1.6% gain seen before the weekend. It could set a new closing high for the year. Gazprom’s announcement of another shutdown of its Nord Stream 1 for maintenance sent the European benchmark up over 15% today. It rose almost 20.3% last week. Iron ore rose for the first time in six sessions, while September copper is giving back most of the gains scored over the past two sessions. September wheat rallied almost 3% before the weekend and is off almost 1% now.  Asia Pacific Following the 10 bp reduction in benchmark one-year Medium-Term Lending Facility Rate at the start of last week, most observers expected Chinese banks to follow-up with a cut in the loan prime rates today  They delivered but in a way that was still surprising. The one-year loan prime rate was shaved by five basis points to 3.65%, not even matching the MLF reduction. On the other hand, the five-year loan prime rate was cut 15 bp to 4.30%. This seems to signal the emphasis on the property market, as mortgages are tied to the five-year rate, while short-term corporate loans are linked to the shorter tenor. The five-year rate was last cut in May and also by 15 bp. Still, these are small moves, and given continued pressures on the property sector, further action is likely, even if not immediately. In addition to the challenges from the property market and the ongoing zero-Covid policy, the extreme weather is a new headwind to the economy. The focus is on Sichuan, one of the most populous provinces and a key hub for manufacturing, especially EV batteries and solar panels. It appears that the aluminum smelters (one million tons of capacity) have been completed halted. The drought is exacerbating a local power shortage. Rainfall along the Yangtze River is nearly half of what is normally expected. Hydropower accounts for a little more than 80% of Sichuan power generation and the output has been halved. Officials have extended the power cuts that were to have ended on August 20 to August 25. Factories in Jiangsu and Chongqing are also facing outages. According to reports, Shanghai's Bund District turned off its light along the waterfront. Japan's Prime Minister Kishida tested positive for Covid over the weekend  He will stay in quarantine until the end of the month. In addition to his physical health, Kishida's political health may become an issue. Support for his government has plunged around 16 percentage points from a month ago to slightly more than 35% according to a Mainchi newspaper poll conducted over the weekend. The drag appears not to be coming from the economy but from the LDP's ties with the Unification Church. Meanwhile, Covid cases remain near record-highs in Japan, with almost 24.8k case found in Tokyo alone yesterday. Others are also wrestling with a surge in Covid cases. Hong Kong's infections reached a new five-month high, for example. The dollar reached nearly JPY137.45 in Tokyo before pulling back to JPY136.70 in early European turnover  It is the fifth session of higher highs and lows for the greenback. The upper Bollinger Band (two standard deviations above the 20-day moving average) is near JPY137.55 today. We suspect the dollar can re-challenge the session high in North America today. The Australian dollar is proving resilient today after plunging 3.45% last week. It is inside the pre-weekend range (~$0.6860-$0.6920). Still, we like it lower. Initial support is now seen around $0.6880, and a break could spur another test on the lows. That pre-weekend low coincides with the (61.8%) retracement of the rally from last month's low (~$0.6680) to the high on August 11 (~$0.7135). The Chinese yuan slumped to new lows for the year today. For the second consecutive session, the dollar gapped higher and pushed through CNY6.84. The PBOC set the dollar's reference rate at CNY6.8198. While this was lower than the CNY6.8213, it is not seen as much as a protest as an at attempt to keep the adjustment orderly. Europe Gazprom gave notice at the end of last week that gas shipments through the Nord Stream 1 pipeline would be stopped for three days (August 31-September 2) for maintenance  The European benchmark rose nearly 20.3% last week and 27% this month. It rose 35.2% last month and 65.5% in June. The year-to-date surge has been almost 380%. The energy shock seems sure to drive Europe into a recession. The flash August PMI out tomorrow is expected to see the composite falling further below the 50 boom/bust level. Bundesbank President Nagel, who will be attending the Jackson Hole symposium at the end of this week recognized the risk of recession but still argued for the ECB rate increases to anchor inflation expectations. The record from last month's ECB meeting will be published on Thursday. There are two keys here. First, is the color than can be gleaned from the threshold for using the new Transmission Protection Instrument. Second, the ECB lifted its forward guidance, which we argue is itself a type of forward guidance. Is there any insight into how it is leaning? The swaps market prices in another 50 bp hike, but a slight chance of a 75 bp move. The German 10-year breakeven (difference between the yield of the inflation linked bond and the conventional security) has been rising since last July and approached 2.50% last week  It has peaked in early May near 3% before dropping to almost 2% by the end of June. It is notable that Italy's 10-year breakeven, which has begun rising again since the third week of July, is almost 25 bp less than Germany. Several European countries, including Germany and Italy, have offered subsidies or VAT tax cut on gasoline that have offset some of the inflation pressures. Nagel, like Fed Chair Powell, BOE Governor Bailey, and BOJ Governor Kuroda place much emphasis on lowering wages to bring inflation down. Yet wages are rising less than inflation, and the cost-of-living squeeze is serious. They take for granted that business are simply passing on rising input costs, including labor costs, but if that were true, corporate earnings would not be rising, which they have. Costs are being passed through. Later this week, the UK regulator will announce the new gas cap for three months starting in October  Some reports warn of as much as an 80% increase. It is behind the Bank of England's warning that CPI could hit 13% then. The UK's wholesale benchmark has soared 47.5% this month after an 83.7% surge last month. Gas prices in the UK have nearly tripled this year. The UK's 10-year breakeven rose by 38 bp last week to 4.29%, a new three-month high. Although the UK economy shrank slightly in Q2 (0.1%), the BOE warned earlier this month that a five-quarter recession will likely begin in the fourth quarter. Unlike the eurozone, the UK's composite PMI has held above the 50 boom/bust level. Still, it is expected to have slowed for the fourth month in the past five when the August preliminary figures are presented tomorrow. The euro and sterling extended their pre-weekend declines  The euro slipped below parity to $0.9990. The multiyear low set last month was near $0.9950. The break of parity came in the early European turnover. Only a recovery of the $1.0050-60 area helps stabilizes the tone. Speculators in the futures market extended their next short euro position in the week through August 16 to a new two-year extreme and this was before the euro's breakdown in the second half of last week. The eurozone's preliminary August composite PMI due tomorrow is expected to show the contraction in output deepened while the market is expecting the Fed's Powell to reinforce a hawkish message on US rates. After falling to almost $1.1790 before the weekend, sterling made a marginal new low today, closer to $1.1780. The two-year low set last month was near $1.1760. The $1.1850-60 area offers an initial cap. Strike activity that hobbled the trains and underground spread to the UK's largest container port, Felixstowe, which handles about half of the country's containers. An eight-day strike began yesterday. Industrial activity is poised to spread, and this is prompting Truss and Sunak who are locked in a leadership challenge, to toughen their rhetoric against labor. America This is a busy week for the US  First, there is supply. Today features $96 bln in bills. Tomorrow sees a $60 bln three-week cash management bill and $44 bln 2-year notes. On Wednesday, the government sell another $22 bln of an existing two-year floating rate note, and $45 bln five-year note. Thursdays sale includes four- and eight-week bills and $37 bln seven-year notes. There are no long maturities being sold until mid-September. The economic data highlights include the preliminary PMI, where the estimate for services is forecast (median in Bloomberg's survey) to recover from the drop below the 50 boom/bust level. In the middle of the week, the preliminary estimate of July durable goods is expected. Shipments, which feed into GDP models is expected to rise by 0.3%. The revision of Q2 GDP the following day tends not to be a `big market movers. Friday is the big day. July merchandise trade and personal income and consumption measures are featured. Like we saw with the CPI, the headline PCE deflator is likely to ease while the core measure proves a bit stickier. Shortly after they are released, Powell addresses the Jackson Hole gathering.  Canada has a light economic diary this week, but Mexico's a bit busier  The highlight for Mexico will be the biweekly CPI on Wednesday. Price pressures are likely to have increased and this will encourage views that Banxico will likely hike by another 75 bp when it meets late next month (September 29). The July trade balance is due at the end of the week. It has been deteriorating sharply since February and likely continued.    The US dollar rose more than 1% against the Canadian dollar over the past three sessions. It edged a little higher today but stopped shy of the CAD1.3035 retracement objective. Initial support is seen near CAD1.2975-80. With sharp opening losses expected for US equities, it may discourage buying of the Canadian dollar in the early North American activity. The greenback is rising against the Mexican peso for the fifth consecutive session. However, it has not taken out the pre-weekend high near MXN20.2670. Still, the next important upside technical target is closer to MXN20.3230, which corresponds to the middle of this month's range. Support is now seen near MXN20.12.    Disclaimer   Source: No Relief for the Euro or Sterling
The French Housing Market Is More Resilient | The Chance Of Republicans Winning The Senate Is Up

France: Industrial Production Decreased | French GDP (Gross Domestic Product) Is Expected To Decline

ING Economics ING Economics 09.09.2022 16:41
Industrial production fell sharply in July and remains 6% below its pre-pandemic level. Industry will probably contribute negatively to French economic growth in the third quarter   French industrial production fell by 1.6% over one month in July, and the decline was widespread across all branches of the industrial sector. Only construction increased its output by 0.5% over the month. Over a year, industrial production is down by 1%. It is therefore a difficult start to the third quarter for the French industrial sector, which is clearly suffering from the disruption of supply chains due to the war in Ukraine, lockdowns in China, and rising energy prices. Looking ahead, the contraction in order books since February, the high level of stocks of finished goods, high uncertainty, high energy and raw material prices, and potential disruptions to energy supplies do not point to an improved outlook for the French industrial sector. Indeed, the business climate indicator for the sector fell further in August. It is therefore likely that industry will make a negative contribution to French economic growth in the third quarter. The industrial sector only represents 15% of total French value added (20% if we include construction), so the weakness of industry is not enough in itself to conclude that the macroeconomic outlook for the next few quarters has worsened. However, the outlook is not much more favourable in the services sector. The deterioration in purchasing power caused by inflation, the decline in consumer confidence, and the fading of the positive effects of the post-pandemic reopenings will weigh on the dynamism of services in the coming months. As a result, the question is no longer really whether France and other European countries are heading for recession, but rather how fast the recession is coming. Given the developments of the last few weeks, there is a risk that French GDP growth will turn negative in the third quarter. We expect growth of 2.2% for the whole of 2022 and -0.2% for the whole of 2023.  Read this article on THINK TagsIndustrial Production GDP France Eurozone Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Brent Crude Oil Stayed Quite Strong Yesterday Rising 0.7%, But In The Near Future Commodites May Be Endangered By (USD) US Dollar's Dominance And More

Crude Oil Market Is Surely Looking Forward To The Fed Meeting, Crude Oil - 100MMbbls From SPR Will Be Sold By DOE

ING Economics ING Economics 20.09.2022 12:07
Markets have been trading in a fairly choppy manner, while sentiment remains relatively negative for risk assets. Participants will be focused on the Fed meeting later this week and expectations in the lead-up to the meeting have been fairly hawkish Energy - US SPR release The oil market continues to trade in a relatively choppy manner. ICE Brent traded in a US$4/bbl range yesterday, and managed to settle higher on the day, after trading weaker earlier in the session. A weaker USD would have provided some support to oil prices. However, like for most risk assets, market participants will be waiting for some clarity from the Fed when it meets later this week. The big question is how aggressive will it be in terms of hiking. Our US economist is of the view that we will see the Fed hiking by 75bps at this week’s meeting. Also not helping sentiment in the oil market at the moment is the weakness that we are seeing in refinery margins. Margins have come under pressure, with reports that China could release 15mt of export quotas for refined products. The refined product market, particularly middle distillates, has faced significant tightness for much of the year, and so increased Chinese supply would be welcomed by many in the market. The US Department of Energy (DOE) announced that it will be selling an additional 10MMbbls of crude oil in November from its Strategic Petroleum Reserve (SPR). This sale would be part of the Biden administration’s announcement back in March to release stocks from the SPR to combat higher prices. Under that initial announcement the DOE authorized the release of 180MMbbls of crude oil from the SPR. According to the DOE, roughly 155MMbbls has been released up until now - this further sale would take the total volume to around 165MMbbls. According to Bloomberg the UAE is wanting to bring forward its plans to increase crude oil production. Adnoc is wanting to have the capacity to pump 5MMbbls/d of oil by 2025, rather than by 2030 as previously planned. The UAE currently has production capacity of a little over 4MMbbls/d - due to the OPEC+ supply deal, production is closer to around 3.16MMbbls/d at the moment. Agriculture – Ukraine grain exports According to the latest update from the United Nations, almost 3.9mt of agricultural products have been exported from Ukrainian Black Sea ports under the export corridor deal since early August. Corn makes up almost 50% of these exports, whilst wheat makes up around a quarter of exports under the deal. Latest trade data from China shows that corn imports dropped 44.% YoY to 1.8mt in August, while YTD imports are down 21% YoY to total 16.9mt. Among other grains, China’s wheat imports fell 25% YoY to 530kt over the month, while cumulative imports declined 10% YoY to total 6.25mt over the first eight months of the year. The USDA’s weekly export inspection data shows the demand for US grains remained strong over the last week. US weekly inspection of corn for exports rose to 549kt over the last week, up from 474kt in the previous week and 403kt from the same time last year. Similarly, soybean shipment inspections rose to 519kt over the last week, compared to 342kt from a week ago and 279kt at the same time last year. Read this article on THINK TagsUS Federal reserve UAE SPR Oil Grains Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Conflict Over Taiwan Would Trigger A Huge Global economic Shock

Elon Musk Is Getting Into Geopolitics| Russia And Another Attack

Kamila Szypuła Kamila Szypuła 10.10.2022 13:48
The new week has started and the markets await more important reports. While waiting for new reports, it is also worth getting acquainted with information on other events in various areas that may affect the situation on the markets. In this article: Relevance of the payment Market volatility Another attack Fear and financial risk Musk's proposal The global energy investment How payments affect the brand JP Morgan in its tweet discusses the importance of payments for the brand. The significance of the payment for the brand is wider explained in the attached short video.   Payments power and support shopping in many ways, directly improving overall brand perception. https://t.co/Eooh2EjJLT pic.twitter.com/yfwnxfH28v — J.P. Morgan (@jpmorgan) October 4, 2022 Building a strong brand is a comprehensive and multi-channel process. Creating a strong and meaningful brand should start inside the company. In order to find out what is important for clients, companies ask them to fill in questionnaires. Recently, payment methods have become more important. Understanding how this detail can affect brands can help companies improve their position. What really is the cause of market volatility? UBS in its last post on twitter informs about the topic of the last UBS Trending clip. The main topic is market volatility and what is the cause of this situation.   As US market volatility continues, many investors are wondering what really is the cause of it all? And are there investment opportunities out there? Find out in this episode of #UBSTrending. #shareUBS pic.twitter.com/edhHPLcsOh — UBS (@UBS) October 9, 2022 Volatility can be high or low. The greater the market volatility, the greater the short-term profitability. However, it is often considered that investing in the most volatile currency pairs or other assets is very risky and therefore the risk of loss is high. In times of high market volatility, prices tend to move very dynamically and rapidly in the short term. For investors, knowing the reasons for this may be helpful in making a decision. Russia is still attacking *Walter Bloomberg tweets about Russia's intentions, following a statement by Russian Defense Minister.   RUSSIAN DEFENCE MINISTRY: RUSSIA LAUNCHED MASSIVE ATTACK ON UKRAINIAN MILITARY COMMAND, COMMUNICATIONS AND ENERGY SYSTEMS - RIA — *Walter Bloomberg (@DeItaone) October 10, 2022 The situation on the front line continues to escalate. Russia is still attacking and is planning further attacks. The deepening of the dispute affects not only the geopolitical situation, but also individual citizens. Not only does the lack of peace evoke negative emotions, but there will also be questions about what to do next, prices are rising as a result of the conflict. With the coming winter uncertainty, fears will increase with subsequent attacks. How To Deal With Fear Morningstar, Inc. in his tweet, he discusses the impact of fear on investments. Sarah Newcomb (@finance_therapy) advises on how to manage fear.   Fear can change how you perceive financial risk.As investors, we cannot eliminate risk entirely, so we must instead learn to conquer — or at least manage — our fears, writes @finance_therapy. Here's how: https://t.co/thYiDUVF2c — Morningstar, Inc. (@MorningstarInc) October 9, 2022 We make most bad decisions under the influence of emotions. Financial decisions can have drastic consequences when influenced by them. In the investment world, risk is common, but the associated emotions, such as fear, can distort our perception of the situation. Not only investors, but also every single person should learn how to advise and manage emotions when making decisions. Such a skill can save you from negative consequences. Musk’s idea for China-Taiwan conflict resolution CNBC On Twitter write about Musk's proposal for China-Taiwan.   Musk's proposal for China-Taiwan relations gets slammed: Our freedom is 'not for sale' https://t.co/o3lQaCVHKq — CNBC (@CNBC) October 10, 2022 Elon Musk has stepped into geopolitics once again, suggesting a deal where Taiwan becomes China's "special administrative zone" and Beijing likely has some control over a self-governing island. This suggestion sparked the anger of Taiwanese politicians. Both sides want to resolve their conflict without an armed confrontation. The businessman's statement may spark a storm of controversy. Taiwan wants to remain independent, but China approves of Musk's idea. Uncertainty about the global energy investment BloombergNEF's post discusses the future prospects of the global energy investment   There's considerable uncertainty about the global energy investment required to achieve meaningful decarbonization. The most frequently referenced scenarios offer very different outlooks - so we took a look at each to better understand potential capital flows up to 2050. 🧵 — BloombergNEF (@BloombergNEF) October 6, 2022 It is important to understand the different markets and their prospects in different times. Assessment of what is and may possibly influence subsequent decisions. With the global energy in the world of geopolitical tensions in the spotlight, what is happening now will have a significant impact on the future.
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Wheat Prices Driven By Russian Attacks, Crude Oil May Feel Not That Strong As The US Labour Market Data Plays In Favor Of 75bp Hike

