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Monday 8th 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 8th November. US Stocks moved higher, European stocks were also up, Hang Seng and Shanghai dropped back. Bitcoin ended the week broadly unchanged. Bond yields moved lower, Sterling slumped, oil eased to $82 dollars, our Empires of the Cloud Fund was up 2.5% in the week.
Currency and bond markets reacted to the MPC inaction. Sterling moved lower against the dollar and the Euro. Coming soon our new series on "OK Boomer" This week a cautionary tale on Shiba, a taste of more to come from the "OK Boomer stories! We explain the language of the "Ape traders" and explain the mystery of NFTs.
Top line, "Cash is Trash, (Jamie Dimon), Bonds are Garbage ( Bill Gross), Equities Are Overvalued (Everyman), Bitcoin is worthless (Jamie Dimon), Most NFTs are junk (John Hargrave)" ...
Be careful out there ...
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| | Markets closed up +1.3% ... Overvaluation + 10.9%
Our index basket closed up this week 1.3%. U.S. stocks were up 2.0% led by a big Nasdaq move. European stocks were up 2%, FTSE once again the laggard with the French index in the lead.
In Asia, the Hang Seng again moved lower. Shanghai also traded lower, rallies in Nikkei and BSE pulled the Asian index higher.
Our over valuation index move to +10.9% for the basket as a whole. The American components leading the charge with a 19% over valuation rating. The Nasdaq trades 23% above bench. Our hedge funds are short, nursing a 6% loss in the process. The US stocks were excited by the Fed decision on tapering. Not sure why. The contrarian play suggests a switch to Shanghai, trading at par, offering great value to offset the regulatory risk.
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| | Bond Market Sentinel ... US Ten Year Yield 1.47 ...
US ten year bond yields eased 13 basis points to close at 1.47. In the UK markets ten year gilts closed down 18 points to close at 0.85. Traders were caught out by the Bank move last week. Not sure about the US, the Fed promised and delivered.
In Japan and Europe rates down a few points. Basing action completed in main markets. We expect a reversal of last week's losses. Next the test of 1.80 in the US and 1.25 in the UK? Big call! That may have to wait for the Spring of 2022.
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| | Exchange Rates ... Sterling at $1.3492 ...
Sterling closed against the dollar at $1.3492 from 1.3800 and against the Euro at €1.1686 from €1.1816. Forex traders expecting the rate rise covered long positions on Sterling. The close at $1.35 looks overdone in the short term but a fair bet into 2022.
The Pound is trading at $1.3491 this morning against the Dollar. 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 on the rally ...
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| | Empires of the Cloud up 2.5% ...
Our Empires of the Cloud Fund moved up 2.5% this week, led by Amazon and Facebook. Apple and Microsoft made modest gains. Google the laggard.
Our valuation index suggests a near 19% over reach. A combined market cap of $9.7 trillion and an average PE of 37 suggests a period of consolidation should follow at best. Our quick call for Alibaba is out of time. Closing at $158 the stock is down 4% in the week.
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| | Crypto Wallet up 1% ...
Sober week for Bitcoin fans. The lead crypto found support at $60,000 dollars just. This week Ethereum and Ripple were the stars in the pack. Dogecoin trading 7% lower, following last week's 13% gain..
Dogecoin the real laggard down 7%. Eyes on the next move for Bitcoin. The chart is hung, it's a punters trade, testing $65,500 this morning. Strap in tight. Coming soon is our new series on "OK Boomer" we track NFTs and the language of the "Ape" Retail Traders. Shiba Inu offers a sober tale of the vulnerability to market manip. Created and trading at 2 cents on the dollar in January, the whales jumped out at $80 dollars in October.
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| | Oil Brent Crude trades lower ... $82.67 ...
Oil
prices Brent Crude closed lower at $82.67 last week. Trading at $83.81 this morning, we expect prices to trend lower.
US oil prices WTI trade at $82.51 as we press send. The US oil rig count moved to 450 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. We are in good company. The EIA STEO expects $72 /b to be the average price through 2022.
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| | | | That's all for this week's Monday Morning Markets, hoped you enjoyed it. If so forward to a friend. They can Sign up Here
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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