Macro: Sandcastle economics
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Morning Brew November 5 2021
Erik Schafhauser
Senior Relationship Manager
Summary: Central Banks still can surprise
Good Morning.
The BoE surprised markets yesterday with no action – a hike was priced in with 60% probability and the GBP lost more than 1.5 % against the USD to trade below 1.35. Money markets had also priced in a second hike before year-end now this to February. The BoEs Governor Andrew Bailey stated the Bank had never indicated it would act at a particular meeting.
In a further central bank surprise, the Czech central bank hiked rates by 1.25% only a day after the Polish central bank was more hawkish than expected.
Today the Non farm Payroll will be closely watched, as Jerome Powell is linking his policy strongly to the labor market. The expectation is at 450k, the unemployment rate at 4.7% and average earnings 4.9%.
Dax is trading at the top of the broader range again and needs to break above 16070 for new upside potential.The Vix Index found some support in the 15 area, currently at 15.44
Gold and Silver could recover quite strongly yesterday to 1797 and 23.89, this is despite a rising USD Index, currently 94.33. Bitcoin is lacking direction at 62.300. A break to the upside would require new highs above 67..250, support is in the 60.000 area.
Nvidia could gain more than 12% after a positive analyst comment triggered a buying spree. Wells Fargo raised the price target to 320. Qualcomm shares also jumped more than 12%
Moderna dropped 18% on delivery shortfalls.
Kaisa Group Holdings Ltd and three of its units had their shares suspended from trading on Friday, a day after an affiliate missed a payment to onshore investors as China's snowballing property debt crisis
Honda cuts profit outlook by 15% due to the chip shortage, Nintendo also stated the global chip shortage was forcing the company to reduce the sales outlook
Todays agenda is dominated by the US labor data at 13:30 and earnings by Alibaba and Enbridge Inc, over the weekend we are expecting Chinese Trade data as well as Berkshire Hathaway earnings, I will travel Monday and return Tuesday.
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