ING Economics ING Economics 11.10.2022 17:33
Wheat prices rose yesterday as concern mounted for Ukrainian exports following Russia’s latest attack on a number of Ukrainian cities. The oil market appears to have shrugged off growing tensions and instead seems focused on the weaker macro outlook Energy- oil rally fades Oil prices corrected lower after last week’s significant move higher. The above-consensus US jobs report at the end of last week has reinforced expectations that the Fed will hike by 75bps at its next meeting, and this has put pressure on most risk assets, including oil. ICE Brent settled almost 1.8% lower yesterday. It appears that, after digesting the recent OPEC+ cuts, the market is once again focused on central bank policy and what it means for the demand outlook. The oil market even seemed to shrug off Russia’s latest attacks on a number of Ukrainian cities, including Kyiv. This lack of reaction is likely due to the limited potential actions the West could take to further hit Russian oil exports. Already, a number of countries have sanctioned Russian oil, whilst the EU ban comes into force later this year. While there is always the potential for secondary sanctions on Russian oil, this is something that the US and other countries are unlikely to pursue given the tighter oil outlook (particularly after the recent OPEC+ cuts) as well as the fact that the US has been pushing a price cap on Russian oil to keep Russian oil flowing, whilst simultaneously trying to limit oil revenues for Russia. Metals – copper spreads strengthen Whilst the bulk of the metals complex came under pressure yesterday due to a stronger US dollar, LME copper 3M prices managed to climb for the first time in four sessions and the cash/3M spread also strengthened by US$9/t to a backwardation of US$59.25/t. The flat price and spreads have been boosted by slower China inventory gains, a tightening global supply outlook and risks of a potential ban on Russian supplies by the LME. Last week, the exchange launched a formal three-week discussion process on the possibility of banning Russian metal. Russia accounts for about 4% of global copper production. Inventories of copper in China rose 16,500 tonnes to 82,700 tonnes during the Golden Week holiday ending October 9 from a week earlier, according to Shanghai Metals Market data. The increase was smaller than in the same period last year (20,900 tonnes). Meanwhile, the latest data from the Shanghai Futures Exchange (ShFE) showed copper inventories declined to their lowest level in more than eight months at 30,500 tonnes in the week ending 30 September. Agriculture – wheat jumps on Ukraine grains export risk Wheat prices rallied yesterday following the latest Russian attack on Kyiv and other cities in Ukraine. CBOT wheat settled more than 6.5% higher on the day and traded to an intraday high of almost US$9.50/bu, which is the highest level since June. Russia’s escalation calls into question the future of the Black Sea grain export deal, which is due to expire in the next month. In addition, there is a backlog of vessels awaiting inspection, with UN data showing 99 vessels awaiting clearance. Since the introduction of the Black Sea Grain Initiative in early August, almost 6.9mt of grains and foodstuff have been exported under the deal. Read this article on THINK TagsRussian oil price cap Russia-Ukraine Grains Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Portugal's Economic Outlook: Growth Forecast and Inflation Trends

Soft Commodities: Tighter Corn Market May Make Prices Increase

ING Economics ING Economics 13.10.2022 11:13
Yesterday's WASDE report was largely constructive. For the US market, corn and wheat saw lower 2022/23 ending stocks. However, the market was expecting even more aggressive reductions. As for soybeans, unchanged US ending stocks proved supportive for prices US corn yields revised lower The USDA revised lower its estimate for US corn stocks at the end of 2022/23 to 1.17b bushels compared to an earlier estimate of 1.22b bushels. However, this still left stocks above the roughly 1.13b bushels the market was expecting. The move was largely due to lower beginning stocks which were lowered by around 0.15b bushels. The agency also lowered domestic corn production estimates for this season from 13.94b bushels to 13.89b bushels on account of lower yields. Export estimates were also revised down by 126m bushels to 2.15b bushels. For the global market, the USDA reduced its estimate for global ending stocks from 304.5mt to 301.2mt; again, largely on account of smaller stocks at the start of the season. Global beginning stocks were revised down by around 5.1mt due to lower stocks in the US and Ukraine. The revised numbers are largely in line with market expectations of around 301.9mt. Global corn output was lowered by 3.8mt to 1,168.7mt due to lower supply from the US (-1.2mt) and the EU (-2.6mt). Meanwhile, global demand estimates fell from 1,180.2mt to 1,174.6mt.  While the numbers, particularly for the US were not as bullish as the market was expecting, both the US and the global market continue to tighten, which should provide support to prices. Corn supply/demand balance Source: USDA US soybean output cut The USDA revised lower production estimates for US soybeans by 69m bushels to 4.3b bushels. This was due to a reduction in yield expectations, which were revised down from 50.5 bu/acre to 49.8 bu/acre. Both yields and production came in below market expectations and this has provided a boost to soybean prices. Meanwhile, the agency estimates that lower output and increased competition from South America could impact exports, which were cut from 2.09b bushels to 2.05b bushels. US ending stocks for 2022/23 were left unchanged at 200m bushels; however, this was below the roughly 245m bushels the market was expecting. For the global market, 2022/23 ending stocks were increased from 98.9mt to 100.5mt, largely on account of higher supplies from Brazil. This number was also slightly higher than the 99.7mt the market was expecting. Global soybean production estimates increased by around 1.2mt to 391mt, which was driven by a 3mt increase in Brazilian supply. Global demand numbers were also increased by around 2.5mt to 380.2mt for 2022/23. Soybeans supply/demand balance Source: USDA Wheat balance sheet tightens The USDA lowered US wheat ending stock estimates for 2022/23 from 610m bushels to 576m bushels (lowest since 2007/08); although it was still higher than the roughly 563m bushels expected. The agency lowered production estimates from 1.78b bushels to 1.65b bushels due to falling acreage and yields. The global wheat balance saw few changes in aggregate with 2022/23 ending stock estimates revised down slightly from 268.6mt to 267.5mt, which was in line with market expectations. 2022/23 output was cut from 783.9mt to 781.7mt with key reductions coming from the US (-3.6mt) and Argentina (-1.5mt). Wheat supply/demand balance Source: USDA Read this article on THINK TagsWheat WASDE USDA Soybeans Corn Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

Podcast: Europe's Real Troubles Discovered As A Result Of The War In Ukraine

Saxo Bank Saxo Bank 13.10.2022 11:42
Summary:  As we await today's US September CPI and wonder whether a soft surprise can really move the needle, we highlight one of the starkest assessments of Europe's current predicament, which has crystallized since Russia invaded Ukraine earlier this year and is not just about stocking up on enough gas to survive the coming winter, but will require decades to address. A look at burgeoning interest in the nuclear energy, stocks to watch and upcoming earnings reports, crude oil, wheat and a 79-year low in the orange crop in the US and more on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-oct-13-2022-13102022
Belarusian opposition leader proposed a collaboration to Ukraine

Belarusian opposition leader proposed a collaboration to Ukraine

Center Of Eastern Studies Center Of Eastern Studies 21.10.2022 13:57
On 10 October, the leader of the Belarusian opposition Sviatlana Tsikhanouskaya proposed to President Volodymyr Zelensky that an alliance be formed between Ukraine and a free & democratic Belarus – i.e. the interim cabinet formed under Tsikhanouskaya’s leadership in August this year. At the same time, she declared that Belarus should give up its political, economic and military alliance with Russia, and that Ukraine would win its war against the Russian aggressor. So far, the offer has not met with a high-level reaction from Kyiv. On 12 October Oleksiy Arestovych, an advisor to the Ukrainian presidential office, reacted positively to the Belarusian opposition leader’s appeal, while at the same time criticising the Ukrainian political class for “unfairly” holding Belarusians responsible for the pro-Russian policy of Alyaksandr Lukashenka. However the chairman of the Ukrainian parliament’s foreign affairs committee and member of the Servant of the Nation party Oleksandr Merezhko, together with another deputy from the same party Bohdan Yaremenko, stated that Ukraine could not recognise Tsikhanouskaya and her cabinet because the stance of the Belarusian opposition towards Russia remains unclear (including its failure to condemn Russia as a terrorist state); they also questioned the credibility of “certain people within her entourage”. Read full article on OSW.WAW.PL
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Officials of Ukraine talks possible intensification of blackouts

Center Of Eastern Studies Center Of Eastern Studies 08.11.2022 15:31
The Ukrainian authorities warn that continued Russian destruction of energy infrastructure will lead to increasingly frequent blackouts. On 5 November, Kyiv mayor Vitali Klitschko said that the capital, now home to around 3 million people (350,000 are internally displaced), could run out of electricity, heating and water. He appealed to residents to consider moving outside temporarily to buildings with an independent heating source and water intake. A day later, mayoral officials did not rule out evacuating the city if there was a total loss of the power system. On the same day, President Volodymyr Zelensky declared that more than 4.5 million energy consumers – mainly in Kyiv and its surroundings – had been disconnected from power. On 7 November, planned and emergency power cuts began in seven oblasts – Kyiv, Chernihiv, Cherkasy, Zhytomyr, Sumy, Kharkiv and Poltava – and the capital from the morning. The latest Russian missile and drone attacks have focused on energy and industrial infrastructure in cities on the back of Ukrainian defences. There was damage to facilities in the Dnipro, Zaporizhzhia and eastern Vilniansk, as well as Kramatorsk and Pokrovsk in the Donetsk Oblast. Both sides continued to shell and bombard enemy positions along the line of contact, with border regions of Chernihiv and Sumy oblasts also targeted by the invaders. According to Pentagon assessments, the Ukrainian army fired 4,000–7,000 artillery rounds daily, while the Russians fired nearly 20,000. After a few days of reduced activity in the northeastern part of the Donetsk Oblast, aggressor forces have again increased the frequency of attacks. The defenders repulsed assaults on Bakhmut and the surrounding villages and the Russians’ subsequent attempts to break through towards Siversk and north of Horlivka. The Russians have not ceased their attacks north and west of Donetsk and south and east of Vuhledar. They have also made attempts to attack Ukrainian positions east of Lyman. There were also isolated attacks in the Kharkiv Oblast bordering the Russian Federation and south of Zaporizhzhia for the first time in many months. Ukrainian units, in turn, were to make further attempts to break through enemy positions on the border of the Kharkiv Oblast and north of Kherson. The Russians would continue to expand defensive positions in the Kherson Oblast on both sides of the Dnieper, on whose right bank they were to leave 20,000–25,000 troops. Read full article on OSW.WAW.PL
Bank of England: Falling Corporate Price Expectations May Signal Peak in Rate Hike Cycle

US Government Scientists Have Made A Breakthrough | Elon Musk And Shutting Down IP Addresses Of Known Bad Actors On Twitter

Kamila Szypuła Kamila Szypuła 12.12.2022 11:17
A new week has begun and the markets already know it's going to be a busy week. With economic events, there was information about breakthrough scientists, in addition, topics that are observed from the place, i.e. the development of events in Ukraine, and in recent weeks, the subject of arousing a lot of emotions, i.e. Twitter management by Elon Musk. Read next: NASA’s Orion Spacecraft Splashed Down. Situation Of European Food Delivery| FXMAG.COM In this article: Clean power hopes The war in Ukraine news Twitter news US scientists boost clean power hopes This year has shown that nothing is certain. Countries dependent on Russia for energy are struggling with problems, an energy crisis. US government scientists have made a breakthrough in the quest for unlimited, zero-carbon energy by achieving a net energy gain in a fusion reaction for the first time. The breakthrough in the United States comes as the world grapples with high energy prices and the need to quickly phase out the burning of fossil fuels to prevent global average temperatures from reaching dangerous levels. Although many scientists believe that fusion power plants are still decades away, the potential of the technology is hard to ignore. Nuclear energy has recently become more popular. According to scientists, it can be cheaper, available to every country (not becoming dependent on others as in the case of gas), and also environmentally friendly. This breakthrough is only the beginning of the road, but it indicates that it may be closer than further. US scientists boost clean power hopes with fusion energy breakthrough | Financial Times https://t.co/EHYaMx6eXM — Bespoke (@bespokeinvest) December 11, 2022 Heavy losses reported among Russian mercenaries in Luhansk The war in Ukraine has been ongoing for 10 months. Fighting in eastern and southern Ukraine remains intense. Ukraine proves that it is not weak and continues to fight despite difficult conditions. Large parts of Ukraine continue to face power shortages over the weekend after successive Russian attacks on energy infrastructure. Heavy fighting in the east and south of the country continued uninterrupted as drone and missile attacks hit key energy infrastructure. Drone attack on Odessa left 1.5 million people without power. One Ukrainian official claimed over the weekend that Russian mercenaries belonging to the suspected "Wagner Group" suffered heavy casualties after Ukrainian forces attacked the hotel they used as their headquarters. There are no peace talks and no end to what Moscow describes as a "special military operation" in Europe's deadliest conflict since World War II. Russia's ostensible military goals of "liberating" eastern Ukraine and extending its control over the southern regions of Zaporizhia and Kherson are unlikely to succeed as recent events show. Heavy losses reported among Russian mercenaries in Luhansk; global leaders to discuss more sanctions https://t.co/gUryYEClns — CNBC (@CNBC) December 12, 2022 Turning off the ip addresses of known "bad actors" on twitter Ever since Elon Musk took over Twitter, his name has been constantly in the news. His unique methods of managing the social network arouse a lot of emotions. Recently, there has been a lot of talk about "Twitter Files", i.e. The documents are being published as evidence of claims that major social media platforms are biased against the political right. The published post about turning off the ip addresses of known "bad actors" on twitter bots also has two sides. There are people who think that this action is pointless and restricts freedom of speech, but there is another side of this coin who believes it is a step in the right direction . MUSK SAYS "SHUTTING DOWN IP ADDRESSES OF KNOWN BAD ACTORS TODAY" ON BOTS ON TWITTER — *Walter Bloomberg (@DeItaone) December 11, 2022
UK GDP Revised Up, Boosting Economic Outlook

New Refugees Will Affect Economic Growth In The Coming Years | The English Royal Family Is Again In The Center Of Interest

