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Morning Brew January 12 2024
Erik Schafhauser
Senior Relationship Manager
Résumé: Watch the Middle East and sentiment
Good Morning
The US and the UK launched strikes against Houthi military targets in Yemen in response to the attacks on ships in the Red Sea.
The Oil, Gold and Silver rise after being under pressure yesterday on the higher CPI reading. Curiously rate traders are more confident now that we will see six cuts this year than they were yesterday. While Futures indicated 136 basis points of rate cuts, it is now 151.
After the release, the USD Gained strength, yields rose and equities came under pressure but the moves were largely reversed – Indexes need to recover a little still. . The USD Index is at 102.27, 10 year Yields are at 3.98 and the US500 4773.
EURUSD is back near the 1.10 at 1.0970, GBPUSD 1.2767 and USDJPY 145.22, Gold and Silver 2035 and 22.85. Kim pointed out the technichals on precious metals yesterday: Silver tested Support at 22.50.
The Bitcoin ETF were launched yesterday and achieved a volume of more than USD 4 Billion, they failed to pull the price of the crypto currency substantially higher, it is now 46000.
In an arcticle on the US Bitcoin ETF, Peter points out that this changes little in the offering for private investors in Europe
“While the SEC approval is a big thing in the US, ETFs holding spot Bitcoin and other cryptocurrencies have been available to investors outside the US for a long time. For European investors the launch of US ETFs on spot Bitcoin mean little as these ETFs will not be available for retail investors in the EU as these ETFs will not be compliant with UCITS regulation. As such, the new spot Bitcoin ETFs will only be available to professional investors in Europe.”
In Europe we have had ETN and such instruments available for a ling time and they are widely used (eg. ABTC:xswx). Where an impact is
Koen took a look at how to trade Coinbase via Options: “The SEC's nod to Bitcoin spot ETFs opens new trading prospects in the US, indirectly benefiting European options traders by likely enhancing liquidity and enabling more effective Bitcoin options trading. Coinbase's role as custodian for several ETFs and its stock's recent price dip post-announcement brings diverse options strategies into focus for traders eyeing the cryptocurrency's volatility. As the market adapts, these strategies offer avenues for risk management and profit across varying market sentiments.”
China reported higher exports but deflation remains, it is widely expected to cut rates and boost liquidity maybe as early as Monday. Exports rose by 2.3% versus 1.7% expected but the PPI was -2.7% and the CPI -0.3% respectively
Tesla is the first prominent victim of the disruptions in the Red Sea, it is forced to halt production in the Berlin Gigafactory for 2 weeks from the end of January. Tesla trade4d right down to it`s support.
This morning the UK GDP came basically in line with expectations and the only larger announcement is the US PPI Machine Manufacturing but we are kicking off the earnings season and Bank stocks are worth watching. At 16:00 CET Neel Kashkari will be on the wires.
Be extremely careful of any fallout from the middle east, that could prove to be a powderkegg and I foresee continued massive nervousness for economic as well as geopolitical reasons.
Events:
- Data China CPI, PPI, UK GDP,
Earnings: Citi, Bank of America, Blackrock, BNY Mellon, JPMorgan Chase, Delta, Wells Fargo,.