This Week In Markets: 21st - 25th November 2022

Okay, hello and welcome back to the channel. And yeah, quick look ahead of what to expect in this week in global markets. And from a data perspective, pretty quiet actually because we do have a holiday-shortened week impacted by US Thanksgiving. So market closures on Thursday and early electronic closures in the US on Friday. Does mean then that Wednesday is probably the main calendar day for economic data. We get some housing figures, durable goods out of the US, as well as global flash PMIs for November coming out of Europe. Elsewhere, we're going to talk a little bit about China, a little bit of an idea of two steps forwards, one step back when it comes to their COVID-related rules, because renewed enforced lockdown seen overnight has weighed on Asian equities and could well impact the open here for European and US trade to get the week underway. Update on Fed speakers, what is going to be the size of the increment rate rise that we'll see in December, a couple of comments to get you up to speed on, and then also this, which is Elon Musk's tweet overnight. This is genuine stuff, this isn't me trying to be provocative here. Elon Musk trying to tease Trump back onto the platform after he reinstated the former president following a public poll that he did, which I'll cover as well. But let's get straight into this and talk about firstly what's been going on in China, where China saw its first COVID-related deaths in almost 6 months on Saturday, followed by another 2 on Sunday. The worsening outbreaks across the nation are stoking concerns then that authorities may again resort to harsher restrictions in order to minimize this death toll, even though they recently called for a loosening of quarantine and mass testing rules. So we've had a complete reversal then on this of what was happening in front— in terms of a market perception around this zero tolerance policy approach, and that has then weighed consequently on Asian equities overnight. This is a look at the Hang Seng, where Hong Kong stocks are set for their biggest loss since early November on COVID concerns. They were down about 3.5% at one point in overnight trade. And again, it does buck the trend of what we've seen from some large financial institutions, Morgan Stanley, BAML, Franklin Templeton Investments, as a growing list of strategists and money managers have all been saying that they're fairly bullish on the market on newfound optimism over China's economy, given the heavy losses that were seen in October and what was apparent a little bit of a softening of the rhetoric on the COVID approach from China. But they're kind of walking that back a bit. So something to just keep an eye on. And given that the fact that Monday session from a calendar point of view is fairly quiet, it could, well, impede a little bit of sentiment to get things underway this week. Other things then is Fed speak. The latest here has come from two members, Fed's Bostic and Fed's Collins. Bostic a non-voter, Collins a voter, so do keep that in mind for context. But Bostic said he favors slowing the pace of interest rate increases with no more than a 1 percentage point more worth of hikes to try to ensure the economy has a soft landing. Meanwhile, Collins, who is a voter, reiterated the view that options are open for the size of the December rate increase, including the possibility of 75 basis points. So still keeping that on the table. As far as markets are concerned, the current implied probability in the short end is reflective around a 78% probability and leaning of a 50 basis point rate rise at the moment, so around 20 2% for a larger size 75. In terms of Trump, yeah, what, what is going on? So basically Elon Musk conducted a public poll via his own Twitter account. It had well over 15 million Twitter users vote on it and it led in favor of reinstating Donald Trump, who's been banned, I think, since the last 2 years or so obviously, given the storming that happened on Capitol Hill, the vote was around 51.8% in favor of putting him back on the platform. Trump, at the time that this poll was open, was urging his followers on Truth Social to jump over to Twitter to vote to put him back on, but then followed up and said, I won't be returning to the platform because of all the terrible problems that Twitter is having at this moment in time. So a bit of a contradictory from, from Donald. He's— he obviously will have far greater reach on, on Twitter. You know, we're talking about tens of multiples of millions of followers comparative to the very small, isolated community that he has on his own platform. So essentially what he's got to play out here is his financial interest in his own Truth Social platform against his political ambitions. And I think that given the fact that he now last week has tabled he's running for his presidency in 2 years' time, coupled with the indirect payoff that you get then from just generally pursuing that avenue politically from a monetary gain, I think it's only a matter of time really before he starts tweeting again. I'd go as far as to say he probably will tweet this week, and hence the reason why the internet is just absolutely lit at the moment of these memes like Elon's own one about Donald getting a little bit teased about tapping back into the Twitter community. So we shall see. But as I said, from a calendar perspective for this week, today's pretty quiet. Tuesday likewise. Wednesday is really the main day in focus. We're looking at ongoing weakness in the housing market. Data in the US is probably the likely outcome. Durable goods orders should rise given firm Boeing aircraft orders. And then looking towards mainland Europe and the UK. PMIs for November are likely to re-emphasize the fact that more companies are seeing conditions worsen than improve at this present point in time. The latest sign, of course, that the recession is coming. And then Thursday we do have the likes of German IFO, but as I said before, US stock and bond markets are closed for US Thanksgiving on Thursday. Generally speaking, obviously barring anything unexpected, news flow does also quiet down quite significantly given the US are out of the market and US and bond markets, early close— closures will be in effect on Friday as well. If you're new to the channel, again, other than just subscribing for future videos, do remember if you jump on the homepage of the AmplifyMe YouTube channel, one interesting section, if you've not seen it, is the Amplify School. Been some really excellent banking series. So if you're a student interested in potentially working in investment banking, for example, in the future, there's a great 5-part series here talking about how exactly investment bank works, from M&A to IPO book running and launching processes and things like that. You might find that really interesting, so do, do check that out. Otherwise, look, that's it, and I will continue to update via the Market Maker newsletter. Otherwise, have yourself a good week ahead. Take care.