Kamila Szypuła Kamila Szypuła 15.12.2022 13:23
This year is a challenge, a continuation of new challenges for economies. The war in Ukraine not only affected the European Union economically and politically, but most of all the townspeople of Ukraine, who had to leave their homeland to protect themselves, but that is to say, the economies that hosted them. What's more, Prince Harry and Meghan will again attract attention thanks to a new documentary series about them. In this article: Refugees and theirs affect on economy Airlines Netflix’s “Harry & Meghan” documentary, Refugees and theirs affect on economy Nearly 8 million refugees have fled Ukraine since Russia invaded in February, the largest wave of refugees in Europe since World War II, most of whom are now in the European Union. Studies conducted in Germany, Moldova and Poland show that the majority of arrivals are children and women under 40 years of age. These numbers will increase depending on the duration and severity of the war. The overarching goal is to create the conditions under which refugees can return home once the war is over and reconstruction begins. However, refugees may stay in their adopted homelands for some time. There are some short-term fiscal costs to supporting refugees. Countries with the highest numbers of refugees, including the Czech Republic, Estonia, Moldova and Poland, may face fiscal costs this year. Greater participation of women and children will result in increased spending on childcare, education and healthcare. However, in the medium term, refugees can boost economic growth and tax revenues, while helping to ease the current labor market pressures in parts of Europe. How new refugees will affect economic growth in the coming years will depend primarily on the speed and quality of their integration into the labor market Refugees fleeing Ukraine could boost Europe’s economic growth and tax revenue while helping some countries facing labor shortages, as we explain in #IMFBlog. https://t.co/jJKvchiH3L pic.twitter.com/f4fbllg0uy — IMF (@IMFNews) December 15, 2022 Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM Airlines In the aviation sector, regardless of the geopolitical situation, there may also be various difficulties. Recent years have shown that there have been better and worse situations in the airline industry. The pandemic and the conflict in Ukraine will also start to affect this sector. Air travel has become popular again after the pandemic. The conflict in Ukraine has resulted in the freezing of air routes in this area and thus the reduction of flights. Airlines are trying to cope with difficult conditions, and the upcoming new year raises new hopes. Watch highlights from #RIAsia 2022 which brought investors together with #SustainableFinance industry experts and practitioners to discuss ESG trends in Asia Pacific. #RIAsia #ESG #ResponsibleInvesting pic.twitter.com/WDhbTnqXXx — Deutsche Bank (@DeutscheBank) December 15, 2022 Netflix’s “Harry & Meghan” documentary The English Royal family is the most popular royal family in the world and a symbol of Great Britain. Recently, especially after the death of Queen Elizabeth II, who was the longest-reigning monarch, interest in the members of this family has increased. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM Just like every event that appears around this family, programs and series are also popular, for example the popular Netflix series The Crown. Now it has become loud again around the family for the couple of Prince Harry and his wife Meghan and their new documentary series broadcast on Netflix. The streaming platform on Tuesday said that the series had become its biggest documentary debut yet, attracting 81.55 million viewing hours globally within its first four days of release. Prince Harry says William screamed and shouted at him in new record-breaking Netflix documentary https://t.co/nuQlo2gFWQ — CNBC (@CNBC) December 15, 2022
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Russian Drones Attacked Kyiv Again | Most respondents do not want Musk

Kamila Szypuła Kamila Szypuła 19.12.2022 12:40
The beginning of a new week brings surprising news. Yesterday, the eyes of the world were on the 2022 World Cup final. The Argentines and the fans supporting the team celebrated yesterday. But this morning news came from Ukraine, which is still struggling with the occupiers. The war in Ukraine also has consequences on the energy market, OPEC's actions are not in favor of the UAE. Elon Musk still in the spotlight. In this article: Russia attacked again Musk’s polls The UAE and OPEC Russia attacked again Russia launched 35 "kamikaze" drones into Ukraine in the early hours of Monday as many people were asleep, damaging critical infrastructure in and around the capital, Kiev. The attack is Moscow's third air attack on the city in six days. The governor said three areas in the region were left without power after that Ukraine war live updates: Russian drone attack takes out power supplies in Kyiv; Ruble tumbles https://t.co/8dVyqymLa9 — CNBC (@CNBC) December 19, 2022 Read next: The Disney Challenges Now Belong To Iger, Ford And Arguments For A New Trial In A Truck Overturning Case| FXMAG.COM Musk’s Twitter polls Elon Musk knows how to focus attention and even keep it for a longer time. Yesterday there was a lot of publicity about his actions against the accounts of journalists. On Sunday, Twitter's new owner and CEO, Elon Musk, posted an informal poll of users of the social media platform asking if he should step down as head of the company. Sunday's poll by Musk followed an online backlash after "Chief Twit" (as he called himself) made abrupt changes to rules affecting Twitter users last week. Twitter polls are straw polls, meaning they are informal and not comparable to professional opinion polls. Malicious bots or unauthentic accounts may also be able to record a response to a Twitter survey. The majority of respondents (57.5%) were in favor of the billionaire leaving office. Should I step down as head of Twitter? I will abide by the results of this poll. — Elon Musk (@elonmusk) December 18, 2022 The UAE and OPEC The United Arab Emirates is a key member of the Organization of the Petroleum Exporting Countries. The UAE has been irritated by OPEC restrictions before, in 2020 and 2021. Currently, the state can only pump 3 million barrels a day, well below its 4 million barrels. It is even further below the 5 million barrels daily production target. The seemingly current OPEC cuts are meant to offset the risk of oil prices falling as the US and Europe enter recession. President Mohammed bin Zayed al-Nahyan, known as MbZ could change that by quitting, as Qatar did in 2019. The UAE would then get the proceeds from being able to pump whatever it likes, while also benefitting from a warm fuzzy glow in the eyes of the United States and its allies. Officially, OPEC believes that oil demand will continue to grow until 2035, and it would be awkward to drop OPEC to pump more oil while hosting a climate conference. So the UAE is going to have a busy year 2023. The Gulf State wants to pump more oil, reinforce its status as a prime destination for the western capital in the region, and make a big buzz. From Breakingviews - UAE will look to a world beyond OPEC https://t.co/F0aYGw31C0 — Reuters Business (@ReutersBiz) December 19, 2022
Argentine Peso Devaluation: Political Uncertainty Amplifies Economic Challenges

Japan Is Trying To Maintain Cover For LNG Vessels In Russian Waters, How Digital Money Could Look Like According To The IMF

Kamila Szypuła Kamila Szypuła 30.12.2022 10:46
The sea route is one of the most popular transport routes, mainly raw materials. The war in Ukraine caused numerous difficulties faced not only by countries dependent on Russia, but also on their transport routes. In addition, it is worth looking at the future of money, which is becoming more and more digital. In this article: Tips from from experts The insurance Future of digital money How to focus on yourself The world is constantly changing. The influx of information is so large that it is difficult to distinguish what is fake news and what is real. In addition, the media began to create our ideas about what our ideal life should look like, mainly through influencers who promote a given lifestyle. Our occupants or family also have an influence by telling us what we should and shouldn't do. That's why it's hard not to succumb to their influence, then I try to live up to expectations. Young people who live mainly on social media are particularly vulnerable to this influence. To deal with this flood of information, expectations or, to put it mildly, tips, you can often consult specialists such as a psychotherapist. In a CNBC article, one such expert offers tips on how to calm down all that excess stimuli. Mainly as many specialists advise to limit media such as Instagram to be able to focus more on your life and not on the created one. What's more, this skill can help you succeed, because such control skills can be extremely useful when making decisions, whether in private or professional life. Here's the 'most overlooked' skill young people need to be successful today, says millennial therapist (via @CNBCMakeIt) https://t.co/52S9vsJJ9z — CNBC (@CNBC) December 30, 2022 Read more: EUR/USD Pair Remains Within Its Horizontal Trading Range, The Aussie Failed To Break The Resistance At 0.68| FXMAG.COM The insurance The war caused by Russia in Ukraine indirectly affects other economies. This is also a problem for the transport industry by sea, which is usually used to transport energy resources such as oil or gas. Japan's Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance told shipowners last Friday that from Jan. 1 they would stop offering insurance coverage for ship damage caused by war in Russian waters, because reinsurers were withdrawing coverage. But to protect itself, a senior official at the industry ministry said on Tuesday that the Japanese government had asked insurers to take additional risks to continue providing war insurance for liquefied natural gas (LNG) shippers. Thus, it is expected that they will enable the insurance to continue. Japan insurers to maintain cover for LNG vessels in Russian waters https://t.co/ilmt8PEi36 pic.twitter.com/MXBVZ1MuMn — Reuters Business (@ReutersBiz) December 30, 2022 Future of digital money More and more often there are information that a given country is launching a pilot program for its digital currency. The popularity of cryptocurrencies as well as non-cash payments will bring us closer to the future of digital money. Of course, digital money has been developing for some time already. New technologies hope to democratize finance and broaden access to financial products and services. A main goal is to achieve much cheaper, instantaneous domestic and cross-border payments. The gains could be especially great for people in developing countries. Many consider that the digitization of currencies and money is inevitable. There are doubts as to what it should look like, especially for legal reasons. Is it supposed to resemble decitralized cryptocurrencies or rather controlled by central banks. Both options have advantages and disadvantages. The lack of a specific law gives the possibility of greater privacy but also threatens the growth of financial savings. On the other hand, controlled by central banks, they are regulated and seemingly safe, but they limit the privacy of transactions. The future of money is undoubtedly digital. The question is: what is it going to look like? In our September issue of F&D, some of the world’s leading experts delved into this complex and politically charged question. https://t.co/DjEnewL79N pic.twitter.com/5UvqhLmIoU — IMF (@IMFNews) December 30, 2022
ECB's Hawkish Hike: Boosting EUR/USD and Shaping Global Monetary Policy

After The Correction, Jack Ma's Share In Shareholder Votes Will Fall To 6.2%

Kamila Szypuła Kamila Szypuła 09.01.2023 10:47
Chinese billionaire Jack Ma will no longer control Ant Group - shareholders of the financial giant have agreed to change the shareholding structure. In this article: Russia Attack a village market in Kharkiv Oblast Jack Ma had not his 50% voting share Russia Attack a village market in Kharkiv Oblast The war in Ukraine has been going on for almost a year. The new year does not show that the situation would change. Heavy fighting continues in the Luhansk and Donetsk regions, especially around Bakhmut and Soledar, and the world is watching developments. Russian forces struck a village market in Kharkiv Oblast in northeastern Ukraine, according to a top regional official, leaving one woman dead and several others hospitalized. Rescue services are on site. Seven civilians, including a 13-year-old girl, were injured in the rocket attack. Attacks bring death to non-innocent people, this time a 60-year-old woman was killed. According to sources, there may still be injured people under the rubble, or in the worst case, more people who have lost their lives. In other news, the Russian government has extended support for a legislative amendment that would classify maps that question the country's official "territorial integrity" as punishable extremist material, state news agency Tass reported Sunday. Russia annexed the Ukrainian Crimea in 2014 – a move rejected by Ukraine and many countries as illegal. Since then, Ukrainians and their government have often objected to world maps showing Crimea as part of Russian territory. Bakhmut 'holding out against all odds,' Zelenskyy says; Russia backs ban on maps disputing territory https://t.co/tFAl5chLhp — CNBC (@CNBC) January 9, 2023 Read next: Plans To Sell FTX Assets Met With Opposition From US Trustee Andrew Vara| FXMAG.COM Jack Ma had not his 50% voting share Beijing may appease the tech champions, but that may be more deliberate than permanent. As the economy falters after years of the pandemic, while demand abroad declines, China needs big tech giants to put an end to job cuts for now. Ant Group is a fintech affiliate of Alibaba - both were founded by Ma. On Saturday, the company announced that Ma's more than 50 percent voting share would be reduced to around 6 percent, and a fifth independent director would join the board. Before the change, the Chinese billionaire owned over 50 percent. votes in Ant via Hangzhou Yunbo and two other entities. Ant Group added in a statement that the voting rights adjustment was intended to make the company's shareholding structure "more transparent and diversified" and would not result in any changes to the economic interests of any shareholder. The voting rights revision came after Chinese regulators refused to agree to Ant received $37 billion for development from its November 2020 IPO and ordered the company to restructure its operations. A month earlier in Shanghai, Ma had criticized China's financial regulation system and state-owned banks. Moreover, Ma's defenestration unexpectedly strengthened Alibaba and other Ant affiliates. From Breakingviews - Jack Ma's Ant is China tech's tiniest bellwether https://t.co/85VyQdHqjB — Reuters Business (@ReutersBiz) January 9, 2023
Russia will suspend participation with the new START treaty and that they would test nuclear weapons if the US does it first

According To Analysts, Russia May Collapse Within A Decade, Guaranty Trust Bank Has Been Fined

Kamila Szypuła Kamila Szypuła 10.01.2023 12:09
As history shows, countries fell apart over the centuries. Mainly because of the wars. now experts are of the opinion that Russia can repeat the history of states that broke up as a result of armed struggles. The British Financial Supervision Authority is looking at the actions of banks in the country.  The British Financial Supervision Authority punished one of them. In this article: J.P. Morgan Healthcare Conference Niranjan Figurado as Chief Country Officer for Sri Lanka Russia may become a failed state Action of The British Financial Supervision Authority J.P. Morgan Healthcare Conference The annual J.P. Morgan Healthcare Conference is the largest and most informative healthcare investment symposium in the industry. This symposium is about healthcare investment in an industry that brings together global industry leaders, emerging high-growth companies, technology innovators and members of the investment community. The development of this sector is possible thanks to incentives and investments, and such projects expand the possibilities. Healthcare leaders, investors, and innovators convene in San Francisco this week to discuss what’s next for the industry at #JPMHC23. https://t.co/Ug3ycIaZtH pic.twitter.com/YZETOZTjob — J.P. Morgan (@jpmorgan) January 9, 2023 Read next: The Weather-Driven Crash Showed The Southwest Airline's Bigger Problems| FXMAG.COM Niranjan Figurado as Chief Country Officer for Sri Lanka Deutsche Bank is dynamically developing in Asian markets. Deutsche Bank has announced the appointment of Niranjan Figurado as Chief Country Officer for Sri Lanka. Niranjan has a wealth of experience, which is why the bank believes it will help develop the platform in Sri Lanka and contribute to the development of capital markets in the country. Deutsche Bank appoints Niranjan Figurado as Chief Country Officer for Sri Lanka. Read more: https://t.co/VBIHnoYoba — Deutsche Bank (@DeutscheBank) January 10, 2023 Russia may become a failed state The Atlantic Council's Scowcroft Center for Strategy and Security surveyed 167 global strategists and practitioners on the biggest potential drivers of change over the next decade. The poll comes as Russia's war with Ukraine shows no signs of ending soon. Like any war, it has its consequences even in the distant future. According to the respondents, Russia's war with Ukraine could cause shocks with huge consequences for a great power with the largest arsenal of nuclear weapons on the planet. Respondents also drew attention to the short-term perspective for this country, emphasizing that disintegration is on the horizon. Thus indicating that Russia will fall apart internally, and by 2033 it will even be a failed state. The vision of responnets may be more real than we think. Russia mainly relies on the export of raw materials such as oil and natural gas, and the restrictions imposed by the EU have caused problems for the development of trade in Russian raw materials. The weakening of the economy, the weakening of the position in the international arena or civil wars can all contribute to the collapse of Russia. Russia risks becoming a failed state in the next 10 years, analysts say https://t.co/VjByeV8txY — CNBC (@CNBC) January 10, 2023 Action of The British Financial Supervision Authority One of the tasks of financial supervision authorities is to assess the effectiveness of banks. It evaluates how banks prevent illegal transactions, money laundering. If they assess that the appropriate procedures have not been followed, they may impose a penalty. So did the British authority. The UK's financial watchdog has fined the UK subsidiary of Guaranty Trust Bank £7.6m ($9.3m) for successive failures in its anti-money laundering and control systems. The bank accepted this penalty. UK watchdog fines Guaranty Trust bank over money-laundering controls failure https://t.co/PA8L2zCC40 pic.twitter.com/eFRQt1qmwg — Reuters Business (@ReutersBiz) January 10, 2023
McDonald's Will Be Replaced In Kazakhstan By The Russian Vkusno & Tochka

McDonald's Will Be Replaced In Kazakhstan By The Russian Vkusno & Tochka

Kamila Szypuła Kamila Szypuła 16.01.2023 12:05
The war in Ukraine is forcing not only governments but also large companies to act. Well-known brands left Russia, but they were replaced by local ones. War is not scary rich who keep getting richer. In this article: McDonald's Will Be Replaced In Kazakhstan The rich keep getting richer The self-driving car market McDonald's Will Be Replaced In Kazakhstan As a result of Russia's attack on Ukraine, many large companies withdrew from the Russian market. The most famous fast food seller, McDonald's, has also withdrawn from this market. The closure of premises in Russia came after Moscow sent tens of thousands of troops to Ukraine last February. Also in neighboring Kazakhstan, McDonald's was forced to close its restaurants, citing supply problems. Kazakhstan McDonald's stopped buying stock from Russia and had trouble replacing it. Russia quickly replaced McDonald with the local brand Vkusno & tochka. Now Vkusno & tochka is trying to expand its reach to neighboring kazahtstsnu after McDonald exit from the market. Russia's McDonald's successor applies for trademark in Kazakhstan https://t.co/CPXp5xKjGT pic.twitter.com/1nrt3BVTTz — Reuters Business (@ReutersBiz) January 16, 2023 Read next: The Swedish Real Estate Market Will See Significant Price Drops| FXMAG.COM The rich keep getting richer A total of $42 trillion in new wealth has been created since 2020, according to a new Oxfam report, of which $26 trillion, or 63%, has been accumulated by the top 1%. The other 99% of the world's population has amassed just $16 trillion in new wealth. The Oxfam report analyzed global wealth creation data from Credit Suisse, as well as data from the Forbes Billionaires List and the Forbes Real Time Billionaires List to assess changes in the wealth of the ultra-rich. This report shows how quickly the social disparities between the ultra-rich and average people can widen. The Covid-19 pandemic has slowed down efforts to fight poverty. Changes in tax policy would help fight ongoing crises, including poverty, around the world. According to Gabriela Bucher, executive director of Oxfam International, she called for higher taxes for the ultra-rich, saying it was "a strategic precondition for reducing inequality and restoring democracy". The richest 1% amassed almost two-thirds of new wealth created in the last two years, Oxfam says https://t.co/AkiFUqLKvl — CNBC (@CNBC) January 16, 2023 The self-driving car market The car market is one of the fastest growing. Electric cars are becoming more and more common. Autonomous driving could become the next technological revolution in the automotive industry, possibly a more significant megatrend than electrification. The self-driving car market is also constantly evolving. Economies around the world are still competing even in terms of being the leader in the production of electric cars or self-driving cars. China is the second largest economy in the world and most car factories are located in the country, which is why many experts and people observing the self-driving car market believe that China has the potential to lead in the mass implementation of autonomous cars. Moreover, in favor of confirming this thesis, the USB analysis shows that the potential size of the autonomous driving market in China may reach the level of approximately USD 100 billion by 2030. Does China have the potential to lead in the mass deployment of self-driving cars? Follow the link to find out why they may be best placed to win the race to autonomous driving. #UBSResearch #shareUBS #EvidenceLab — UBS (@UBS) January 16, 2023
China’s Foreign Minister Qin Gang Downplayed Russia’s Invasion Into Ukraine

