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Monday 1st November 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 1st November. US Stocks moved higher, European stocks were also up, Hang Seng dropped back. Bitcoin ended the week broadly unchanged. Bond yields moved lower, Sterling drifted, oil eased to $84 dollars, our Empires of the Cloud Fund was up 3% in the week.
Markets are focused on central bank meetings this week in the U.S. and the U.K. Analysts are convinced of a fifteen basis point move when the MPC meets. The Fed is expected to begin tapering. Should be an interesting few days.
Top line, "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 +0.1% ... Overvaluation + 9.5%
Our index basket closed up this week 0.1%. U.S. stocks were up 1.5% led by a big Nasdaq move. European stocks were up, FTSE the laggard with the French index in the lead.
In Asia, the Hang Seng reversed last week's 3% move. Shanghai traded lower with a big move down in the Bombay Stock Exchange.
Our over valuation index move to +9.5% for the index basket as a whole. The American components leading the charge with a 16% plus rating. Momentum trading carries the markets higher with great weight attached to Fed statements on tapering and any Bank of England move on rates.
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| | Bond Market Sentinel ... US Ten Year Yield 1.60 ...
US ten year bond yields eased five basis points to close at 1.60. In the UK markets ten year gilts closed down thirteen points to close at 1.03. Markets continue to speculate on the prospect of a UK rate rise this week. Not all are convinced!
In Japan and Europe rates were unchanged. Basing action completed in main markets, next the test of 1.80 in the US and 1.25 in the UK. Long way to go before the runways are cleared on Planet ZIRP ...
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| | Exchange Rates ... Sterling at $1.3800 ...
Sterling closed against the dollar at $1.3800 from 1.3821 and against the Euro at €1.1816 from €1.1867. The cross rate Euro Dollar moved down to $1.1597 from $1.1648. The Forex traders have their doubts about any rate rise this week..
The Pound is trading at $1.3650 this morning against the Dollar, down sightly against the Euro. As we said last week, $1.38 may be the extent of the Sterling rally. $1.40 the full stretch. Love those dollars ... make the switch ...
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| | Empires of the Cloud up 3% ...
Our Empires of the Cloud Fund moved up 3% this week, led by Microsoft and Google both up 7%. Not much movement in the rest of the set. Facebook (Meta) slipped as Apple and Amazon made small gains.
Our valuation index suggests a 16% over reach. A combined market cap of $9.6 trillion and an average PE of 35 suggests a period of consolidation should follow at best. Our quick call for Alibaba looks out of time. Closing at $165 the stock is down 7% in the week.
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| | Crypto Wallet up 3% ...
Big week for Bitcoin fans. The lead crypto found support at $60,000 dollars. This week Ethereum and Dogecoin were the stars in the pack. Dogecoin trading almost 13% higher, Ethereum trailing with a 5% gain!
Litecoin the real laggard down 2%. Ripple slightly off down 0.4%. Eyes on the next move for Bitcoin. The chart is hung, it's a punters trade, testing $82,000 this morning. Strap in tight ...
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| | Oil Brent Crude trades lower ... $84.43 ...
Oil
prices Brent Crude closed lower at $84.43 last week. Trading at $84.20 this morning, prices are trending lower.
US oil prices WTI trade at $83.77 as we press send. The US oil rig count moved to 444 last week. The rig count should be double the level for an $80 dollar trade, the WTI - Brent spread much higher.
We expect a pull below $80 dollars, $75.00 to $80.00 may be the range for the Brent Crude Autumn trade. $80 to $85 dollars the more pessimistic or perhaps more plausible scenario. Yep we got this one wrong and continue to do so ...
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| That's all for this week's Monday Morning Markets have a great week ahead ...
John
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© 2021 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.
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