This Week In Markets: 9th - 13th May 2022

Okay, I hope you're doing well. It is Sunday the 8th of May and going to just wrap up where we finished last week, talk about some of the major headlines from the weekend, and then look ahead for the week where we do have US CPI on Wednesday. It's pretty quiet though other than that. That of course then does mean that we've already seen the likes of the Fed rate decision, we've seen the same for the Bank of England last week, and that was really a key catalyst for some of the movement that we saw to finish off week, which of course was the fact that the S&P suffered its longest weekly losing streak in a decade. The NASDAQ 100 underperformed, tech stocks really getting hit hard at the moment. Treasury 10-year yields remained above 3%. The dollar continues to rally, imparting a large part of degree of pressure on those major currency pairs, particularly that of sterling currency that we saw in cable at the end of last week. The reality really is hitting home definitely coming on the back of what Powell said, where the Fed are going to be raising rates aggressively, more 50 basis point clips to come, and the fears about the consequent impact that's going to have on growth for the second half of this year. And then that R-word, recession, of course, coming back onto the table firmly now going further forward, not just in the US but also the UK and elsewhere. So some of the things over the weekend to be aware of Before I get into that, just quickly wanted to mention we do have our latest Finance Accelerator. It's happening this Wednesday, of course, as it always does for the public event. Again, this is a sponsored event by Morgan Stanley, and we've already had a number of university students go through this, get fast-tracked, and have already secured their internships for the summer of 2023 by, by starting, by doing this very exact finance accelerator simulation. So do get involved. I'll drop the link into the video. Just sign up. Doesn't matter what your background, doesn't matter what you study or whether you've done even a finance-related course. As long as you've got an interest, an appetite to learn, get stuck in, you'll definitely come out of that with some, some good quantifiable metrics about your performance and then hopefully some good career guidance for your future applications as well as potential to land a role at MS. So do check that out. But yeah, getting stuck into some of these headlines in the weekend. ECB's Holzmann, if you've never heard of him before, he's the Austrian central banker. He definitely leans much more out on the hawkish side of the policy spectrum, has said the ECB should raise interest rates 2 to 3 times in small increments this year in order to tackle inflation. We've also had Christine Lagarde, of course, the ECB president, who has said that stagflation isn't the most likely economic outcome for the euro area, even as the war in Ukraine slows growth and speeds inflation. Neither of these two comments, I think, really is going to be a game changer at the open, but nonetheless, definitely something to be aware of. And Holtzman being on the outlying, more hawkish side doesn't come as too much of a surprise. In terms of Ukraine and Russia, what's going on there? The G7 nations committed today on Sunday to ban or phase out imports of Russian oil, and the US have unveiled sanctions against Gazprom bank executives and other businesses in order to punish Moscow for its war against Ukraine. Again, nothing too new there, but just continuation of the kind of the line of attack, if you like, from a sanctioning point of view coming from the various different countries involved. And then on the oil front, Saudi Arabia has cut oil prices for buyers in Asia as coronavirus lockdowns in China weigh on demand countering uncertainty about Russian supplies as Ukraine war continues to drag on. The other thing that a lot of people have been talking about this weekend is, is quite a key technical area for Bitcoin. You can see on this chart here, both from a horizontal point of view where you've got around the 34, kind of 450, 500 level was that previous low that we saw in late February of this year. You've also got this trendline going back to the summer of last year, which had been tested on a few times through that period, both in kind of July time of 2021, early 2022. And that's where we're trading at the moment. And yeah, just keeping an eye on this. Any further kind of breakdown in this price action could quite quickly see that previous low down here at around the $33,000 level as a target towards the year-to-date low. And then further deeper down to $30,000 would put us down to those summer lows that we had from last year. So definitely on the crypto space being weighed upon by just generally perceived value as a risk asset and the risk-off that obviously has been heavily weighing across the, the asset class mix from last week, just given that the rising yields and rates markets that we're seeing at the moment with the tightening of, of policy ahead. And then in some single stock news, I thought this was quite interesting. Really because of the EV bubble has well and truly popped. I was having a look at Rivian and also Lucid shares, which were two of the more kind of new-to-market names other than the more matured ones like Tesla. But Ford Motor Company, according to CNBC's David Faber and sources, Ford Motor is going to be selling 8 million of its Rivian shares as the insider lockup for the stock expires actually today. So I'd be quite interested to keep in our Rivian shares at the open. And to give a bit of context, Ford currently owns about 102 million shares of Rivian, so they're dumping around 8. JP Morgan is also believed to be planning to sell Rivian a share block of between 13 to 15 million for an unknown seller. Again, the timing of this all coming as that insider lockup for the stock expires. Rivian has said In March, it expected to produce 25,000 electric vehicles and SUVs this year, as all auto manufacturers battle with supply chain constraints and internal production snags that they've had specifically. And to give it some context, that would be just half of the vehicle production it forecasted to investors last year as part of their IPO roadshow. So definitely not living up to the hype. And if you haven't seen Rivian shares, This is pre, obviously, the open, and definitely likelihood to see some further downside as the recommencing of trade this week. They're already down about 72% year to date. The likes of Lucid also down not quite as much, but a fairly similar margin as well. And then something from the weekend which is definitely symbolic, if anything, but definitely interesting, is Sinn Féin in Northern Ireland will now be the largest party in the Northern Ireland Assembly for the first time time in 100 years. Although Sinn Féin can now nominate a First Minister, they cannot take up office unless the DUP, the biggest party from the Unionist bloc, agrees to nominate a Deputy First Minister. In terms of where the DUP leader Geoffrey Donaldson— and where he stands— on Saturday he said he would refuse to join a new devolved administration until the UK government dealt with the Protocol. That Essentially then means that would paralyse Stormont, which would be run by a caretaker administration and puts pressure on the Prime Minister to amend the protocol to end the stalemate. That impasse, impasse in itself expected to last for weeks, if not months, and possibly lead to a new election. So yeah, definitely this is something that's going to create a lot of, a lot of headlines just given the context of what it means symbolically. But in the near term, very little changes in terms of the overnight. And then for the week ahead, as I said, it's pretty quiet overall. We've got some Chinese trade data coming out overnight, perhaps worth keeping an eye on, just given that it's likely to show a degree of impact from the stringency of the lockdowns that we've been seeing imparted across the nation in China. And as far as this week is concerned, US CPI really is the highlight on Wednesday, um, and that should show that inflation has passed its peak in the US, with the year-on-year rate expected to slow from around 8.5% to 8.3%, the core inflation edging down to 6.1% from 6.5%. So I'm interested to see whether or not that does indeed materialize. And just given the impact that rising prices has had, be interested to look at consumer sentiment in the US as well from the University of Michigan reading. It'll be the preliminary figure we'll get on Friday. To see how the, the US consumer is standing up under those conditions at the moment. And that's it. So going to leave it there. I wish you a very good week ahead. Any questions at all, feel free to drop a comment and do check out that simulation link below. If you're a student and haven't done a Finance Accelerator yet, I'd love to have you on one of those next sessions. So yeah, hopefully see you online. Take care.