Ukraine Is Calling For More Sanctions Against Russia

Kamila Szypuła Kamila Szypuła 27.01.2023 12:28
The war is gaining new momentum, many countries are declaring their help for Ukraine by offering modern weapons. But will it be enough? Ukraine believes that more sanctions could significantly weaken Russia. In this article: President Volodymyr Zelensky called for more sanctions against Russia Regulations for banks in the EU The IMF’s gold standard for Belgium More sanctions against Russia The war in Ukraine is becoming more and more dangerous. Russia is carrying out increasingly brutal attacks. Several regions of Ukraine have to introduce emergency power outages. Millions of Ukrainians experience regular power outages and freezing winter temperatures as Russia attacks critical infrastructure and energy facilities. The attacks came a day after Ukraine's western allies pledged to send battle tanks to the country, opening up a new front in the types of weapons they are ready to deliver against Russian forces. President Volodymyr Zelensky called in his late-night video speech for more sanctions against Russia and for the establishment of a tribunal to deal with Russian war crimes. Japan on Friday announced additional sanctions in response to Moscow's recent actions in Ukraine, banning the export of key strategic goods to Russia and freezing the assets of a dozen people. Zelenskyy demands more sanctions as Russia bombards Ukraine; explosions heard near nuclear plant https://t.co/dqfnxmGhcj — CNBC (@CNBC) January 27, 2023 Read next: Another Sector Announced Layoffs, Hasbro Reduced Its Workforce, IBM And SAP Have Joined Technology Companies That Are Reducing Employment| FXMAG.COM Regulations for banks in the EU Banking regulation is coordinated internationally by regulators, but there are still differences in how the rules work in practice and how they are implemented. The European Banking Federation and consultants Oliver Wyman conducted a study in which they found that banks in the European Union could increase lending by almost a third if regulators applied capital requirements in the same way as their US counterparts. Ease capital rules on EU banks to boost lending, banking industry says https://t.co/onyrj9Ca26 pic.twitter.com/BDhcroGsec — Reuters Business (@ReutersBiz) January 27, 2023 The IMF’s gold standard for Belgium The IMF Data Standards Initiatives were established in the mid-1990s to increase the transparency of member countries' data as a global public good and to promote the development of robust statistical systems. Belgium adheres to the IMF Special Data Dissemination Standard (SDDS) Plus and meets the most stringent standards for the dissemination of basic macroeconomic and financial data on the state of the economy and its financial interconnections. This is a strong testament to the country's commitment to data transparency to the public, markets and the international community, which, among other things, fosters efficiency in markets, better policies and greater accountability in policymaking, and richer and better. Belgium is the latest country to have achieved the IMF’s gold standard for data transparency, the SDDS Plus, which recognizes their achievements in the dissemination and quality of 🇧🇪 macroeconomic and financial data. https://t.co/3dMv5KR9tV pic.twitter.com/rgNTR04z8a — IMF (@IMFNews) January 27, 2023
Japan's Prime Minister Tested Covid Positive. Gazprom Confirmed Gas Shipment Would Be Stopped!

Baltic Pipe Is Alternative Energy Source For Poland

Kamila Szypuła Kamila Szypuła 21.02.2023 11:46
In an interview with the IMF, Piotr Naimski explains why the Baltic Pipe is important not only for Poland but for the whole of Europe. In this article: Ant Group and NBA partnership Putin blames West The Baltic Pipe Ant Group and NBA partnership The NBA is one of the most popular cultural exports from the United States to China. Chinese fintech giant Ant Group said on Tuesday that it had entered into a strategic partnership with the NBA in China. Fans in China would be able to access NBA video content on Alipay, the hugely popular payment app owned by Ant Group. Collaboration with the Chinese business arm of the professional basketball league will also cover areas such as joint marketing campaigns and digital collectibles. NBA, Ant Group launch strategic partnership in China https://t.co/3OPNvYdBAE pic.twitter.com/jWr7LUNjRz — Reuters Business (@ReutersBiz) February 21, 2023 Read next: Amazon Will Pay Employees A Lower Salary Due To Lower Stock Prices, Declining Demand For 5G Equipment Will Result In The Loss Of 1,400 Jobs At Ericsson| FXMAG.COM Putin blames West Russia annexed Crimea in 2014 after a fraudulent referendum. The invasion was widely condemned by the international community and resulted in a series of Western sanctions against Russian officials. On February 24, it will be a year since Russia launched a large-scale invasion of Ukraine, starting a ground war in Europe that Putin still calls a "special military operation." Putin on Tuesday discussed the Donbass, saying the Kremlin saw an increase in threats in the disputed region ahead of the February 24 invasion. The US administration on Saturday formally concluded that Moscow had committed "crimes against humanity" Russian President Vladimir Putin on Tuesday used a widely watched speech to deny responsibility for the war in Ukraine and attack his opponents. In a speech lasting more than an hour, Putin stated that Russia was trying to let the citizens of the disputed region of Donbass speak their "own language" and was seeking a peaceful solution. He also cited NATO expansion and new European missile defense systems as provoking Russia 'They started the war': Russia's Putin blames West and Ukraine for provoking conflict https://t.co/deJPZ6uDji — CNBC (@CNBC) February 21, 2023 The Baltic Pipe The countries of Europe, and especially Eastern Europe, were largely dependent on Russia for energy. Russia's aggression against ukraine has caused tensions and the need for independence. Although Poland has coal deposits, they want to leave for ecological reasons and decide to import other energy resources. In order to become independent from Russia, Poland decided to supply supplies from Norway, and for this purpose, The Baltic Pipe was launched. The Baltic Pipe will have a capacity of 10 billion m3 per year. This is roughly half of the Polish demand and will replace 100 percent. Russian supplies. This action is important because Poland will be free from hostile Russian gas manoeuvres. This is especially important today, when Europe has to face the Russian armament of hydrocarbon supplies. .@PiotrNaimski, mastermind behind the Baltic Pipe, is on a mission to find alternative energy sources for Poland. Read his interview in F&D. https://t.co/DvqFkcjRyF pic.twitter.com/kVNC7490Km — IMF (@IMFNews) February 21, 2023
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Russia Unleashed A Wave Of Drone And Missile Attacks On Ukraine Overnight, SHEIN Is Expected To Raise Around $2 Billion In A New Round

Kamila Szypuła Kamila Szypuła 09.03.2023 09:48
The war in Ukraine is not coming to an end, and the recent acts of Russia show that the situation may escalate even more. Despite the lack of peace in the markets, companies continue to expand. Chinese retailer SHEIN has ambitious plans for this year. In this article: War in Ukraine The flotation Insights on the world economy and markets War in Ukraine Kiev and other major cities in Ukraine, including Lviv, Kharkiv and Odessa, were hit by a wave of Russian drone strikes and missile attacks overnight, Ukrainian officials said. The mayor of Kiev, Vitali Klitschko, said that there were a series of explosions in the capital that damaged the energy infrastructure and injured several civilians. The air alert lasted for almost seven hours in the capital. Officials at the southern port of Odessa, Lviv in western Ukraine and Kharkiv in northeastern Ukraine also reported nighttime drone and missile attacks. As a result of the missile attack on Ukraine, the power supply to the Zaporozhye nuclear power plant was interrupted. The Zaporozhye nuclear power plant, the largest of its kind in Europe, has repeatedly been at the center of conflict between Russian and Ukrainian forces, which accuse each other of shelling and threatening the operation and safety of the facility, and the risk of a potential catastrophic nuclear accident. International observers called for a demilitarized zone around the plant. 'The enemy is raging': Russia unleashes wave of drone and missile strikes on Kyiv and other cities https://t.co/4U3opXhcFh — CNBC (@CNBC) March 9, 2023 The flotation Chinese online apparel retailer SHEIN is expected to raise around $2 billion in a new round of funding this month and aims to go public in the US in the second half of this year. The UAE's sovereign wealth fund Mubadala is the lead investor in this round. Last month, the company held preliminary talks with several investment banks to select major bookrunners for its US IPO, with Tiger Global Management as the new investor. The flotation, if successful, would be one of the biggest worldwide this year. SHEIN is aiming for a U.S. listing and the flotation, if successful, would be one of the biggest worldwide this year and a test of U.S. investor appetite for Chinese companies amid volatile capital markets and geopolitical tensions https://t.co/A4W0RC864O pic.twitter.com/R1JpfFARyM — Reuters Business (@ReutersBiz) March 9, 2023 Insights on the world economy and markets Late last year, OPEC announced a production cut of 2 million barrels a day in response to slowing global growth and increased risk of recession among developed countries. However, increased demand from China following the lifting of COVID-19 restrictions, coupled with a slight increase in non-OPEC production this year, is likely to prompt OPEC to reverse. According to a new report by Goldman Sachs Research, oil prices could rise as high as $107 a barrel by the end of the year from around $84 today, depending on how OPEC responds to emerging market conditions. What's more, the problem of inflation and thus porcelain alloys is still on top. Stronger economic data has recently raised concerns that inflation is likely to remain stickier than expected. Goldman Sach also looks at how retailers cope with slowing consumer demand, high interest rates and rising prices. Which global macro risk are investors most worried about for 2023? Over 40% of attendees polled at our Global Macro Conference said ‘US-China tensions’, followed by 26% saying ‘inflation’. Explore our research insights by topic: https://t.co/Yfvww77V8h pic.twitter.com/EeH1hvfGJP — Goldman Sachs (@GoldmanSachs) March 9, 2023
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To Protect Customer Deposit, SVB UK Will Be Sold To HSBC, The Food Crisis Is Getting Worse

Kamila Szypuła Kamila Szypuła 13.03.2023 09:38
The SVB crisis triggered an avalanche of reactions throughout the world's banking system. Governments, financial institutions are doing what they can to minimize the damage. In addition to problems in the banking sextor, there will also be problems with food. In this article: In protection of SVB UK customer deposits The changes Food crisis Stablecoins In protection of SVB UK customer deposits HSBC on Monday announced a deal to buy the UK subsidiary of US tech lender Silicon Valley Bank, which collapsed on Friday. Plenty of potential buyers have made bids to buy SVB UK since the bankruptcy of its US parent company on Friday, amid widespread fears about the immediate future of many UK tech and life sciences start-ups. HSBC UK Bank has agreed to acquire SVB UK for £1 ($1.21). The assets and liabilities of the parent company SVB UK are excluded from the transaction. The sale, facilitated by the Bank of England in agreement with the UK Treasury, will protect SVB UK customer deposits. In addition, U.S. regulators on Sunday approved plans to protect depositors and financial institutions affiliated with U.S. parent company SVB. HSBC buys Silicon Valley Bank UK, protecting deposits https://t.co/FeR6RZEecF — Ted Kemp (@TedKempCNBC) March 13, 2023 The changes President Xi Jinping is preparing to change the financial bureaucracy, already replacing members of the shrinking reformist camp in the country. Surprisingly, PBOC Governor Yi Gang, a proponent of market reform who taught economics in the United States, remained in office despite reaching the official retirement age. However, his eventual replacement by someone more parochial like Zhu seems inevitable. From Breakingviews - China central bank punts its succession problem https://t.co/jfuJF2QIeG — Reuters Business (@ReutersBiz) March 13, 2023 Food crisis One year after Russia's invasion of Ukraine shook agricultural commodity markets, food prices remain high. Moreover, as the world's two largest exporters of wheat and other key crops enter their second year of war, many vulnerable countries continue to face heightened food insecurity. The IMF and other global institutions said in a recent Joint Statement on Food Security that governments and donors must increase support for the most vulnerable, facilitate trade and market functioning, and end harmful subsidies. Global food prices remain high even after dropping from the record level reached early last year on Russia’s invasion of Ukraine. See our Chart of the Week blog for more: https://t.co/70ubEeRD80 pic.twitter.com/xW8WoNi1Qk — IMF (@IMFNews) March 12, 2023 Stablecoins As the world of finance becomes increasingly digital, digital currencies are taking center stage in the financial sector. Stablecoins have gained considerable popularity in recent years thanks to their ability to provide the benefits of both digital currencies and traditional fiat currencies. Analyzing the percentage composition of the stablecoin portfolio among respondents holding stablecoins, the number of owners decreases as the size of the stablecoin portfolio increases. A survey of 392 stablecoin holders revealed that the most commonly held stablecoins are: USDT (80.3%), USDC (50%) and BUSD (50%). You can learn more about stablecoins from the summary of the survey. 1/ What are the most commonly held #stablecoins among stablecoin owners? 🪙Our recent survey with @lab_blockchain revealed that the most commonly owned stablecoins are: $USDT (80.3%), $USDC (50%) and $BUSD (50%).Read the full report: https://t.co/nBN8ufuKtQ pic.twitter.com/bMCTQLVzJ2 — CoinGecko (@coingecko) March 13, 2023
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Profitability Under Pressure: Analyzing the Impact of Falling Grain Prices on IMC's Financial Outlook

