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Monday 15th 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 15th November. US Stocks moved lower, European stocks were up, just, Hang Seng and Shanghai moved higher. Bitcoin ended the week up 5%. Bond yields rallied. Sterling moved lower, oil eased to $82 dollars, our Empires of the Cloud Fund was pretty flat.
Markets are talking once again about a rate rise next month. We now model in a rate rise to 1.00% by the end of next year. The move is expected to begin before Easter, not before Christmas!
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)" ... When it comes to understanding market moves, "Any explanation is better than none" (Nietzsche).
Be careful out there ...
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| | Markets closed up +0.42% ... Overvaluation +11.4%
Our index basket closed up this week 0.42%. U.S. stocks were down -0.5%, Dow and Nasdaq leading the reversal. European stocks were up 0.5%, FTSE closing at 7,348, best value in the European trio.
In Asia, Hang Seng and Shanghai moved higher, Nikkei was flat, Bombay enjoyed a 1% rally to close above the 60,000 level.
Our over valuation index move to +11.4% for the basket as a whole. The American components leading the charge with a 18.5% over rating. The Nasdaq trades 22% above bench. Shanghai the best value in our world series. Markets are braced for a sell off. Berkshire Hathaway is sitting on a $150 billion cash pile. Elon Musk dumped $700 billion of Tesla stock this week. The insider buy/sell ratio dropped to 25%, sellers are outpacing buyers almost 4-1.
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| | Bond Market Sentinel ... US Ten Year Yield 1.56 ...
US ten year bond yields moved up 9 points to close at 1.56. In the UK markets ten year gilts closed up 7 points to close at 0.92. Traders recovered positions following the MPC messages.
In Japan rates moved up 2 basis points, euro rates moved down.
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. Don't expect a rise in base rates before Christmas but we now model UK rates at 1.00% by the end of next year.
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| | Exchange Rates ... Sterling at $1.3392 ...
Sterling closed against the dollar at $1.3392 from 1.3492 and against the Euro at €1.1676 from €1.1686. The test of $1.34 continues, we expect a hold into next week.
The Pound is trading at $1.3422 this morning against the Dollar and €1.1727 against the Euro. $1.38 may be the extent of the Sterling rally. Love those dollars ... make the switch on the rally ... average in along the way ...
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| | Empires of the Cloud down -0.1% ...
Our Empires of the Cloud Fund was flat this week, down -0.1%. Apple the biggest loser down almost 1%. Not much excitement elsewhere.
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.
In the UK we like Polar Capital Technology and Blue Whale for a broader tech over view.
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Crypto Wallet up 6.4% ... Exciting week for Bitcoin fans. The lead crypto found support at $60,000 dollars and moved to $63,000 plus a near 5% rally. This week Litecoin was the star in the pack up 26%, accepting meme status, the rally may well get even more exciting.
Bitcoin trades tests $66,000 this morning. Litecoin is taking a breather. Charlie Munger Vice Chairman of Berkshiire Hathaway considers Bitcoin to be investor "rat poison". For traders and Apes, it offers superior win margins. FX trading offers such miserly returns.
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| | Oil Brent Crude trades lower ... $82.21 ...
Oil
prices Brent Crude closed lower at $82.21 last week. Trading at $81.01 this morning, we expect prices to trend lower.
US oil prices WTI trade at $79.79 as we press send. The US oil rig count moved to 454 last week. The cavalry is coming. 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 Winter trade. The EIA 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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