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Tuesday, October 5, 2021

RBA Keeps Rates At Record Lows As Lockdowns Hurt Recovery

AUD On The Backfoot Following RBAThe Australian Dollar has seen choppy, two-way flows on the back of the October RBA meeting overnight. The central bank held its headline policy rates unchanged, as expected, citing its commitment to achieving its employment and inflation targets before tightening. The meeting was fairly uneventful, given the lack of new information. However, it is worth noting that the bank is showing a decidedly less hawkish tone than just a few months prior. The RBA had been tipped to embark upon the tightening route ahead of the summer. However, resurgent COVID cases there led to fresh lockdowns which appear to have hindered the RBA and delayed its anticipated policy normalisation.Rates on Hold Until 2024In terms of forward guidance, the RBA reiterated that it will continue with its program of $AUD 4 billion in weekly asset purchases until at least February 2022. Additionally, the RBA noted that It will not be raising its headline policy rate until it has sustainably achieved its inflation target of 2 – 3% which it still feels will not happen until mid 2024.Key quotes from the meeting statement: The Delta outbreak has interrupted the recovery of the Australian economy and GDP is expected to have declined materially in the September quarter. This setback to the economic expansion in Australia is expected to be only temporary. As vaccination rates increase further and restrictions are eased, the economy is expected to bounce back. There is, however, uncertainty about the timing and pace of the bounce-back and it is likely to be slower than that earlier in the year. In our central scenario, the economy will be growing again in the December quarter and is expected to be back around its pre-Delta path in the second half of next year.SummaryThe read here is that the latest lockdowns have essentially set the Australian economy back and the RBA is monitoring the situation to see when the recovery is kicking in. With that in mind, near term AUD prospects look limited to the upside with the currency likely to remain under pressure until we start to see a significant uptick in data.Technical ViewsAUDUSDFollowing the breakout above the bear channel, price has since reversed and traded lower. However, for now, the market appears to be carving out a double bottom base against the .7112 level, suggesting room for a reversal higher in the near term. Indicators are turning higher here also. Keep an eye on the .7413 level resistance, a break of which will likely signal the start of a reversal.

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How Britain’s DIY divorce boom can help you split up without costing the earth

ritain is having a “divorce boom”, says Sophia Money-Coutts in The Daily Telegraph. The misery of lockdown sent Google searches for “divorce lawyer near me” up by 233% in the year to December 2020. “DIY divorces”, where couples seek little or no legal help, are also on the rise, says Esyllt Carr on the BBC.

One survey by family-law reform group Resolution found that 57% of divorces in the last five years went down this route. That can keep costs low – perhaps just the £550 application fee – but those with dependent children, or significant property and pensions, are likely to find that they need more help.

Those going the do-it-yourself route don’t always realise that “divorce, and dealing with the financial issues arising out of the divorce, are two distinct… legal processes”, says Adam Maguire of Shoosmiths LLP. The pronouncement of decree absolute (which ends a marriage) does not protect either side from future financial claims, even if everything has already been divided up.

While the split of assets may be amicable for now, obtain a consent order from a court so that the financial deal remains binding on both parties once you go your separate ways. One party inheriting money or losing their share of the spoils are two of the scenarios that can cause headaches later if a deal is not binding.

The average UK divorce costs £14,000, says Sally Williams for You Magazine. Lengthy contested divorces with significant assets at stake can be much pricier. It is little wonder that many are tempted by the DIY approach. Suzy Miller, divorce strategist and founder of the app Best Way to Divorce, advocates a “pick-and-mix approach” to getting help, says Williams.

Lawyers can be helpful for “initial advice” and “to translate the financial agreement into legal language”. Consider using legal assistance “selectively”, agrees Nicola Phipps of Wikivorce. That could mean filling in the divorce forms yourself, but seeking professional help for the financial settlement. If you need to cash in or transfer investments to your ex-partner then it is also worth getting advice from an independent financial adviser or accountant so that you are not hit with an unexpected capital gains tax (CGT) bill, as MoneyHelper points out.

A divorce and money calculator is available at moneyhelper.org.uk. Using it will help you draw together all the information you need before consulting a solicitor. Being well-prepared should mean fewer meetings and lower legal bills.

No-fault divorces

Divorce laws in England and Wales are changing. From next April it will be possible for couples to divorce without needing to show grounds such as adultery or unreasonable behaviour. The current requirement to blame one of the parties can mean that a divorce that started off amicably ends acrimoniously. That can then interfere with reaching a financial settlement.

Some divorcing couples will be tempted to wait for the change in the law, says Emma Lawler of Langleys Solicitors LLP. Just note that the new process will not be any quicker or simpler than the present one. Others think that avoiding “fault” will get them a better financial settlement. That is a “common misconception… It is in fact rare for the court to take into account a spouse’s behaviour when determining how your assets should be divided”.

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China’s property woes are spreading beyond Evergrande

SEE MORE Xu Jiayin: the tycoon behind Evergrande
SEE MORE Forget China, here’s why you should invest in India

Shares in troubled Chinese property giant Evergrande and its property management unit were suspended from trading in Hong Kong on Monday, amid reports that a major transaction is underway.