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 31.05.2023 09:45
Falling grain prices likely weigh on profitability In this report we revise financial forecasts and valuation for IMC downgrading recommendation from Buy to Hold and lowering target price from PLN 22.56 to PLN 18.28 p.s.   Since our last company update from Dec 2022, wheat and corn prices fell by 31% and 14% respectively. Falling spot prices reflect ample supply, coming mainly from Russia. USDA forecast 2023e harvest to remain high as well, likely weighing on expectations of future prices. On the side of production costs we highlight falling of fertilizers and diesel prices.   Regarding IMC financial forecast, we lowered our EBITDA estimates for 2023e which is associated with lower grains’ prices and rising costs (IMC makes major cost positions hedges well in advance). Compared to our previous report, we also expect lower volumes sales mainly stemming from higher sales of inventories between 4Q22 and 1Q23. Realized prices will continue to command hefty discount to European market prices stemming from high transport cost.   Weak macro and worsening of operational prospects in current year may take back seat in the light of falling geopolitical risk. Successful Ukraine’s counteroffensive may fuel rerating of Ukrainian companies pushing share prices higher on the optimism surge. For the moment being we assume Ukraine’s risk free rate at 36%/20%/7% in 2023e/24e and thereafter.   We also assume risk premium at 20% in 2023e and 10% thereafter, which in our view reflect the risk of investing in companies operating in a country where full-scale war takes place. From the point of view of cash flows, thanks to the high inventories sales between 4Q22 and 1Q23 cash generation seemed solid, hence for the moment being, liquidity risk lowered considerably. The company said in 1Q23 financial report it managed to extend credit line and pay off short-term debt.     Forecasts and valuation update Financial forecasts update   In this report, we change our financial forecasts for IMC mainly due to the falling of grain prices since our previous company update released in September 2022. Both corn and wheat remain under pressure which stems from the ample supply as well as economic slowdown (corn is more exposed to the cycle through ethanol fuel enduses).   We point out price discounts IMC is reporting on sales compared to the average spot market prices (76% vs ca. 100% of full-cycle average for corn). High price discount is also associated with rising selling and distribution expenses per ton, likely the result of costly process of exporting grains by railway (in general it’s more expensive than ship) or freight (costs of insurances, freight rates etc.). Admittedly, the unit cost of sales went down over a few months from ca. USD 60 to USD 30, however volumes sales growth keep sales expense in the P&L at elevated level. We also highlight the problem of rising production costs: admittedly spot fertilizers prices go down recently, but hedging of 2023e costs took place in winter 2022.   In our view, the change of sentiment toward Ukrainian agri companies require either reversing the negative trend on grains prices or falling of geopolitical risk associated with the upcoming Ukrainian counter-offensive. From the point of view of business environment we’d rather err on the safe side hence the change of recommendation and cut of target prices. However, in case of some optimistic scenarios regarding development on the war front, Ukrainian companies’ shares prices may gain as a result of sentiment change or rerating of market multiples.     FAO grain index dropped in April 2023 to 136 points, the lowest since February 2022 when the war broke out. Most grains suffered losses in April, except for rice. In case of wheat, prices remained under pressure due to the ample availability from Russia and Australia. Beneficial weather conditions in the USA, Russia and Europe as well as EU reaching an agreement over Ukrainian grains transit through neighboring countries (including Poland) also encouraged prices to continue downward trend. In May, USDA raised the estimate of US grains conditions by 2 p.p. to 28%.   The agency also forecast second highest wheat harvest in Russia. Production is expected at 81.5mn tons, 11% down vs. record 2022 but still 2% higher vs 5Y average. USDA also remains optimistic with respect to European harvest, except for drought-hit Iberian Peninsula. European production is expected to come in around 139mn tons, 3% higher yoy and 5% higher vs 5Y average. Regarding corn, falling prices came on the heel of record high harvest in Brazil.   The additional factor dragging prices down are falling spot diesel and fertilizers prices. After pushing out Russian from Poltawa, Sumy, Czernichov and Charkow region, the key problems of Ukrainian agri companies remained export disruptions.   On July 22, 2022, Russia, Ukraine, Turkey and UN signed Istambul Black Sea agreement, which guarantee safe marine grain export from Ukrainians ports on Black Sea.   The aim of said agreement was to reduce the price pressure on global grains market and prevent the famine affecting the poorest countries in the world. The agreement was set to last for 120 days with potential for renewal. In May 2023, the Black Sea agreement has been extended for another 60 days which has been confirmed by Ukraine and Turkey, brokering the deal and guaranteeing its execution. Marine grain transport was responsible for 70% of Ukrainian cereals international sales, whereas railway accounted for only 20% of sales.   Considering the importance of the agreement for Turkey and its bargaining power over Russia, we do not expect the deal will be terminated in the foreseeable future. Nonetheless, there is a non-zero risk of such an event following further escalation of the ongoing military conflict. In mid-April Poland, as well as other countries neighboring Ukraine, introduced unilateral bans on Ukrainian agri produce including grains.   The bold step was preceded by domestic farmers protests, blaming Ukrainian import for dumping prices and increased competition. Kiev as well as Brussels voiced its concerns and disappointment over the ban, whereas the latter said it’s EC jurisdiction to shape common trade policies.   At the end of April, the agreement has been reached which established a ban of produce sales directly in neighboring countries, whilst those countries will let the Ukrainian grain to be transited over their territories further West. It's difficult to say what part of rail export ended up specifically in CEE EU countries, nonetheless the extent of rail export is considerably lower vs. marine transport in general. We do not assume the agreement will have meaningful effect on Ukraine’s export level, which would suffer incomparably more in case of Black Sea agreement termination.   We assume total IMC grain sales at 874k tons this year and 770k tons in following years. We highlight the change of sales structure which reflects different grain acreage structure of corn, sunflower and wheat from 75%/10%/15% to 58%/14%/19%.   Changing production in favor of wheat and sunflower at the expense of corn stems from the need of limiting the usage of gas and power which is indispensable in the process of corn grain drying. Volume sales in 2022 turned out to be higher than we expected therefore proportionally lower sales in 2023 vs our previous expectations. From the point of view of financial results we expect this year considerably lower gain on sales of biological assets, which results from falling grains prices (additionally lowered by cost of transit) as well as higher costs of production.   At the same time, there is a chance of recognizing higher results on sales due to the very low price level used for establishing gains on recognition of biological assets in the preceding quarters vs current spot market prices. We highlight the accounting character of gains recognized on valuation of biological assets which is not tantamount to cash flows the company generates.   Valuation Our IMC valuation is based on DCF model indicating a 12M target price of PLN 18.26 per share.   We attach 100% weight to this valuation method as it better captures the long-term prospects, company-specific factors and country risk as well as limited number of peers exposed to similar set of risk factors. For illustrative purposes, we have prepared a peer comparison valuation based on 2023E - 2025E multiples which yields a 12M valuation of PLN 27.75              
China Boosts Gold Reserves: Central Banks and Metals Market Updates

China Boosts Gold Reserves: Central Banks and Metals Market Updates

ING Economics ING Economics 09.06.2023 09:06
Metals: China continues to boost gold reserves The latest data from the People’s Bank of China (PBoC) shows that China increased its gold reserves for a seventh straight month amid ongoing strong demand for safe assets. The nation raised its gold reserves by about 0.5mOz to a total of 67.27mOz at the end of May 2023.   China has added over 2.6mOz of gold to its reserves since the start of the year and nearly 4.6mOz since restarting gold purchases in November 2022. A recent survey by World Gold Council (WGC) conducted in May shows that about a quarter of central banks plan to increase their gold holdings over the next 12 months as the future role of the US dollar comes into question.   Meanwhile, a recent survey from Shanghai Metals Market shows that China’s primary aluminium output rose to 3.47mt in May as some smelters in Guizhou province restarted operations. The group further believes the nation’s aluminium output could rise in June, as smelters in Yunnan province are expected to restart operations on increased power supplies. Among other metals, refined nickel output rose 30.3% YoY (+5.7% MoM) to 18.6kt last month as producers ramped up production levels.   Agriculture: Ukraine grain shipments decline The latest data from Ukraine’s Agriculture Ministry shows that domestic grain exports so far in the 2022/23 season stood at 46mt, a marginal decline of 3% YoY. The above includes wheat exports of 15.7mt, down 15.7% YoY and corn exports at 27.3mt, up 21% YoY. The fall in exports is in line with the series of obstacles faced by Ukrainian shipments in recent months. Recent data from Brazil’s Trade Ministry shows that Brazil’s soybean exports rose 46.5% YoY to 15.6mt in May, while cumulative shipments increased by 14% YoY to 49mt in the first five months of the year. Shipments to China jumped 60% YoY to 10.3mt in May 2023 whilst exports to Argentina reached a record high of 979kt. In contrast, corn exports fell 64.6% YoY to 385kt in May. However, year-to-date shipments expanded from 5.3mt to 10.64mt in Jan’23-May’23.
French Economy Faces Challenges Amid Disinflationary Trend

Central European and Eurasian Local Rates Outlook: Opportunities and Challenges

ING Economics ING Economics 14.06.2023 07:59
Czech Republic - local rates views summary The CZK still has a lot to offer - high carry, balanced market positioning and a central bank ready to intervene in the FX market if the koruna weakens. In addition, the CZK has by far the highest beta against EUR/USD in the region, making it a good proxy for a global story view with a high CEE carry element. We believe the market has gone too far with the pricing of the CNB rate cuts this year and along with the heavy received market positioning we see an opportunity for an upward re-pricing of the IRS curve. CZGBs offer good value with the prospect of a near halving of supply next year.     Hungary - local rates views summary We expect that the market will continue to favour the HUF, which will continue to maintain a significantly higher carry within the region in the second half of the year. In our view, the playing field for the forint will be in the range of EUR/HUF 368-378 and we target year-end at 372. The market is pricing in a large portion of NBH normalisation, but we believe that the fast disinflation and a strong forint will support further market bets on policy easing. We see a lower and steeper curve. HGBs are getting expensive after the recent rally.   Poland - local rates views summary The Polish zloty has closed the gap with the CEE region and although it should remain on a strengthening trajectory it is no longer undervalued in our view. We target 4.45 EUR/PLN for the end of the year. However, currently, the significant long positioning of the market and election noise over the coming months will be hurdles. The NBP is the most dovish central bank in the CEE region and with inflation falling, the market will price in more rate cuts both this year and next. Moreover, inflation has the potential to surprise to the downside. POLGBs are seen as the cheapest bonds in CEE, while funding is fully under control, pricing too many negatives.     Romania - local rates views summary The new range is likely to be 4.94-4.98 EUR/RON, with no expectation of moves to the lower levels. We envisage at least one more upward shift before the year-end. We target the EUR/RON level of 5.02 for the end of the year. ROMGBs offer the best funding situation and disinflation profile in the CEE region. In addition, they are the only ones to offer a steep curve and reward for duration. However, spreads against CEE peers and heavy long positioning may indicate a problem for the next rally. The overall direction remains clear, further gains may be at a slower pace.   Ukraine - local rates views summary FX reserves exceeded nearly US$36bn in May, for the first time since 2011. This reflected continued foreign aid and lower monthly costs of FX interventions. This significantly deceases near-term odds of another devaluation of the UAH, as the central bank may prefer a stable currency to combat inflation. The fundamentals behind UAH remain unsupportive though. Ukraine has benefited from declines in global commodity prices and the CPI is dampened by the high statistical base. However, we expect the NBU to wait for a more decisive period of disinflation and start rate cuts in early 2024. Public and external financing needs have been met by foreign flow. The fiscal position is set to deteriorate further but improve gradually in the medium term.     Kazakhstan - local rates views summary KZT appreciation since 3Q22 was based on the substantial atypical net private capital inflow, which could prove volatile. USD/KZT has now almost recovered to levels seen before February 2022, and the new fiscal rule assumes lower state sales of FX out of NFRK. In addition, risk of Russia-related secondary sanctions may push Kazakhstan be more cautious about trade flows   Turkey - local rates views summary Under the CBT policy with indirect FX interventions and regulations to control locals' FX demand, gross FX reserves have been under pressure since the beginning of this year. Given this backdrop, there is a consensus that points to a normalisation in the conduct of the monetary policy. We target 26.0 USD/TRY for the end of the year. The CBT has maintained its purchases from the secondary market, still below 6% vs the limit set at 7% of total assets of the CBT weekly statement. In the aftermath of elections, signals implying a change in policy direction are likely to determine the bond market outlook. Markets are pricing in more orthodoxy in the policy ahead than anticipated earlier.
Recovering Economy: Ukraine's International Reserves Surge, Limited Devaluation Risks, and Positive Growth Outlook

Recovering Economy: Ukraine's International Reserves Surge, Limited Devaluation Risks, and Positive Growth Outlook

ING Economics ING Economics 15.06.2023 08:25
Country strategy: Limited short-term risks to the hryvnia Ukraine’s international reserves exceeded nearly US$36bn in May, for the first time since 2011. This reflected continued foreign aid and lower monthly costs of FX interventions (c.US$2bn in May, down from the monthly peak of US$4bn in June 2022). This significantly deceases near-term odds of another devaluation of the hryvnia, as the central bank may prefer a stable currency to combat inflation. The fundamental factors behind the hryvnia remain unsupportive though. Ukraine is running a significant trade deficit, as exports collapsed in 2022, while imports remained quite stable. With the central bank aiming to re-liberalise the FX market at some point this signals risk of further devaluation in the future.   Forecast summary     Positive growth in 2023 to follow 30% GDP wartime losses The Russian invasion in 2022 has brought huge human, social and economic losses to Ukraine. The country’s GDP shrank by nearly 30% in 2022. According to the World Bank estimates, sectoral output declined by about 60% in industry, 25% in agriculture and 20% in services. In the second half of 2022, severe disruptions to businesses were caused by damage to energy infrastructure, which impacted around 40% of Ukraine’s power grids. Out of about 20 million refugees, 8 million are yet to return home. The country’s economy seems to have passed the greatest shock and, on our estimates, real GDP is set to recover gradually and reach 2% positive growth in 2023, and accelerate in subsequent years, driven mainly by consumption.    GDP growth (%)
The cost of green steel production compared to conventional steel

Market Reaction and Potential Implications: Wagner Group's Rebellion, Inflation Reports, and Central Bank Policies

Ipek Ozkardeskaya Ipek Ozkardeskaya 26.06.2023 08:06
Slow start following an eventful weekend.    The weekend was eventful with the unexpected rebellion of the Wagner Group against the Kremlin. Yevgeny Prigozhin's men, who fight for Putin in the deadliest battles in Ukraine walked towards Moscow this weekend as Prigozhin accused the Kremlin of not providing enough arms to his troops. But suddenly, Prigozhin called off the attack following an agreement brokered by Belarus and agreed to go into exile. The Kremlin took back control of the situation, but we haven't seen Vladimit Putin, or Prigozhin talk since then. The Wagner incident may have exposed Putin's weakness, and was the most serious threat to his rule in two decades. It could be a turning point in the war in Ukraine. But nothing is more unsure. According to Volodymyr Zelensky, there are no indications that Wagner fighters are retreating from the battlefield.  The first reaction of the financial markets to Wagner's mini coup was relatively calm. Gold for example, which is a good indication of market stress at this kind of moment, remained flat, and even sold into the $1930 level. The dollar-swissy moved little near the 90 cents level. Crude oil was offered into the $70pb level, as nat gas futures jumped more than 2% at the weekly open, and specific stocks like United Co. Rusal International, a Russian aluminum producer that trades in Hong Kong, gapped lower at the open but recovered losses.  Equities in Asia were mostly under pressure from last week's selloff in the US, while US futures ticked higher and are slightly positive at the time of writing.    The Wagner incident will likely remain broadly ignored by investors, unless there are fresh developments that could change the course of the war in Ukraine. Until then, markets will be back to business as usual. There is nothing much on today's economic calendar, but the rest of the week will be busy with a series of inflation reports from Canada, Australia, Europe, the US, and Japan.     Except for Japan, where the Bank of Japan (BoJ) doesn't seem urged to hike the rates, higher-than-expected inflation figures could further fuel the hawkish central bank expectations and add to the weakening appetite in risk assets.     The Federal Reserve (Fed) will carry its annual bank stress test this week, to see how many more rate hikes the baking sector could take in and the potential for changes in capital requirements down the road. The big banks are likely not very vulnerable to higher capital requirements, yet the profitability of the US regional banks could be at jeopardy and that could cause investors to remain skeptical regarding the US banking stocks altogether. Invesco's KBW bank ETF slipped below its 50-DMA, following recovery in May on the back of decidedly aggressive Fed to continue hiking rates, and stricter requirements could further weigh on appetite.    Zooming out, the S&P500 is down by more than 2% since this month's peak, Nasdaq 100 lost more than 3% while Europe's Stoxx 600 dipped 3.70% between mid-June and now on the back of growing signs that the aggressive central bank rate hikes are finally slowing economic activity around the world. A series of PMI data released last Friday showed that activity in euro area's biggest economies fell to a 5-month low as manufacturing contracted faster and services grew slower than expected. The EURUSD tipped a toe below its 50-DMA last Friday but found buyers below this level. Weak data weakens the European Central Bank (ECB) expectations, but that could easily reverse with a strong inflation read given that the ECB is ready to induce more pain on the Eurozone economy to fight inflation.     Across the Channel, the picture isn't necessarily better. Both services and manufacturing came in softer than expected. And despite the positive surprise on the retail sales front, retail sales in Britain slumped more than 2% in May, due to the rising cost of living that led the Brits back from loosening their purse string. One thing though. UK's largest lenders agreed to give borrowers a 12-month grace period if they missed their mortgage payments as a result of whopping costs of keeping their mortgages due to the aggressively rising interest rates. Unless an accident – in real estate for example, the Bank of England (BoE) will continue hiking the rates and reach a peak rate of 6.25% by December.   The only way to slow down the pace of hikes is to find a solution to the sticky inflation problem. And because the BoE has limited influence on prices, Jeremy Hunt will meet industry regulatory this week to discuss how they could prevent companies from taking advantage of inflation and raising prices more than needed, which adds to inflationary pressures through what we call 'greeflation'. But until he finds a solution, the BoE has no choice but to keep hiking and the UK's 2-year gilt yield has further to run higher, whereas the widening gap between the 2 and 10-year yield hints at growing odds of recession in the UK, which should also prevent the pound from gaining strength on the back of hawkish BoE. Cable will more likely end up going back to 1.25, than extending gains to 1.30.       By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  
Russia's Weekend Mutiny and Gold's Bounce off Support Raise Concerns; Verbal Intervention in USD/JPY and US Banking Stocks Tumble Ahead of Fed's Stress Test Results

Russia's Weekend Mutiny and Gold's Bounce off Support Raise Concerns; Verbal Intervention in USD/JPY and US Banking Stocks Tumble Ahead of Fed's Stress Test Results

