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Monday 13th December 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 13th of December. Markets moved higher as cash moved in. FOMO overcame FOBIA. US markets made the strongest moves. Apple jumped 10%. Bond yields were lower. Sterling remained under pressure against Dollar strength.
Our Empires of the Cloud Fund was up. Our Crypto wallet was down. Oil prices rallied to close above $75 dollars Brent crude basis this morning. The Fed, MPC and ECB meet this week. Market sentiment will be tested. Should make for an interesting Friday Forward Guidance, our last of the year.
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 up 2.6% ... Overvaluation +9.7%
Our index basket closed up this week 2.6%%. US markets were on the move up 4%. European gains averaged almost 3% with French stocks leading the way.
In Asia gains were more muted. Hang Seng up 1% restored the index to parity and represents best value in the basket.
Last week we thought markets were looking for a reset, "Fear of Missing Out", yielding to "Fear of Being In Again". For the moment FOBIA, yielded to strong cash inflows. This week, central bankers meet to really test sentiment.
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| | Bond Market Sentinel ... US Ten Year Yield 1.46 ...
US ten year bond yields moved up 2 points to close at 1.46. In the UK ten year gilts closed down 7 points to close at 0.73. So much for fears of inflation in forward markets. The move a reaction to the absence of a UK rate rise this month.
In Japan rates were down slightly, euro rates moved down 5 points. Next the test of 1.80 in the US and 1.25 in the UK? That may have to wait for later in 2022.
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| | Exchange Rates ... Sterling down to $1.3206 ...
Sterling closed down against the dollar at $1.3206 from 1.3307 and down against the Euro at €1.1703 from €1.1757.
It was all about Sterling pressure. The Euro closed level against the dollar. We still think latest moves looks to be a consolidation from a downside move overdone. Markets may react to hawkish noise from the Bank of England and the Fed this week.
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| | Empires of the Cloud up 4.4% ...
Our Empires of the Cloud Fund was up 4.4% this week. All bar Facebook, were up. Apple the strongest mover up 11%. Morgan Stanley set a new price target of $200 dollars to push the stock. A market cap of $3 trillion dollars is close for the Cupertino charmer.
Our valuation index suggests a 22% over reach. A combined market cap of $10.1 trillion and an average PE of 38.0 suggests a period of consolidation should follow at best. Technically, Apple, Microsoft and Google look vulnerable to a 20% reset. FB / Amazon offer fairer value. |
| | Crypto Wallet up 2.8% ... A rally week for Crypto fans. Bitcoin closed down -2.5%. The overall wallet showed progress led by Ripple, Litecoin and Dogecoin.
Ethereum and Bitcoin look technically vulnerable. Bitcoin tested the $47,000 level mid week but failed to hold the $50,000 level twice in the seven day period. Ethereum look set for a 20% drop. $40,000 beckons for Bitcoin. The excitement is over for the rest of the wallet but dead cats do bounce when Apes jump in.
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| | Oil Brent Crude higher ... $74.83 ...
Oil
prices Brent Crude closed up at $74.83 last week. Brent crude trades at $75.29 this morning.
The US oil rig count moved up to 471. We expected the pull below $80 dollars to hold. $75.00 to $80.00 may be the range for the Brent Crude Winter trade. The EIA forecast of $72 dollar oil through 2022, doesn't look quite so optimistic at the moment but $75 Brent Crude through 2022 is our benchmark call.
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| | That's all for this week's Monday Morning Markets, have a great week ...
John
Friday Forward Guidance, The Saturday Economist, Monday Morning Markets
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© 2021 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.
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