The suspension came just before it looked as though Evergrande was set to miss yet another payment.

According to the Global Times, China’s state-owned newspaper, Chinese rival Hopson Development plans to buy 51% of Evergrande Property Services. However, there’s not yet been an official confirmation of the deal, and share trading remains suspended.

So what’s going on?

The Evergrande saga

Evergrande, China’s most heavily indebted property company, has been in the headlines in recent weeks for all the wrong reasons. Its shares have fallen by 80% since the start of the year.

The company, which is struggling under a debt pile of $305bn, missed a $47.5m bond payment last week. Before that, it failed to make an $83.5m coupon payment on some of its outstanding dollar debt. Both have grace periods of 30-days. So it is too early to say whether investors will be stomaching huge losses or not (though the omens are not great).

Now, Bloomberg says, the embattled firm is due to miss a third payment: a dollar bond worth $260m that is guaranteed by Evergrande, called Jumbo Fortune Enterprises. Because the due date is 3 October, it was effectively due on Monday and failure to do so would count as default, as the debt has no grace period.

As a result of all this, the company has been scrabbling to raise cash by selling assets. This is the driver behind the sale of the property unit. Evergrande said in a regulatory statement to the Hong Kong Stock Exchange, that it was suspending its shares “pending the release by the company of an announcement containing inside information about a major transaction.” Although, as of Tuesday, share trading remains suspended with no fresh news on the deal.

Why is Evergrande facing so much trouble and could its demise reverberate beyond China?

Much of the Evergrande’s importance on the global stage has to do with the fragmented nature of China’s property market. Reuters reports: “With liabilities equal to 2% of China’s GDP, Evergrande has sparked concerns its woes could spread through the financial system and reverberate around the world, though worries have eased somewhat after the central bank vowed to protect homebuyers’ interests.”

Calling China’s real estate market huge would be an understatement: it was worth $52trn in 2019, according to Goldman Sachs, and the sector accounts for 29% of Chinese GDP. Yet around 20% of supply – roughly 65 million homes – are underoccupied, reports Business Insider.

There is too much housing and too little overall demand for homes to live in. This gap has been filled by speculators and small investors, but both are now under pressure from regulators who want to dampen house price growth.

“Speculators and investors are being blocked by government policies in cities where they want to buy, and some are increasingly concerned that developers will be unable to complete the units they are promising to build,” reports Foreign Policy.

Real estate is seen as a more reliable investment vehicle than the stockmarket in China – about 70%-80% of household wealth lies in real estate, reports CNBC, underscoring how significant a default by the country’s second-largest property developer would be. So it is unsurprising that China has been asking state-backed firms to snap up Evergrande’s assets, having ruled out the chance of bailing it out.

Should markets worry less now about a default?

Can markets take a breather now that more than half of Evergrande’s property unit could be purchased, bringing in much needed capital for the firm? Perhaps not. Lisa Zhou, Bloomberg’s Intelligence analyst, says that the potential deal “could bring short-term relief” to the liquidity problem and effectively buy the company time to fix its onshore liabilities.

However, the spillover effect into other property developers – many of whom face similar if slightly less acute problems to Evergrande – are already showing up in markets. Chinese developer Sinic Holdings was downgraded by Fitch with concerns over a bond repayment coming up in mid-October. Homebuilder Fantasia saw its bonds collapse in half, after it failed to make a $206m payment.

As my colleague John pointed out last week, it seems unlikely that Evergrande will trigger another “Lehman Brothers” moment – at least, for global financial markets.

But at the same time, stabilising China’s real estate market will take a lot more than just the sale of Evergrande’s property unit – and it has implications for the country’s growth for years to come.