Kelvin Wong Kelvin Wong 26.06.2023 15:57
Russia’s weekend mutiny cast doubts on Putin’s grip on power. No major impact on markets but keep a lookout on Gold, which bounced off the key support zone of US$1,913/1,896 per ounce. Stern FX verbal intervention from Japan’s top currency official. Watch USD/JPY key near-term support at 142.50/25. US banking stocks tumbled ahead of annual key Fed’s banks’ stress test results Before the start of this new trading week, market participants were being jolted from their weekend leisure activities to shift their focus to the internal coup in Russia that may put President Putin’s power grip in jeopardy. Yevgeny Prigozhin, leader of the Wagner Group, a Russian key independent military contractor that has played a significant role in the ongoing Russia-Ukraine territorial conflict voiced displeasure with Russia’s top leadership in handling the Russia-Ukraine situation, took over two Russian cities and order his mercenaries to march towards Moscow on Saturday.   Russia’s weekend mutiny started fast and ended fast Upon reaching 200 km within Moscow, Prigozhin’s troops halted and made a U-turn back to their field camps. In addition, Putin dropped earlier treason charges on the Wagner Group and allowed Prigozhin to head to Belarus, Russia’s western neighbour for exile. In less than 48 hours, the mutiny in Russia is over without any clear details on what has transpired that led to Prigozhin’s retreat as Putin has not made any official speech or press conference yet. US Secretary of State Blinken commented that the weekend’s uprising by Prigozhin, a former Putin royalist has posed a direct challenge to Putin’s grip on power in Russia and provided a battlefield advantage to Ukraine. On the other hand, several geopolitical commenters have analyzed the situation to be in favour of Putin in which Wagner Group’s mutiny may be used as a cover for Putin to remove the top brass in Russia’s Ministry of Defence; Shoigu, the defence minister and Gerasimov, chief of the general staff as they posed a threat to Putin’s rule. Thus, the change of Russia’s military leadership may be part of the “deal” package that the Kremlin and Prigozhin agreed on.   No significant movements in markets but watch gold In today’s Asian session, both the S&P 500 and Nasdaq 100 e-mini futures were up slightly by around +0.20% after posting their worst weekly losses last week in three months. Major Asian stock indices were mixed at this time of the writing, Nikkei 225 (-0.24%), Kospi 200 (+0.60%), Hang Seng Index (-0.14%), Hang Seng China Enterprises Index (+0.13%), and CSI 300 (-0.70%). The US dollar is almost unchanged on average with the US Dollar Index inching down by a meagre -0.1%. Gold, a traditional safe haven asset that tends to benefit in light of major geopolitical risks upheaval in the past has exhibited some interesting price actions movement from a technical analysis perspective.     Gold’s decline has managed to bounce off from a key support zone of US$1,913/1,896 per ounce   Fig 1: Gold (XAU/USD) medium-term trend as of 26 Jun 2023 (Source: TradingView, click to enlarge chart) Last week’s decline seen in Gold (XAU/USD) has led its price actions to hit a crucial medium-term pivotal support zone of US$1,913/US$ 1,896 per ounce (printed an intraday low of US$1,910 last Friday, 23 June) which is being defined by a confluence of elements; the lower boundary of the medium-term ascending channel in place since 3 November 2022 low, 38.2% Fibonacci retracement of the prior medium-term up move from 3 November 2022 low to 4 May 2023 high, and approximately the downside price objective of recent “Descending Triangle” bearish breakdown. Momentum has also improved as the daily RSI oscillator has managed to stage a bounce off the key corresponding support at the 36 level. Watch the US$1,896 key medium-term pivotal support and a clearance above US1,940 intermediate resistance sees the next resistance coming in at US$1,990 (also the 50-day moving average).   FX verbal intervention from Japan After a strong upside movement seen in the USD/JPY that recorded a weekly gain of +1.3% last week which outperformed other major USD crosses, the US Dollar Index only rose by +0.56% over the same period, Japan’s Vice Finance Minister Masato Kanda, a top currency official that has oversight over foreign exchange market matters has sounded the alarm in today’s morning Asian session. Based on a Reuters report, Kanda said that the authorities will respond to any excessive moves in the foreign exchange market, warned that the recent yen moves were rapid and will not rule out any chance of an FX intervention. He said, “Regardless of the direction, it’s generally not good for the economy if exchange rates move excessively in a way that deviates from economic fundamentals.” Today’s verbal intervention was the most pronounced made by any of Japan’s finance ministry officials in the past month when USD/JPY sailed past the prior 141.00 and 142.00 psychological levels “effortlessly”. USD/JPY has shed -0.2% intraday and broke key near-term support at 143.45 at this time of the writing, the next support to watch will be at 142.50/25 (former swing highs of 11/21/22 November 2022).     Fed’s annual banks stress test results out on Wednesday The US Federal Reserve will unveil the results of its annual stress tests on the 23 biggest US banks on Wednesday, 28 June. The key focus will be on a section of the test, labelled as “exploratory market shock”, this is the first time such a test is being conducted on the trading books of the largest US banks. The urgency and significance of the “exploratory market shock” stress test come after the US regional banks’ turmoil. Hence, monitoring of fixed income duration risk is paramount now given that the latest Fed’s hawkish monetary policy guidance is to keep interest rates higher for a longer period. Last week, the US banking stocks shed by -6.80% as indicated by the SPDR S&P Bank exchange-traded fund, its worse weekly performance in seven weeks and underperformed the S&P 500.     Fig 2: S&P 500 major trend with VIX as of 26 Jun 2023 (Source: TradingView, click to enlarge chart) If the “exploratory market shock” stress test results come in unfavourable, it may put more downside pressure on US banking stocks which in turn may trigger a volatility upside breakout in the VIX, a measurement of implied volatility on the S&P 500 as it has compressed to a low level of 13.44 not seen since early February 2020 before the pandemic. A sudden spike in VIX may dampen the current bullish mood for US stock indices.  
Russia's Weekend Mutiny Raises Concerns About Putin's Power Grip; Market Highlights: Gold Support, FX Intervention, and Fed's Stress Test Results

Russia's Weekend Mutiny Raises Concerns About Putin's Power Grip; Market Highlights: Gold Support, FX Intervention, and Fed's Stress Test Results

Kelvin Wong Kelvin Wong 27.06.2023 10:32
Russia’s weekend mutiny cast doubts on Putin’s grip on power. No major impact on markets but keep a lookout on Gold, which bounced off the key support zone of US$1,913/1,896 per ounce. Stern FX verbal intervention from Japan’s top currency official. Watch USD/JPY key near-term support at 142.50/25. US banking stocks tumbled ahead of annual key Fed’s banks’ stress test results   Before the start of this new trading week, market participants were being jolted from their weekend leisure activities to shift their focus to the internal coup in Russia that may put President Putin’s power grip in jeopardy. Yevgeny Prigozhin, leader of the Wagner Group, a Russian key independent military contractor that has played a significant role in the ongoing Russia-Ukraine territorial conflict voiced displeasure with Russia’s top leadership in handling the Russia-Ukraine situation, took over two Russian cities and order his mercenaries to march towards Moscow on Saturday.     Russia’s weekend mutiny started fast and ended fast Upon reaching 200 km within Moscow, Prigozhin’s troops halted and made a U-turn back to their field camps. In addition, Putin dropped earlier treason charges on the Wagner Group and allowed Prigozhin to head to Belarus, Russia’s western neighbour for exile. In less than 48 hours, the mutiny in Russia is over without any clear details on what has transpired that led to Prigozhin’s retreat as Putin has not made any official speech or press conference yet. US Secretary of State Blinken commented that the weekend’s uprising by Prigozhin, a former Putin royalist has posed a direct challenge to Putin’s grip on power in Russia and provided a battlefield advantage to Ukraine. On the other hand, several geopolitical commenters have analyzed the situation to be in favour of Putin in which Wagner Group’s mutiny may be used as a cover for Putin to remove the top brass in Russia’s Ministry of Defence; Shoigu, the defence minister and Gerasimov, chief of the general staff as they posed a threat to Putin’s rule. Thus, the change of Russia’s military leadership may be part of the “deal” package that the Kremlin and Prigozhin agreed on.     No significant movements in markets but watch gold In today’s Asian session, both the S&P 500 and Nasdaq 100 e-mini futures were up slightly by around +0.20% after posting their worst weekly losses last week in three months. Major Asian stock indices were mixed at this time of the writing, Nikkei 225 (-0.24%), Kospi 200 (+0.60%), Hang Seng Index (-0.14%), Hang Seng China Enterprises Index (+0.13%), and CSI 300 (-0.70%). The US dollar is almost unchanged on average with the US Dollar Index inching down by a meagre -0.1%. Gold, a traditional safe haven asset that tends to benefit in light of major geopolitical risks upheaval in the past has exhibited some interesting price actions movement from a technical analysis perspective.   Gold’s decline has managed to bounce off from a key support zone of US$1,913/1,896 per ounce   Fig 1: Gold (XAU/USD) medium-term trend as of 26 Jun 2023 (Source: TradingView, click to enlarge chart) Last week’s decline seen in Gold (XAU/USD) has led its price actions to hit a crucial medium-term pivotal support zone of US$1,913/US$ 1,896 per ounce (printed an intraday low of US$1,910 last Friday, 23 June) which is being defined by a confluence of elements; the lower boundary of the medium-term ascending channel in place since 3 November 2022 low, 38.2% Fibonacci retracement of the prior medium-term up move from 3 November 2022 low to 4 May 2023 high, and approximately the downside price objective of recent “Descending Triangle” bearish breakdown. Momentum has also improved as the daily RSI oscillator has managed to stage a bounce off the key corresponding support at the 36 level. Watch the US$1,896 key medium-term pivotal support and a clearance above US1,940 intermediate resistance sees the next resistance coming in at US$1,990 (also the 50-day moving average).   FX verbal intervention from Japan After a strong upside movement seen in the USD/JPY that recorded a weekly gain of +1.3% last week which outperformed other major USD crosses, the US Dollar Index only rose by +0.56% over the same period, Japan’s Vice Finance Minister Masato Kanda, a top currency official that has oversight over foreign exchange market matters has sounded the alarm in today’s morning Asian session. Based on a Reuters report, Kanda said that the authorities will respond to any excessive moves in the foreign exchange market, warned that the recent yen moves were rapid and will not rule out any chance of an FX intervention. He said, “Regardless of the direction, it’s generally not good for the economy if exchange rates move excessively in a way that deviates from economic fundamentals.” Today’s verbal intervention was the most pronounced made by any of Japan’s finance ministry officials in the past month when USD/JPY sailed past the prior 141.00 and 142.00 psychological levels “effortlessly”. USD/JPY has shed -0.2% intraday and broke key near-term support at 143.45 at this time of the writing, the next support to watch will be at 142.50/25 (former swing highs of 11/21/22 November 2022).     Fed’s annual banks stress test results out on Wednesday The US Federal Reserve will unveil the results of its annual stress tests on the 23 biggest US banks on Wednesday, 28 June. The key focus will be on a section of the test, labelled as “exploratory market shock”, this is the first time such a test is being conducted on the trading books of the largest US banks. The urgency and significance of the “exploratory market shock” stress test come after the US regional banks’ turmoil. Hence, monitoring of fixed income duration risk is paramount now given that the latest Fed’s hawkish monetary policy guidance is to keep interest rates higher for a longer period. Last week, the US banking stocks shed by -6.80% as indicated by the SPDR S&P Bank exchange-traded fund, its worse weekly performance in seven weeks and underperformed the S&P 500.     Fig 2: S&P 500 major trend with VIX as of 26 Jun 2023 (Source: TradingView, click to enlarge chart) If the “exploratory market shock” stress test results come in unfavourable, it may put more downside pressure on US banking stocks which in turn may trigger a volatility upside breakout in the VIX, a measurement of implied volatility on the S&P 500 as it has compressed to a low level of 13.44 not seen since early February 2020 before the pandemic. A sudden spike in VIX may dampen the current bullish mood for US stock indices.    
Energy and Metals Decline, Wheat Rallies Amid Disappointing Chinese Growth

Energy and Metals Decline, Wheat Rallies Amid Disappointing Chinese Growth

Ipek Ozkardeskaya Ipek Ozkardeskaya 18.07.2023 08:29
Energy, metals fall, wheat rallies.    The week started with unpleasant news really. First, the Chinese growth numbers disappointed at yesterday's open, and sent the metal, energy, and European stocks down. A barrel of American crude fell 1.72% and slipped below the $75pb level, and is still consolidating below this level this morning, the European nat gas prices continue trending lower following an upbeat mood at the start of the summer on expectation that the European nations refilling their reserves for winter would push prices higher. But the disappointing growth numbers and the slowing activity in Europe hammered the positive trend and the prices remained under pressure despite the recent spike in oil prices. Then, Wisdomtree's industrial metals ETF dropped nearly 2% and Hermes slumped more than 4% below its 50-DMA and to its 100-DMA yesterday on worries that the Chinese costumers, who were the reason why the company announced juicy earnings in the past few quarters. In summary, energy and French luxury goods, and the British FTSE 100 index – full of energy and miners – didn't react well to the news.   Then, Russia cancelled the grain deal, which allowed the safe passage of around 33 million of crops from Ukraine via Black Sea since last June and wheat futures jumped nearly 3.50% yesterday. While Russia had only half-heartedly agreed to sign a Turkish brokered deal, the latest explosion in the bridge between Russian and Crimea and the Western sanctions that are taking a toll on the Russian exports brought Russia to drop the deal, turning all eyes to Turkish President Erdogan, who said that he will meet Vladimir Putin in August, but given the urging situation he will certainly call him before. There is one thing that could displease Russians though, and it is the fact that Erdogan gave a greenlight for Sweden joining NATO just a couple of days ago. The latter could make another crop deal harder to be sealed. So, all eyes are on Turkish President Erdogan. If he can't agree on a new deal, the Ukrainian crops must take a pricier detour to reach the international market and that extra cost could discourage farmers to keep supply steady. Lower supply could boost wheat prices and add to food price inflation worries that had just started easing.     By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  
Steel majors invest in green steel, but change might be driven by contenders

Steel majors invest in green steel, but change might be driven by contenders

ING Economics ING Economics 19.07.2023 11:36
Steel majors invest in green steel, but change might be driven by contenders This transformation of the steel industry is not simply a theoretical exercise and the largest steel makers in the world are now setting themselves on a pathway of reaching net zero emissions. According to Bloomberg New Energy Finance (BNEF), over 615 million tons of steel or 18% of global production is under a net zero target and most aim to be carbon neutral by 2050. Company analyses by BNEF show consensus in the near term. Almost all steelmakers agree that the focus should be on increasing recycling rates and improving the energy efficiency of the conventional coal-based process while piloting deep decarbonisation technology like CCS and hydrogen. There is less consensus looking further ahead, with long-term technology choices differing between companies. Diversified majors like Baowu (China) and ArcelorMittal (Luxembourg), the two largest steel companies in the world, are testing both the CCS and hydrogen routes. ThyssenKrupp (Germany), Posco (South Korea) and TataSteel IJmuiden (the Netherlands) plan to fully convert their fleets to hydrogen-based production. They are developing new equipment to accommodate lower-grade iron ore in hydrogen-based steelmaking. SSAB (Sweden) is at the forefront of hydrogen-based steelmaking but plans to primarily rely on purer forms of iron such as recycled steel. Nippon Steel and JFE (both from Japan) aim to reduce emissions by applying CCS to existing coal-based blast furnaces but have recently started to investigate hydrogen too. While US Steel is somewhat lagging behind its peers, it will likely roll out pilots for both CCS and hydrogen on the back of increased policy support in the US for both hydrogen and CCS. But the real change might not come from the steel majors who have billions of dollars worth of coal-based steel assets on their balance sheets. On a positive note, that provides them the capital to develop CCS and hydrogen. On a more negative note, it could limit real change as current assets may become stranded once hydrogen technology takes over. Disruptive change might be driven by Tesla-style new entrants. Vulcan Green Steel from Oman is a new company in the industry that is planning to build a hydrogen-based steel plant from scratch. Blastr is doing similar things in Norway and Finland. GravitHy in France focuses on the production of green iron. Van Merksteijn is planning to build a green steel facility to produce a specialised steel product (wire rod) at the Eemshaven in the Netherlands. The H2 Green Steel mill in northern Sweden is currently the most advanced green steel project in Europe. Finally, Ukraine could be a country driving the change in the sector. As the ongoing war persists, the financial focus of politicians and financiers is on short-term funding issues. But slowly, they're beginning to look at long-term reconstruction efforts too. The World Bank estimates Ukraine's reconstruction will cost more than $400 billion. Ukraine is seeking up to $40 billion to fund the first part of a Green Marshall Plan to rebuild its economy. The main priority will be on the iron and steel industry, with a vision to build a green steel industry of 50 million tonnes.
Collapse of Black Sea Grain Initiative Rattles Market: Impact on Ukrainian Grain Exports

