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Monday 18th 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 18th October. Stocks moved higher, Bond yields eased, Bitcoin is bouncing, Sterling is rallying, oil remains sticky, Our Empires of the Cloud Fund rallied despite Facebook's fall ...
Topline view, "Cash is Trash, (Jamie Dimon), Bonds are Garbage ( Bill Gross), Equities Are Overvalued (Everyman), Bitcoin is worthless (Jamie Dimon)" ... Be careful out there ...
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| | Markets closed up +1.98% ...
Our index basket closed up this week almost 2.0%. A strong rally across the board with some weakness in mainland China. In the US, Stocks moved higher led by Nasdaq up over 2%, the Dow and SPX followed closely.
In Europe, markets moved higher in Germany and France, FTSE the laggard up just under 2% as Sterling strengthened.
In Asia, the Nikkei surged, recovering last week's losses. Hang Seng was up 2%, Shanghai slipped slightly. India continues to attract. The BSE closed up 2% to close above the 61,000 level.
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| | Bond Market Sentinel ... UK Ten Year Yield 1.56 ...
US ten year bond yields eased four basis points, markets overwhelmed by recent heady moves. The UK followed with ten year gilts closing down four points to 1.56. Little credibility attached to a possible base rate rise before Christmas.
In Japan ten year bond yields were down to 0.08. European bond rates were down at -0.17. The only way for yields is up, with an inherent capital loss in the process.
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| | Exchange Rates ... Sterling up $1.3683 ...
Sterling closed up against the dollar at $1.3683 from 1.3622 and up against the Euro at €1.806. The cross rate Euro Dollar moved slightly higher at $1.1574.
The Pound is trading at $1.3727 this morning against the Dollar, up sightly against the Euro. Markets price in a one in four chance of a rate rise before the end of the year. This week, MPC member Silvana Tenreyro explained why this is unlikely to happen anytime soon.
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| | Empires of the Cloud Trade up +1.5%.
Our Empires of the Cloud Fund traded up 1.5% this week. Microsoft and Amazon leading the way, Facebook slipped -1.6% as sentiment moves away from the Social Media Giant.
Our valuation index suggests a 12% over reach. A combined market cap of $9.2 trillion and an average PE of 39 suggests a period of consolidation should follow at best. Our contrarian call for Alibaba still looks good. Closing at $168 the stock is up 20% from the October low. We expect a modest pull back before a further push.
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| | Crazy week for Bitcoin ... Up 11.0% ...
Baffling week for Bitcoin fans. It remains the traders' instrument of choice. The crypto moved up 11% pushing through the $60,000 dollar level to close at $60,861. The test of $62,000 a little too much mid week. The sell of back towards $50,000 the logical call, let's see what happens. Don't bet on it! and don't short it!
Our crypto wallet didn't share the excitement. The wallet moved up just 1.6% Ethereum, Dogecoin and Ripple moving south. Litecoin enjoyed a recovery from an early week sell off.
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| | Oil Prices Moving Higher ... $84.68 ...
Oil
prices Brent Crude closed up at $84.68 last week. Trading at $85.69 this morning, oil continues to trade higher. Gas prices are easing back as Putin promises to ease the pain in the West.
US oil prices WTI trade at $83.76 as we press send. Biden is calling the frackers back to work. The US oil rig count jumped to 445 last week. We expect a pull below $80 dollars and soon, $75.00 to $80.00 may be the range for the Brent Crude Autumn trade.
Traders will push higher but OPEC is still expected to open the valves to relieve the pressure, US oil rigs will increase the count ... Putin will ease 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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