S&P 4682.85 +0.72%
Dow 36100.31 +0.50%
Nikkei 29776.80 +0.56%
Hang Seng 25 390.91 +0.25%
Dax 16 090.50 -0.02%
FTSE 7358.58% +0.15%
Corporate News:
Beijing stock exchange commenced trading today. with 81 companies listing on the bourse. (Lets see what this means for HK volumes!)
European stocks getting close to ATH
Sunac raised $953mm in Asian property news (placed $653mm in 1918 HK, trading at 15.36 vs placement 15.18) and $300mm in 1516 HK (broken now trading 14.16 vbs 14.75)
BBVA bids for Garanti (Turkey’s biggest bank) to acquire remaining stake it does not already own.
Serco upgrades its FY forecasts as C-10 and immigration work remain strong.
Shell ditches dual shareholder structure (tilting London vs Amsterdam)
Watching consolidation in the race for space and communications;
Macro data:
Coronovirus stories growing in Europe (and UK), anecdotally, UK schools are not optimistic in remaining open through Christmas with the odds on some form of lockdown growing.
University of Michigan consumer sentiment fell to 66.8 the lower since 2011.
WSJ reporting that House Speaker has enough votes to pass the “build back better” package.
Japanese Q3 GDP fell 3% (ann) much worse than expected.
Chinese numbers better than expected with retail sales +4.9% vs 3.7% 9yoy), and Industrial production +3.5% vs (3.1%)
COP26 appears to have been a damp squib, although given the low expectations in some areas there is celebration that anything got agreed.
Money Supply grew 7.6% over the past 3 months, while down 18% since pay it has remained stable for the last few months. $442.26bn of monetary expansion (405 from QE and 103.7 from TGA). MStrat report: for every $15bn in tightening we can expect to see annualised monetary growth reduced by nearly 75bpts.
Lock downs moving to amber across Europe, which would add complexity to any EU road to normalisation and put caps on the growth story for 2021.
Inflation targets (GS) for 2021 4.4% vs Fed’s 3.7% Yoy. (Core PCE)
2 hikes priced for 2022 (July and November) — with 2 every year after that.
US GDP Q3 rose 2% qoq down from 6.7% in Q2. Annualised rate for 1st 9m of the year is 4.98% down from 5.82% (in rolling 9m in June)
Follow the money, with energy prices rising, Euros are being sent to Russia and the Middle East, who are unlikely to be reinvesting in negative yielding EU debt, which might explain the disconnect between the USD and EU (dollars from the east coast conversely flow to Texas)
Commodities:
Theme remains under investment in capex over many years versus growing demand across the complex (see note on EV demand vs current OEM)
Temperature remains wild card in short term gas/heating prices.
China set onshore price cap, below market price.
Iron ore and coal headwinds due to China are close to 50% lower, rebar 25%
OIl, copper, ally — down 5–10% (note the varying responses)
Gold: watch $1850 as a level (large rotation out of ETF’s recently implying big buying in physical or OTC to support)
Notes:
Lots of chatter about 60:40 as an investment model breaking down, this follows on from the risk parity discussion we had earlier this year. (based upon correlation between equities and bonds)
Volatility is the topic of conversation, the bond market
Global Rate Watch.
UK looks set for a 15bps hike in December.
ECB borrowing -100bps due to move to -50bps in June 2022.
Conditions: [not yet met]
- ECB must see inflation reaching 2% of its 3 year projection horizon
- ECB must see inflation remaining 2% through the 3rd year of its projection period
- ECB wants to see enough realised core inflation to be sure inflation will stabilise at 2% over the medium term.
Australia has joined Canada in tightening; moving away from bond targeting, with the 04/24 Aussie Government debt moving 0.7% (target had previously been 0.1%)
RBZ + Norway + South Korea
Covid Tracker:
Biggest Movers in the watchlist.
Please see latest movers in the Upside-index and performance of the Upside-stacks