Collapse of Black Sea Grain Initiative Rattles Market: Impact on Ukrainian Grain Exports

ING Economics ING Economics 24.07.2023 09:54
Collapse of grain deal rattles the market Grain markets have rallied this week following Russia’s refusal to extend the Black Sea Grain Initiative. The ratcheting up in tensions between Ukraine and Russia means that risks are skewed to the upside, particularly when it comes to the wheat market. However, for now, we do not see the market re-testing the 2022 highs.   How important is the Black Sea Grain Initiative? The Black Sea Grain Initiative came to fruition in July last year after the UN, Turkey, Ukraine and Russia agreed on the safe passage of vessels shipping agricultural commodities from three Ukrainian Black Sea ports: Odesa, Chernomorsk and Yuzhny. The deal was originally set for 120 days with the intention for it to be extended by a similar duration. And while this initially happened, since March, Russia has only been prepared to extend the deal for periods of 60 days, which has led to elevated uncertainty across grain markets. In recent months and in the lead-up to Russia pulling out of the deal, flows from Ukrainian Black Sea ports slowed significantly with Ukraine suggesting that Russia was blocking vessel inspections. However, despite the many challenges and uncertainties with the deal, it has proved beneficial for grain flows and therefore for consumers. Ukraine has managed to ship almost 33m tonnes of grain under the deal since August last year. This has seen CBOT wheat prices trading more than 20% lower between the period the deal was announced and Russia suspending its participation. Of the almost 33m tonnes shipped under the deal, 16.9m tonnes was corn, whilst 8.9m tonnes was wheat. The remainder of flows were mostly sunflower oil/meal, barley and rapeseed.   Ukranian grain and oilseed exports under the Black Sea Grain Initiative (m tonnes)   These are not the only export volumes from Ukraine. According to Ukraine’s agricultural ministry, the country managed to ship a total of 29.5m tonnes of corn and 16.8m tonnes of wheat in 2022/23. This is due to the fact that Ukraine has also increased exports through other routes, via river, road and rail. However, there are obviously challenges in doing this. Firstly, transportation costs will be higher than shipping from the Black Sea in dry bulk vessels, secondly, there will be capacity constraints as well as other logistical issues moving this grain westwards. And finally, there has been pushback from neighbouring EU countries over the influx of Ukrainian grains into these markets, which has weighed on domestic prices. Poland, Hungary, Slovakia, Bulgaria and Romania have restricted grain imports from Ukraine since the spring, although transit is allowed. Recently, these countries have pressured the EU to extend restrictions which expire on 15 September, given the expectation that more grains will flow westwards now.     2022/23 total Ukranian grain exports (m tonnes)  
US Weekly Jobless Claims Hit Lowest Level Since February; Apple Shares Slide Amid China's iPhone Crackdown; USD/JPY Shows Volatility Amid Interest Rate Fears and Tech Stock Woes

The Commodities Feed: Supply Risks Increase Amid Russia-Ukraine Tensions

ING Economics ING Economics 25.07.2023 09:11
The Commodities Feed: Supply risks grow Russia’s bombing of port infrastructure along the Danube river in Ukraine has pushed grain prices significantly higher. This escalation risks spilling over into other parts of the commodities complex, particularly energy.   Energy – Oil marches higher Having struggled to break convincingly above US$80/bbl over the last week or so, Brent settled above US$82/bbl yesterday and in doing so broke above the 200-day moving average. The market would have taken comfort from China’s Politburo meeting where the government said it would provide further support to the property sector, stimulate consumption and tackle local government debt. China is key for global oil demand growth this year and the market has been getting increasingly concerned over the weaker-than-expected economic recovery, so any support measures will be helpful in easing some of these concerns. On the supply side, whilst remote for now, risks are growing following Russia’s escalation and bombing of Ukrainian port infrastructure along the Danube River. Whilst this is not a direct threat to energy markets, there are worries that this could spill over into other markets, particularly after Ukraine last week said that any ships heading to Russian Black Sea ports could be treated as potential military targets (in response to a similar statement from Russia). Russia ships almost 500Mbbls/d from the Black Sea port of Novorossiysk, while the CPC terminal in the port exports around 1.2MMbbls/d of Kazakh oil. Therefore, it is not too surprising that the market is starting to become a little nervous over a potential supply disruption, even if it is a remote risk for now.   In addition, stronger refinery margins are likely adding to some optimism over demand, although the strength in refinery margins appears to be more supply-driven than demand-driven at the moment. The strength has been driven predominantly by gasoline and middle distillate cracks, while fuel oil cracks are also holding relatively firm. European gasoline cracks have hit US$30/bbl, the highest levels since July last year. The strength in the gasoline market has been blamed on several factors, including tightness in the octane market, while hot weather in parts of Europe also appears to have led to some refinery disruptions. The initial strength in margins was driven by middle distillates, which would have led to some yield switching (gasoline to gasoil), however the more recent relative strength in gasoline could now see yields switching back (gasoil to gasoline). As a result, this is also offering continued support to middle distillate cracks. In addition, in the US, an unplanned outage at Exxon’s 540Mbbls/d Baton Rouge refinery, the fifth largest refinery in the US, is also providing some strength to margins. European natural gas prices also rallied significantly yesterday with TTF settling 8.5% higher on the day, taking it back above EUR30/MWh. There will be concerns over what further escalation in Ukraine could mean for the small but still important amount of Russian pipeline gas that runs through Ukraine into the EU. Fundamentally though, the European market remains in a very comfortable position with storge almost 84% full. While uncertainty may provide support to prices in the near term, we expect prices to come under pressure over much of the third quarter, given storage will be full well ahead of the next heating season (assuming no significant supply disruptions).  
Turbulent Q2'23 Results for [Company Name]: Strong Exports Offset Domestic Challenges

SecoWarwick Group: Leading the Way in High-Tech Industrial Furnaces and Solutions

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 16.08.2023 14:06
SecoWarwick group - business model SecoWarwick is a customer solution provider for high-tech industrial furnaces for the thermal processing of metals. Solutions are dedicated to customers in the automotive, aircraft, energy, medical, tooling, powder metallurgy or defense industries, among others. SecoWarwick specializes in energy-efficient and environmentally friendly equipment. The company provides access to defining technologies and new solutions, provides state-of-the-art control and data analysis systems, as well as professional services available in the world's most important metallurgical markets. The offer includes standard and dedicated solutions, delivery of equipment including technology and associated equipment, installation and commissioning, service support, technical and technological training, tests and research in industrial and laboratory conditions, analyses and simulations. SecoWarwick's solutions also include industrial furnaces for fire testing, vacuum equipment, precision test chambers, thermal processing systems, windscreen heating and molding production lines. A wide range of technologies, highly qualified engineers and customized solutions give the customer a competitive edge. Geographical presence Currently, SecoWarwick's largest sales market is the US (37% of sales) served by two local production facilities. Next is Europe (30% of sales), which is mainly supplied by plants in Poland. Asia is the third market (28% of sales), served by plants in China. In the future, the opening of production in India (currently sales & service; planned production later this year) and an increase in deliveries from China to Europe cannot be ruled out due to the appreciation of the PLN to the USD and generally rising operating costs (manufacturing costs, transport costs), especially in Europe. Geographical diversification is a considerable asset for SecoWarwick in mitigating performance volatility in response to business cycles. In 2022, exposure to Russia, Belarus and Ukraine was less than 5%. With the start of the war in Ukraine, SecoWarwick ceased contracting new orders in the Russian market      
Weak July Performance: Polish Retail Sales Disappoint Amid Economic Challenges

Weak July Performance: Polish Retail Sales Disappoint Amid Economic Challenges

ING Economics ING Economics 22.08.2023 14:40
Polish retails sales disappoint in July Retail sales join a list of disappointments in recent data readings on the Polish economy after less than stellar industrial production and labour market numbers yesterday.   Polish real retail sales fell by 4.0% YoY, and that's worse than the consensus expectation of a 3.8% decline, although milder than in June (-4.7%). Additionally, in seasonally adjusted terms, retail sales were 1.3% M/M higher in July compared to June this year. We saw retail sales decline across most major groups, except in motor vehicles & motorbikes parts, which was up 3.*% YoY, and that's consistent with the relatively strong growth in industrial production in this sector. The largest YoY declines were recorded in the groups "press, books, other sales in specialised shops" (down 13.6% YoY) or in the durable goods group "furniture, RTV, household appliances" (down 11.6%) and the category "other" (down 11.4%). Sales of food, beverages and tobacco also fell (by 4.2%), which can be linked to last year's high reference base following the influx of refugees from Ukraine. People's 'household' situation is slowly stabilising after real wage growth returned in June after almost a year of prolonged purchasing power erosion thanks to high inflation. Yesterday's labour market data, however, again saw wage growth (10.4% YoY) below CPI inflation (10.8% YoY in July). We expect a gradual improvement in household consumption in the coming months, particularly in the fourth quarter, when households’ purchasing power will improve further with disinflation continuing while wage growth remains in double digits.   Nominal wages, CPI inflation, and real retail sales, YoY, in %
Sygnity Stock Faces Headwinds Despite New Government Contracts

Mercor: Leading the European Market in Passive Fire Protection"

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 08.09.2023 15:07
Business model and strategy The Company’s description The Mercor capital group is one of the leaders of the European market of passive fire protection and a leading entity in this industry in Poland. Mercor started operations in 1988. The Company's financial year does not coincide with the calendar year, it starts in April and ends in March. Currently, the capital group includes nine operating subsidiaries. The company offers assistance in the selection and design of fire protection systems. The offer of the group includes: ■ Smoke exhaust, heat exhaust and roof lighting systems (e.g. smoke exhaust vents, fixed skylights, roof hatches, ventilation vents, skylights, smoke curtains, shutter vents). ■ Fire ventilation systems (e.g. smoke exhaust fans, fire dampers, shut-off valves, staircase overpressure systems, garage jet ventilation systems), ■ Fire protection of building structures (e.g. fireproof board systems, spray systems, installation passage systems, magnesium board systems), ■ Fire separation systems (doors, gates, profile walls). Mercor has eight production plants located in several European countries, of which four plants are located in Poland. The group employs over 900 people.     The largest Company’s production plant is the factory in Cieplewo near Gdańsk, from which Mercor generates nearly half of its consolidated revenues. The plant in Russia produces products (mainly smoke and ventilation systems) for the Russian and former Soviet republics, generating over 10% of revenues. The plant in Ukraine processes ventilation flaps mainly for the Polish market. The material sent there is already well advanced, and the work carried out there requires the involvement of manpower. The factory in Ukraine generates about 10-15% of revenues. On the other hand, the plant in Spain mainly produces fire protection panels and spray systems used in tunnels, primarily for the local market
Sygnity Stock Faces Headwinds Despite New Government Contracts

Mercor's Impressive Portfolio of Realizations in Poland and Abroad

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 08.09.2023 15:09
Realizations The portfolio of realizations includes facilities located in the country and abroad. Realizations include hotel/office facilities, airports, power plants, tunnels, refineries, factories, museums, logistics parks. The group has carried out many implementations in many domestic projects, including airports in largest Polish cities; metro in Warsaw; Hilton hotels in Warsaw, Gdańsk, Łódź; National Library; Kozienice power plant; Copernicus Science Center in Warsaw; National Library. Also abroad, Mercor can boast of many projects, e.g. a new terminal at Charles de Gaulle Airport in Paris; sewage treatment plant in Henriksdal (Sweden); the RWE coal power plant in the Netherlands; London Olympic Stadium; the AVE high-speed train tunnel in Malaga and Alicante; tunnels in Madrid, Bilbao, Oslo, Al Ras Al Akhadar (UAE), Doha (Qatar).     Orders for the Company's products are correlated with the economic situation in the construction industry. Mercor focuses its attention on cubature construction, i.e. primarily production halls, warehouses, and to a lesser extent office buildings. Multi-family housing construction accounts for a small share of revenues, usually the scope of works concerns ventilation in garage buildings. The company does not focus its attention on infrastructure projects (outside Spain), which largely depend on public procurement. The company's clients are mainly general contractors for whom the company is a subcontractor. Mercor monitors the situation on the market of planned investments, and obtaining a contract often depends on competences and experience, which puts the Company in a fairly good position on the Polish market. The time elapsing from submitting an offer, through the receipt of an order, to implementation varies and depends on the size of a project. However, the average time from the receipt of an order to the completion of a project is usually 3-4 months. Due to the relatively short lead time from receipt of the order, there are no inflation clauses in contractual provisions or clauses protecting against an increase in the prices of materials necessary for production. In the recent period, there was a good economic situation on the market, which can be seen in the increased value of orders. The company recorded the biggest jump in 2021/22, when the value of orders increased by 27% y/y to PLN 530 million. The value of orders from the last 12 months (August 2022-July 2023) amounted to PLN 620 million and was higher by 15% y/y. However, the value of orders in July 2023 was similar to the previous year’s level.  
Asia Morning Bites: Key Comments from Bank of Japan and Upcoming Global Economic Data

Asia Morning Bites: Key Comments from Bank of Japan and Upcoming Global Economic Data

ING Economics ING Economics 11.09.2023 10:51
Asia Morning Bites Comments from the Bank of Japan's Ueda may be the main story for Monday. Later this week, US inflation and the China data dump could provide more direction.   Global Macro and Markets Global markets:  US stocks didn’t manage to make any headway on Friday, despite opening up, and drifted slowly lower over the session, ending only fractionally higher than the previous day’s close. Equity futures suggest another positive open today. Chinese stocks continued to struggle, with nerves showing ahead of what will be a big data week for China. The Hang Seng Index fell 1.34% and the CSI 300 was down 0.49%. US Treasury yields rose again. The yield on the 2Y UST rose 4.4bp, while that on the 10Y bond rose just 2bp to 4.264%. EURUSD skirted just under the 1.07 level at times on Friday, and its attempt to move higher didn’t succeed. It is currently 1.0709. The AUD is slightly stronger though still trading below 64 cents. Cable is fairly flat at 1.2478 and the JPY lost ground but has rallied in early trading today and is back to 147.24 after Bank of Japan (BoJ) Governor Ueda signalled to a newspaper that wages data may provide enough information by the end of the year to determine whether to end its super-easy policy. It was a mixed day for Asian FX currencies. At one end, the PBoC seemed to relinquish more ground with a fix above 7.20 which allowed CNY to trade above 7.35. At the other end, there were gains for the INR and THB.  The INR is trading back now within the previous range and just below 83. G-7 macro:  The G-20 in India managed to achieve more than cynics might have expected, given President Xi’s absence. A joint communique was reached, and actions were agreed on climate change and debt relief, as well as opening the group to the African Union. Ukraine has criticized the communique for watering down the language on Russia’s invasion. There was very little data out on Friday, but one data point that may have flown under the radar, was the US consumer credit figures for July, which dropped sharply from the previous month. Are households maxing out? If so, this could threaten Janet Yellen’s soft landing hypothesis, which she seemed to be embracing at the G-20 summit. There is not much on the G-7 calendar today. The ECB will meet to decide on rates later this week. The consensus is still split on the decision, as is the market. We narrowly favour a hike. China:  Over the weekend, China released August inflation data which rose back above the zero line, though only just, rising to 0.1%YoY. Later this week, we have the monthly data dump, which may also show some modest improvements from last month – the emphasis is on the word modest though… At least we won’t have to endure inaccurate references to deflation for a month. What to look out for: US CPI inflation and China data Japan M3 and machine tool orders (11 September) China M3 money supply (11 September) Australia Westpac consumer confidence (12 September) US NFIB survey (12 September) India CPI (12 September) South Korea unemployment (13 September) Japan PPI inflation (13 September) India trade balance (13 September) US CPI inflation (13 September) Japan core machine orders and industrial production (14 September) Australia unemployment (14 September) ECB policy meeting (14 September) US initial jobless claims, PPI and retail sales (14 September) China medium term lending rate (15 September) Indonesia trade balance (15 September) China retail sales, industrial production (15 September) US University of Michigan sentiment (15 September)  
Toya: A Forward-Thinking Company Expands in China and Eyes Ukraine for Future Growth

Toya: A Forward-Thinking Company Expands in China and Eyes Ukraine for Future Growth

