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Monday 11th October 2021
Hi Friend,
TSE Monday Morning Markets ...
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| | The Saturday Economist Monday Morning Markets ...
This is our Monday Morning Markets Update for the 11th October. US stocks remain over valued, fair value in equities lies elsewhere ... Bond yields are rising, Bitcoin is bouncing, Sterling is rallying ...
"Cash is Trash, Bonds are Garbage, Dollar Equities Are Overvalued" ... Be careful out there ...
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| | Markets closed level +0.55% ...
Our index basket closed level this week up just 0.55%. Is the fizz leaving the markets? In the US, the Dow closed up 1.2% to close at 34,746. Little excitement in the Nasdaq and SPX. Our overvaluation index strikes 11% for Uncle Sam's stocks.
In Europe, markets were little changed, the FTSE consolidating above 7,000. Fair value in Europe, markets were little changed.
In Asia, the Nikkei fell 2.5%. The Hang Seng bounced. Shanghai traded up slightly as excitement returned to the Bombay Stock exchange up over 2%. Is the money really leaving China? Both Japan and India appear to be significantly overvalued.
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| | Bond Market Sentinel ... UK Ten Year Yield 1.15 ...
US ten year bond yields moved higher again this week, closing at 1.60 from 1.48. UK bond yields moved higher to 1.15 from 1.00. Further pressure will push yields higher and capital prices lower as talk of early rate rises continue.
In Japan ten year bond yields were up to 0.09. European bond rates were up at -0.15. The only way for yields is up, with an inherent capital loss in the process.
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| | Exchange Rates ... Sterling up $1.3622 ...
Sterling closed up against the dollar at $1.3622 and up against the Euro at €1.1783. The cross rate Euro Dollar moved lower at $1.1543.
The Pound is trading at $1.329 this morning, up slightly against the Dollar and unchanged against the Euro. Strong talk from Michael Saunders at the MPC suggests rates may rise earlier than expected. Once a hawk ... always a hawk ...
Markets price in a one in four chance of a rate rise before the end of he year. Another delivery that may fall short for Christmas ....
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| | Empires of the Cloud Trade Flat +0.2%.
Our Empires of the Cloud Fund traded pretty flat this week. The "AI" Five closed up just 0.2%. Microsoft and Google up 2% plus. Facebook was down 3%.
The average over valuation we place at 10.6% with further correction possible. Look to the East and Alibaba for a contrarian play we said last week. Alibaba jumped 12% in the call ...
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| | Crazy week for Crypto ... Up 8.5% ...
Crazy week for Crypto fans. Our crypto wallet moved up 8.5% led by Bitcoin up over 15% closing at $54,818. The test of $40,000 will have to wait for now. Dogecoin and Ripple enjoyed the rally. Ethereum missing out on the fun.
The Crypto club was relieved when Fed Chair, Jerome Powell said he had no intentions of banning Bitcoin last week. This week, AMC announced it would accept Bitcoin for cinema admissions ... strange world this ... Is it true James Bond died at the end of the movie?
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| | Oil Prices Moving Higher ...
Oil
prices Brent Crude closed up at $82.54 last week. Trading at $84.10 this morning, both oil and gas prices are moving higher again.
We had expected oil to trade between $65 - $70 in the
second half as the long bets unwind. The current pattern will upset our inflation outlook.
The Bank expects inflation to hit 4% plus in the final quarter but the risk is to the upside ... $75.00 to $80.00 may be the range for the Brent Crude Autumn trade maintaining the pressure on input costs.
Traders will push higher but OPEC is still expected to open the valves to relieve the pressure ... Putin may ease the push for gas prices as Nord Stream 2 is expected to come on stream ...
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| That's all for this week's Monday Morning Markets have a great week ahead ...
JKA
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© 2021 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.
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