What a day in Ukraine y'day with the Biden visit to Kyiv - perhaps the most consequential POTUS visit in post Soviet space since Bush’s visit to Georgia in 2005. The three-dimensional diplomatic chess game China can't win: bashing the US, wooing Europe and standing by Russia. Taiwan is bolstering military exchanges with U.S., President Tsai says. Wang Yi visiting Russia today
BofA "It's the most aggressive Fed tightening in decades and U.S. retail sales are at all-time highs; unemployment at 43-year lows; payrolls up over 500k in January and CPI/PPI inflation reaccelerating," "That's a Fed mission very much unaccomplished."
French S&P Global Services PMI Feb P: 52.8 (est 49.8; prev 49.4) - 7months highs.. - no sign of recession there either. Auto sales in Europe rise for a sixth month, driven by robust growth in Spain and Italy. Bigger divergence between services and manufacturing, as in most countries..
RBA minutes : pausing in Feb not an option, even 50bps was discussed
NI Brexit deal may trigger resignations, Sunak told. PM warned not to undermine Northern Ireland-Times
Portugal's government announces radical plans to tackle housing crisis. Includes forcing all unoccupied homes to be put on market at affordable prices where it will act as estate agent. All rental prices will be capped and 'tourist apartments' prohibited
Switzerland’s financial regulator is reviewing comments that Credit Suisse chairman made in December on outflows from the company having stabilized, on the basis that they may have been misleading, Reuters reports
Venice canals start to run dry as low tide and lack of rain hit. Gondolas unable to navigate some of its famous canals as Italy faces prospect of another drought
Bank of Japan Governor Haruhiko Kuroda said on Tuesday wage growth will likely accelerate as companies increase pay to compensate households for the higher cost of living, and cope with an intensifying labour shortage
Markets :
Strong EZ PMI will keep Lagarde, Schnabel & Co hawkish, while as BofA mentions above, little signs of U.S economy showing signs of slowdown either, should keep markets guessing about 5.5 or even 6% - at a stretch
USD remains on firm side, Ueda/BoJ on 24th Feb a key moment, Kuroda's last meeting in March too. Bonds should continue to struggle in the face of strong macro data
Metals on the backfoot in the face of higher yields/strong usd
SPX500 4150 on topside, maybe revisit 3900 area in coming weeks
MS:.. Recent economic data suggest the economy might be able to dodge a recession, but that has also taken the possibility of a Federal Reserve pivot off the table. That’s left rates higher across the curve and stocks more expensive than at any time since 2007 by the measure of equity risk premium, they added.
Equity risk premium has entered a level known as the “death zone”, making risk-reward very poor especially as the Fed is far from ending its monetary tightening and earnings expectations remain 10% to 20% too high, Wilson said. “It’s time to head back to base camp before the next guide down in earnings,” he wrote in a note on Monday.
well worth a read - The message from the Biden administration is absolutely clear - we stand firmly behind Ukraine, to the end, and it’s inevitable victory over Russia. If Biden can visit Kyiv then there are few limits to US support for Ukraine - fighter jets are a real possibility. There are other views clearly..China can't stand on both sides as they seem to right now..
The three-dimensional diplomatic chess game China can't win: bashing the US, wooing Europe and standing by Russia
Summary: Bubble stocks are up more than 20% this year in a sign of the comeback of reckless gambling behaviour by retail investors. This has been across massive speculation in zero-days-to-expiry options, ridiculous moves in AI-related stocks, and cryptocurrencies. It is all based on a blind spot towards the accelerating geopolitical risks and a naive hope of inflation coming back to the old past. The Munich Security Conference over the weekend has highlighted the growing geopolitical risks and this week is about appreciating these risks. In today's equity note we once again highlight our defence basket which has by far been the best performing basket over the past year.
It is the US, not China, that has been pouring weapons into the battlefield in Ukraine. The US is in no position to tell China what to do. China will never accept US finger-pointing or coercion on China-Russia relations
The 1000+ global companies who voluntarily chose to exit Russia in an unprecedented.
These voluntary business exits of companies with in-country revenues equivalent to 35% of Russia’s GDP
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