TOKYO :The BoJ will review the side-effects of its monetary easing at next week's policy meetings and may take additional steps to correct distortions in the yield curve, the Yomiuri newspaper reported on Thursday
Inflation crisis poses greatest near-term global threat, Davos survey warns >>> ok so we have definitely peaked on inflation now...in fact, US inflation may have dropped below zero in December MoM (thread below). If it did, would be first negative print since 2020, so lets see later on today now!..markets expect 6.5% and 5.7% core U.S CPI, above 6.6% and markets (Algo's) wont be happy (buy the dip probably, as trend is softer)
U.S NatGas prices free fall - chart below
December’s -14.9% YoY drop for used car prices per at the Manheim/US, this was the worst/biggest ever drop in the data
Fed economists: Home price gains over the last 2 years could have produced a wealth effect for homeowners that drove one third of the increase in the CPI (non-shelter prices) >>> Fed's Collins (Boston), who has been relatively dovish, explicitly goes for 25bp rate hike at the February FOMC meeting. Daly and Bostic signalled another downshift but Collins more explicitly expressed her preference for 25bp by saying “ I’d lean at this stage to 25, but it’s very data-dependent...”
Morgan Stanley is Bullish on Chinese Assets Now: “We believe the market is under-appreciating the far-reaching ramifications of reopening and the possibility that a robust cyclical recovery can occur despite lingering structural headwinds.", here they come now!
SPX500 : Momentum has flipped bullish in the market as buyers stepped in at a crucial level Next big fight is the macro downtrend line, see thread below - confirmation or not this afternoon, but there are plenty of signs that many inflation data pointing lower, quite clearly, and beware, everyone has same tech levels on their screens >> ''mind the gap''
US companies spent over $1 trillion buying back their own shares last year as they shrugged off fears of a recession-fueled crash
“California Deficits Roar Back as Stock Rout Hits Taxes” The stock market drives marginal US consumption, GDP, & tax receipts
Why Can't Tesla Drive US Oil Demand Lower? Plastics...US consumption of fossil fuels is heading toward records even amid the electric-car boom
A barrel of Brent oil could reach $110 by the third quarter if China and other Asian economies fully reopen from Covid restrictions, Goldman's Jeff Currie
China outbound flight bookings at 15% of pre-pandemic levels >> plenty of pent-up demand there..Chinese bank deposits exceed loans by $6.5tn as caution prevails
Gap is largest since 1997, with spending sinking under cloudy economic forecasts
South Korea is cutting its renewable electricity target by 2030 (the previous target was ~30% and the new one is 21%) while boosting its target for nuclear electricity generation (~33% vs ~24%). Coal and LNG down
Markets :
German bond curve – 2s/10s yield spread – inverts most in 30yrs at -40bps, recession bells ringing (note GS said, NO recession in Europe this year...who's going to be right!!?)
Energy prices dropping like a stone - thank you mild weather/winter
SPX500 plenty of resistance around 4K (chart)and huge short-term upside strikes were bought last few days (gamme to sell into big algo jump?).., with still 4050/4150 bigger resistance, downside 3750/3800 the base. CHINA HXC higher as covid restriction easing clearly, Europe outperformed (thank you mild winter and low energy prices, no major crisis as market talked about 6months ago..)
EURCHF finally back above PAR, 1.02-1.04 area possible, no crisis in Europe etc. GBPCHF too, strikes might/should be partly avoided eventually and EU/UK also making some positive noise on protocol deal. USDJPY could well come under further pressure on BoJ review and specifically if U.S inflation softer..would not be shocked to see it back to 110-120 range this year...
Crude slightly higher/off lows - Russian oil revenues falling because of price cap -U.S. official
when the Davos WEF gets involved, it's often already over!!
US Companies Spent $1 Trillion on Buybacks Despite Recession Warning (businessinsider.com) and often adding debt to do the buybacks.. !!
Tesla shares: How Musk made history with the biggest loss of personal wealth ever recorded (cityam.com) astonishing really
SPX500, same old chart, clearly above 4K sustained move will have the shorts scratching their heads. DAX has moved up 1000points in 1month, back to 15K already, pretty amazing really..
GBPCHF (needs +ve UK news too...) and EURCHF can have a 2-3-5pct run (europe no crisis etc)
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