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 11.09.2023 14:47
Toya – Forward all the time Toya is one of the leading companies selling hand tools and power tools in Poland and Central and Eastern Europe. The strength of the company is having a team of product managers who care about high quality and continuous development of the product offer. Toya has two subsidiaries in China, located close to the world's largest factories and transhipment ports. The strategy of the capital group assumes further geographical expansion - currently sales are conducted to over 100 countries. We see great potential to increase the scale of operations and improve results in the long term, we set the target price per share at PLN 10.1.   Launch of a new warehouse in China After the launch of a new logistics and warehouse center in Baibu Town, China, in July last year, the total warehouse space of the Toya group increased to 73.5 thousand square meters. m2 . Such a size of warehouses, in our opinion, should allow for an increase in annual sales to PLN 1 billion, without the need to rent external warehouses. The new logistics center will enable the creation of buffer stocks in the event of disruptions in supply chains or a spike in demand. It is also to be a foothold to activate sales in Asia, Africa, America and Australia     Rebuilding Ukraine as an option for future revenue growth The option for the company is to end the war in Ukraine - currently Toya directs 5% of its sales to that market. We assume that if Ukraine is rebuilt, the sales of tools and power tools will increase significantly. Toya, having maintained relations with customers from Ukraine for many years and having large inventories, may be one of the most important beneficiaries of the increase in sales in this region.   Solid results in the coming years he financial results of the group are improving quite systematically. Over the last 14 years, only two years saw a decrease in revenues: during the global crisis in 2009 (-11% y/y) and during a significant economic slowdown in 2012 (-4% y/y). The Group is characterized by high collection of receivables - most of them are insured in reputable financial institutions. In 2023, we forecast a similar level of revenues as in 2022. We believe that the economic slowdown will last into 2024, but we assume that Toya will slightly increase sales (+4% y/y), e.g. thanks to having a new warehouse in China. In the following years, we forecast sales growth of approximately +8% y/y.     We estimated the value of Toya shares based on the DCF method at PLN 9.05 and the comparative method at PLN 11.37. We assigned 90% weight to the first method, 10% to the second. We set the 9-month target price at PLN 10.1, which gives a 62% upside potential for the share price.  
BOJ Verbal Intervention Sparks Market Reactions and Sets Stage for Eventful Week

Korea's FX Ambitions: A Glimpse at Success and Benefits of Proposed Reforms

ING Economics ING Economics 12.09.2023 09:01
The won's FX peer group Before looking at the benefits of these proposed reforms, perhaps we should be asking what success would look like. For example, the Korean won already sees the largest NDF trading volumes in London, but as a deliverable currency, what should it be aiming for?   Daily trading volume by FX product and average daily trading volume (US$m of NDF mkt in London)   If developed market status is the ambition, then the APAC members of the MSCI Developed Market index are Australia, Hong Kong, Japan, New Zealand and Singapore. Korea is roughly a similar-sized economy to Australia, while its economy is around three times larger than Singapore. Yet, Asian countries are quite heterogeneous in terms of economic structure, trade dependence, and capital market size, although they are all quite dependent on trade with China. If we narrow our focus more to the FX trading side, we can see from Bank of International Settlement (BIS) data that the average daily trading volumes for all KRW FX instruments (spot, FX swaps, outright forwards, and options) was $142bn per day in 2022. Korea could well be setting its sights on the sort of total FX volumes being enjoyed by Singapore ($182bn) or Hong Kong ($193bn). For reference, CNY daily FX volumes were $526bn in 2022.    The benefits The first obvious benefit of these reforms would be the expected narrowing in bid/offer spreads. We see two paths here. The first is that the extension of onshore KRW trading hours should reduce the illiquidity premia currently embedded in the out-of-hours bid/offer spread. The second path is higher trading volumes driving USD/KRW bid-offer spreads narrower towards those potential targets such as USD/SGD, USD/HKD, or even USD/CNH. In the chart below, we look at the average bid/offer spreads to mid-price for selected pairs between 2 June and 23 August. The data has kindly been provided by ING’s eFX team. The two standouts here: USD/KRW bid/offer spreads are nearly double when the onshore market is closed and USD/KRW onshore spreads are around 11 times wider than for the likes of USD/SGD, USD/HKD, and USD/CNH. Clearly, there is plenty of room for narrower spreads here.   Average bid-offer spread to mid-price of USD/KRW and selected Asian pairs 1m KRW NDF Asia hours spread = 100   The second benefit involves the risk management of positions. Currently, offshore entities are hedging exposure to the KRW by using the NDF market. This is cash-settled, usually in dollars, against an official NDF fixing provided by local authorities. Presumably, the liquidity of using a more widely traded FX-swap market to hedge positions will reduce slippage. There have also been extreme cases in Argentina and Ukraine where the local NDF fixings have failed to reflect market developments – effectively undermining the NDF contract as a hedging product. 
Dr. Copper: Building a Foundation Amidst Commodity Challenges

Dr. Copper: Building a Foundation Amidst Commodity Challenges

Saxo Bank Saxo Bank 12.09.2023 11:23
Dr Copper: building a foundation Copper spent most of the second quarter on the defensive, after a less commodity-intensive recovery in China upset expectations for a strong rebound in demand of key industrial metals. However, during June, the prospect of additional China economic stimulus and falling inventories at exchange-monitored warehouses to a five-month low helped trigger a change in sentiment from hedge funds who, up until then, had traded copper with a short bias. Additional China stimulus or not, we view the current copper weakness as temporary, as the green transformation theme in the coming years will continue to provide strong tailwinds for so-called green metals, the king of which is copper – the best electrical-conducting metal needed in batteries, electrical traction motors, renewable power generation, energy storage and grid upgrades. Adding to a challenged production outlook as miners see lower ore grades, rising production costs, climate change and government intervention, as well as the ESG focus which reduces the available investment pool provided by banks and funds. From its current level well below $4 we see the High Grade contract eventually move higher and reach a fresh record high, potentially not until the new year when the global growth outlook and the central bank rate focus turns to cuts from hiking. Crude oil: demand concerns offsetting Saudi supply cut WTI and Brent crude oil’s sideway trading action since May looks set to continue into the third quarter with global economic growth concerns continuing to be offset by the willingness of key OPEC+ members to sacrifice revenues and market share to support the price. Overall, we believe prices are near a cycle low, but a few more challenging months cannot be ruled out, primarily because of worries that a robust pickup in demand, as forecast by OPEC and the IEA, will fail to materialise. The latter is potentially the reason why Saudi Arabia took the unprecedented step of announcing a unilateral production cut shortly after the group announced production cutbacks. It all adds up to what could become a challenging few months for OPEC, especially if demand should fail to recover with Saudi Arabia, then raising the pressure on other producers to curb production. For now, the de facto leader of OPEC has managed to send a signal of support which may help prevent a deeper correction, while an eventual recovery, which we believe will occur, paves the way for higher prices. Until then, Brent will likely remain stuck in the $70’s before, towards the end of the quarter, eventually breaking back above to the psychologically important $80 level, thereby shifting the current 70-80 range higher by 5-10 dollars, where it will be trading ahead of year-end. Crop production risks downgrade amid rising weather concerns Following a year-long retreat, the grains sector joined a rally already well established across key soft commodity futures from sugar and cocoa to coffee and orange juice. The grains sector has sprung back to life amid concerns of the potentially damaging impact of drought in key production regions across the Northern Hemisphere, where unseasonably dry conditions have been noted across some the key growing areas, from the Black Sea to Northern Europe and, most recently and not least, the US. Weekly data showing the conditions of the three major crops of wheat, corn and soybeans have all deteriorated, and unless dry conditions are reversed soon by rainfalls, concerns about the eventual production results may underpin prices ahead of the harvest season. These developments are occurring at a time when markets are on high alert for the potential impact of a returning El Niño, and having formed a month or two earlier than most El Niños, the head of NOAA’s El Niño/La Niña forecast office said it would give it room to grow, raising the risk of a strong event over the coming months. El Niño strongly tilts Australia towards drier and warmer conditions, with northern countries in South America — Brazil, Colombia, and Venezuela — likely to be drier and Southeast Argentina and parts of Chile likely to be wetter. India and Indonesia also tend to be dry through August in El Niños. In addition to these, the prospect of a long drawn-out war in Ukraine challenging supply from the Black Sea region, and China, following domestic weather woes, becoming the world’s largest importer of wheat could increase global competition for this sought-after crop -- especially in a year where El Niño may reduce production in Australia, China’s biggest supplier of wheat by far.  
USDA's WASDE Update: Wheat Tightens, Corn Loosens

USDA's WASDE Update: Wheat Tightens, Corn Loosens

ING Economics ING Economics 13.09.2023 08:49
WASDE update: Tighter wheat and looser corn market The USDA’s latest monthly WASDE report was constructive for wheat as adverse weather in Australia, Canada and the EU is expected to tighten global supply. However, the release was more bearish for corn on the back of revisions higher to US acreage and ending stocks.   Higher acreage pushes US corn supply up The USDA revised up its 2023/24 US corn production estimates by 23 million bushels to 15.13 billion bushels, with an increase in acreage offsetting lower yields. This is higher than the roughly 15 billion bushels the market was expecting. Planted acreage estimates were increased by 0.8 million acres to 94.9 million acres, whilst yield estimates were lowered by 1.3bu/acre to 173.8bu/acre. With no changes to demand estimates, 2023/24 ending stocks were increased by 19 million bushels to 2.2 billion bushels. This is higher than the roughly 2.13 billion bushels the market was expecting. Therefore, it was not surprising to see CBOT corn coming under pressure following the release. For the global balance, 2023/24 ending stock estimates were revised up from 311.1mt to 314mt primarily due to higher beginning stocks and expectations for larger US output. The market was expecting a number below 310mt, so again, the USDA’s estimate is a lot more bearish than what the market was expecting. It will also provide some comfort to those who have been concerned over lower export availability from Ukraine since the suspension of the Black Sea Grain deal.   Corn supply/demand balance
Ukraine's Odessa Port Damage Disrupts Grain Exports; US Wheat and Soybean Shipments Rise

Ukraine's Odessa Port Damage Disrupts Grain Exports; US Wheat and Soybean Shipments Rise

ING Economics ING Economics 26.09.2023 14:47
Agriculture – Damage to Ukraine's Odessa port Wheat prices firmed up yesterday on reports that Russia has ‘significantly damaged’ the Odesa port in Ukraine, one of the major ports for grain export. The latest attacks were reported to have damaged port infrastructure, grain storage facilities and warehouses at the ports. Ukraine’s export of grains from the port has largely stopped after Russia pulled out of the export deal. However, recently a few ships were reported to have managed shipments from the port. The latest attacks are likely to stop any residual exports from the port and also lower the possibility of export resumptions from the port in the near term. The USDA’s weekly export inspection data for the week ending 21 September show that US soybean and wheat shipments rose while corn exports slowed over the last week. US weekly inspection of corn exports stood at 661kt, lower than the 676kt over the previous week and up from 550kt reported a year ago. For wheat, export inspections stood at 451kt, up from 423kt last week but lower than the 589kt seen for the same period last year. Soybean export inspections stood at 482kt, higher than 430kt from a week ago and 292kt from a year ago. The USDA’s latest crop progress report shows that 53% of the US corn crop is rated in good to excellent condition, up from 51% in the previous week. Meanwhile, the harvest is progressing well with 15% of the crop harvested, up from 11% at the same stage last year and also above the five-year average of 13%. As for the US soybean crop, 50% of the crop is rated good to excellent, down from 52% the previous week. However, the harvest is progressing well, with 12% of the area harvested, up from just 7% at the same stage last year. It is also higher than the five-year average of 11%. Finally, winter wheat plantings are falling behind last year with 26% of the area planted, down from 30% at the same stage last year and also lower than the five-year average of 29%.
BRL: Positive Outlook Amid Fiscal Focus and Successful ESG Offering

India Anticipates 8% YoY Drop in Sugar Production for 2023/24 Amid Adverse Weather Conditions

8 eightcap 8 eightcap 02.11.2023 12:34
Agriculture – India sugar production to fall 8% YoY in 2023/24 The first advance estimates from the Indian Sugar Mills Association (ISMA) show that gross sugar production (including sugar diverted for ethanol production) in India could fall to around 33.7mt in 2023/24 compared to around 36.6mt in 2022/23 as adverse weather was seen impacting yields. The total acreage under sugarcane is expected to be around 5.7m hectares in 2023/24. Sugar allocation for ethanol production was around 4.1mt for last season and a similar allocation this year would keep net sugar production at around 29.6mt. While net sugar production is sufficient to meet the domestic demand of around 27.9mt, sugar exports from the country could fall significantly in the current season. Ukraine’s Agriculture Ministry reported that the Ukrainian winter grains plantations rose to 4.2m hectares as of 31 October, in line with last year’s plantation. This includes winter wheat crop plantings rising by 6% YoY to 3.7m hectares for the above-mentioned period. Weekly data from the European Commission shows that soft wheat exports for the season so far fell 24% YoY to 9.6mt as of 27 October, down from 12.6mt reported in a similar period a year ago. The major destinations for these shipments were Morocco, Nigeria, and Algeria. Meanwhile, the nation's corn imports fell 41% YoY to 5.6mt in the season so far.
Artifex Mundi's Positive Trajectory: Record Margins, EBITDA Projections, and Growth Outlook for 2024

BDM Q3'23 Report: Revenue Decline and Increased Operating Expenses Raise Concern

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 23.11.2023 15:54
Last recommendation BDM: BUY with target price 6,7 PLN/share (2023/09/13) LINK Decrease in revenue with increased cost dynamics – negative BCG segment In line with our expectations, sales of the Onko BCG vaccine declined significantly in Q3'23. However, we expect outstanding contract deliveries to be made by the end of the year, as indicated by increased inventory levels. The largest of these are deliveries to the National Health Service (52,000 ampoules in H2'23) and Ukraine (650,000 ampoules). Onko BCG sales amounted to PLN 2.4m, a level similar to Q1'23 (in line with forecasts). Traditional segment Sales of other medicines were in line with our expectations. The decline in Distreptaza revenue in our view is due to a strong Q2'23 - historically a strong quarter was followed by a decline in sales. In Q3'23, supplies of Lakcid were still on hold due to ongoing negotiations for a new contract with Polpharma. We expect these to be completed by the end of the year and regular sales to return. The gross margin on sales surprised us positively, but the rest of the report extinguishes the optimism. The biggest negative surprise was an increase in general and administrative expenses (+56% y/y), which amounted to PLN 5.4m vs. our PLN 4.1m forecast. In line with our expectations, other operating expenses increased by PLN 1.0m relative to the previous two quarters. In our view, this is a result of maintaining a reduced production of probiotic with no sales. This led to an operating loss of PLN -2.9m and a net loss of PLN -2.4m. BDM's comment: We view Q3'23 results negatively. A very strong decline in revenues combined with increased dynamics of operating expenses translated into an operating and net loss. According to the company's report, the remaining deliveries that were scheduled for H2'23 should be completed by the end of the year, so we expect much better results in Q4'23. A threat to the annual forecasts included in the last recommendation is the increase in operating expenses. If their level continues in the next period, it is possible that the company will not deliver the expected results.  
Shift in Central Bank Sentiment: Czech National Bank Hints at a 50bp Rate Cut, Impact on CZK Expected

The Commodities Feed: Oil Surges Amid Escalating Tensions

ING Economics ING Economics 25.01.2024 13:03
The Commodities Feed: Oil pushes higher on rising tensions Oil extended its upward rally this morning amid continuing tensions in the Middle East. Reports of drone attacks by Ukraine against facilities on the Baltic coast – a key oil export route for Russia, has further supported the oil market.   Energy: Brent holds above US$80/bbl The oil market continued to rally this morning with ICE Brent trading around US$80.4/bbl as of the time of writing. The heightened geopolitical tensions have continued to provide support to the oil market with the recent reports of more airstrikes by the US and UK against the Houthis in Yemen. Meanwhile, drone strikes by Ukraine have shut down a Novatek PJSC gas-condensate terminal on the Baltic coast over the weekend, raising concerns for the oil exports from Russia’s western ports.   North Dakota’s pipeline authority estimates that oil production in the region was down around 250-300Mbbl/d as of 22 January due to the operational challenges amid the cold snap. The estimates have slightly improved from Friday’s estimate of being down around 350-400Mbbl/d as the weather has improved. The extreme cold weather in the US has also impacted refining operations in the country with around 15% of refining capacity in the Gulf Coast region reported to be offline as of last Friday. Libya could resume its oil exports and production from its largest oil field which has been shut for about three weeks. The National Oil Corp. said that oil output at Sahara fields will restart as the force majeure is lifted. The restart of the operations came after the local governments agreed to meet most of the demands from protestors. Crude oil production at the oil field stood at around 270Mbbls/d earlier.

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