Saxo Market Call

The great twin tightening is barreling down on us

Today's slide deck: https://bit.ly/3DRPTpt   -

Today we look at the continued pressure on risk sentiment after the FOMC minutes show the Fed discussing a rapid pace of quantitative tightening that is set to phase in after the May 4 FOMC meeting and, together with US treasury net issuance, will mean an annual run rate of $2-2.5 trillion in liquidity tightening for financial markets. Financial conditions have been responding accordingly, a dangerous development for equity markets if the tightening continues apace. The US dollar has jumped back higher over the last couple of sessions against riskier currencies and the oil market may be responding to that as well as to demand reductions from Chinese lockdowns and an incoming flood of supply from further reserve releases. Copper, Facebook and more on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX.

Intro and outro music by AShamaluevMusic

Brainard threatens rapid QT starting in May

Today's slide deck: https://bit.ly/3LBaW2m   -

Today we look at the US equity market advance getting checked yesterday by a hawkish broadside from Fed Vice Chair Lael Brainard, who invoked Paul Volcker in a speech on the unequal impacts of inflation on US households and the need to bring inflation down to the 2% area, as she guided for a May kick-off to quantitative tightening that will procced "considerably more rapidly" than in the 2017-19 tightening. (This on top of the market already pricing in a 50 basis point rate hike). US treasury yields, financial conditions, stock sectors in focus and more are also on today's pod, which features Peter Garnry on equities and John J. Hardy hosting and on FX.

Intro and outro music by AShamaluevMusic

How high can the froth take us?

Today's slide deck: https://bit.ly/3DDwhW9   -

Today we look at a frothy US equity market as traders react to Elon Musk's move to acquire a significant portion of Twitter, Cathie Wood and the absurd idea of $12 oil, the irony of easing market conditions when key financial conditions are rapidly tightening and are set to tighten further in the months ahead. We also look at falling container rates, the latest on the crude oil and wheat outlook, what is moving FX, including the Australian dollar, nominal equity market returns versus real returns and more. Today's pod features Peter Garnry on equities, Ole Hansen on equities and John J. Hardy hosting and on FX.

Intro and outro music by AShamaluevMusic

Quiet before the storm as commodity pressures mount

Today's slide deck: https://bit.ly/3DzlAUx   -

Today we look at equities staging a rebound on the back of Friday's strong economic data in the US and Russian retreat across the entire Northern front line in the war in Ukraine setting the war up for the "battle of Donbass" over the next month. The unfolding food and energy crisis is becoming tough for frontier economies and Sri Lanka is right now the canary in the coal mine with food shortages and a collapsing equity market. We also talk about the risks to Europe's energy markets as Russia continues to demand to be paid in RUB for oil and gas breaching contracts with European importers. Today's pod features Peter Garnry on equities and Ole Hansen on commodities.

Intro and outro music by AShamaluevMusic

Europe under (too much?) pressure. Understanding the ruble exchange rate.

Today's slide deck: https://bit.ly/38cTvGN   -

Today we look at the euro brushed back lower on dovish ECB talk and Putin's demands for sanctioning countries to "pay for gas in rubles". Also, while the outlook is dim for EU economic growth, at what point are relative European equity valuations simply too cheap to ignore? Elsewhere, the US tries to impress the oil market with a massive reserve release that may be too massive to physically get to market at the intended pace, we are concerned that not enough wheat will be planted this year. Today's pod features Peter Garnry on equities, Ole Hansen on equities and John J. Hardy hosting and on FX.

Intro and outro music by AShamaluevMusic

Fed credibility on the line. Financial conditions are both tight and loose.

Today's slide deck: https://bit.ly/3JYPpA4   - 

Today we look at Fed credibility on the line in coming days with the Fed's preferred inflation measure, the PCE Deflator and Core levels for February is set for release later today and the March payrolls and earnings data is up tomorrow. The backdrop of financial conditions is a mixed bag, with market measures showing easing and a lack of Fed credibility while higher rates point to a significant tightening. Will the Fed respond to market conditions? We also look at EU yields, Russian default risks, US possibly set to release strategic reserves to push oil prices lower ahead of today's OPEC+ meeting and the most important planting report in years from the USDA later today. Today's pod features Peter Garnry on equities, Althea Spinozzi on fixed income, Ole Hansen on commodities and John J. Hardy hosting and on FX.

Intro and outro music by AShamaluevMusic

Last chance saloon for Nasdaq 100 bears?

Today's slide deck: https://bit.ly/3LvaJ0F   -

Today we look at the US Nasdaq 100 index trading up against the "final" major resistance level as markets enthused yesterday on supposedly hopeful developments in Ukraine-Russia peace talks. We note that the commodity markets are the most important to watch for the reaction function, with no real change to the status quo after yesterday's volatility. Also, we note quarter-end effects possibly already in full swing here, key equity stories, including Apple eyeing all time highs on its hardware subscription plans and much more. Today's pod features Peter Garnry on equities and John J. Hardy hosting and on FX.

Intro and outro music by AShamaluevMusic

The Fed vs. Market showdown is now fully engaged

Today's slide deck: https://bit.ly/3qJiZlF   -

Today we look at animal spirits continuing their comeback, with signs of aggressive risk-taking in the most speculative corners of the market that many had written off until this latest surge. As rising yields are not yet pressuring real rates, the implications of rising nominal yields and quickly flattening yield curves are more muted than in previous cycles. Clearly, the Fed has its work cut out for if it wants to avoid a raging new speculative bubble, and it's a long wait until the May 4 FOMC meeting. Today's pod features Peter Garnry on equities, Althea Spinozzi on fixed income and John J. Hardy hosting and on FX.

Intro and outro music by AShamaluevMusic