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The IndeX Files 05-10-2021

Risk Tone Remains HeavyBenchmark global equities indices have started the week under pressure as the risk off tone of recent weeks continues to inform investor activity. The Evergrande situation in China continues to paint clouds on the horizon here. The property giant missed two interest payments last week, edging closer towards a collapse which could spell big trouble for the Chinese and global economy alike. Away from that specific issue, broader concerns around the global energy crisis and the inflation spike being seen across the US, UK and European economies, is also causing concern for investors.Expectations that central banks will be forced to tighten monetary policy in the coming months is dampening the near-term outlook for equities markets. Both the Fed and the BOE have acknowledged the likely need to begin tapering in the near term in response to the trajectory of prices in both respective economies. On a global scale, with energy prices soaring, the upward pressure on prices is becoming increasingly difficult, raising the risks of central bank intervention. With this in mind, equities traders appear reluctant to acquire fresh upside exposure, creating the room for sharp moves downward on position unwinding. Looking ahead this week the big focus is on US employment data on Friday. Any upside surprises here will further sharpen the market’s focus, creating room for a deeper move lower in equities if USD appreciates.Technical ViewsDAXThe sell-off in the DAX has seen the market trading back down to the 15078.83 level. This is a major support level for the index and while indicators are both in the red, it is worth noting bullish divergence here, suggesting the risk of a reversal higher. To the topside, bulls will need to see a break of 15486.96 to alleviate near term bearishness. To the downside, 14791.27 is the key level to watch.S&P500The breakdown in the S&P has seen the market piercing below the big 4295.75 level support, However, we have seen buying kicking in at the lows which has taken price back above the level for now. With bullish divergence on both indicators we need to be aware of upside risks on a break above 4383.50. To the downside, 4236.50 remains the key level to watch.FTSEThe FTSE continues to be a tricky one here. The market is essentially still straddling the middle of the 6968.7 – 7137 range. Both indicators are in the green and with price sitting atop the bullish trend line, the outlook remains bullish here. However, we need to see some upside momentum to have any conviction in this view. In terms of broader levels, 6895.6 is the big downside marker and 7241 is the upside target for bulls.NIKKEIWhat goes up, must come down. It’s been a wild ride for anyone trading the Nikkei recently. The market exploded higher over the last month only to collapse just as quickly. Price has come all the way back down to the 27422.9 level for now and while we are seeing some buying at the lows, focus remains on further downside, in line with bearish indicator readings. To the topside, bulls need to break back above 28356.6 to shift this view.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-index-files-05-10-2021"
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Investment Bank Outlook 05-10-2021

CitiEuropean OpenA risk-off mood was prevalent in the Asian morning as we saw Asian equities continue the sell-offs seen by S&P (-1.5%) and NDX (-2.2%) yesterday during the NY session. NKY and KOSPI were in the red, trading at -2.4% and -1.7% respectively. HSI opened significantly lower, but pared its losses to trade flat nearer to the European open. DXY unsurprisingly saw an uptick, trading near the 94.0 handle. AUD saw a rate decision, although there were no surprises as the RBA maintained its stance that conditions for rate hikes would not be met prior to 2024 and left its cash rate unchanged. NZD saw a dip ahead of its rate decision tomorrow, in which we expect a rate hike of 0.25%.Looking ahead, we flag another set of central bank talk, starting with NOK’s Governor Olsen (09:00 BST), EUR’s Holzmann (11:00 BST). The former is expected to reiterate hawkish messaging from the Norges Bank meeting last month, while the latter is expected to deliver hawkish-leaning messages given his earlier commentary. RON will be expecting a rate decision (time unknown), although the consensus expectation is for no change at 1.25%. USD also sees data in the form of ISM Services Index (15:00 BST).Lastly, we flag that CNY is on holiday today.CBA ■ USD strengthened modestly in the Asia session. In our view, the unresolved US debt ceiling can underpin USD in the near term. US President Joe Biden said that he could not guarantee the US wouldn’t exceed the debt ceiling in a few weeks. We still expect US lawmakers will reach a deal, but it is more likely than not to occur at the last minute. In the meantime, the yield on Treasury bills that expire on 21 October are the key indicator to watch for market expectations of default. Yields on that maturity are currently 10bp compared to 5bp on slightly earlier maturities. ■ EUR/USD eased against a firmer USD and is trading near 1.1600. Meanwhile, GBP/USD traded in a tight range near 1.3595. We expect both EUR and GBP will remain under downside pressure this week on broad USD strength. Eurozone Central Bank President Christine Lagarde and Governing Council member Robert Holzmann speak today (4pm and 11am London time respectively). ■ AUD/USD weakened slightly towards 0.7270. As expected, the RBA left the cash rate and yield target unchanged at its policy‑meeting. Also as expected, the RBA discussed rising house prices and noted that credit growth has picked up. Of note, the RBA said ‘it is important that lending standards are maintained and that loan serviceability buffers are appropriate’. This supports our view that raising the minimum interest rate buffer from 2.5% over the loan’s interest rate is the most appropriate form of macro‑prudential policy to be introduced. Read more here. ■ Australia posted a record trade surplus of $A15.1bn in August. A sharp rise in cereal grain exports helped to offset the decline in the iron ore price. Rising prices for coal and LNG prices also offset some of the drag from iron ore amid supply constraints and strong demand. But we maintain that the energy outlook is not all upside risk for AUD. China’s energy shortages can slow its economy and is a headwind for AUD. We continue to see a risk AUD drops below 0.70 before the end of the year.

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Forget China, here’s why you should invest in India

UK savers put £31.3bn into their pensions in the year to April 2020, according to numbers released recently. That was up from £27.9bn the year before, says HM Revenue & Customs.

Some 9.4 million people contributed to their personal pensions – with an average annual contribution of around £3,300. Add up all the tax reliefs this comes with, and the net cost to state coffers was over £22bn. That last number is key – it doesn’t just represent the immediate income tax relief you get when you contribute but the capital gains tax and the dividend taxes you never have to pay when your money is protected in a pension.

In other good news, the majority of the new cash is coming via our excellent auto enrolment programme – and 65% of the contributions are paid by employers (so most people are effectively being paid rather more than they think they are).

It all adds up to real money – money sitting in real people’s pension accounts looking for a home. The problem – and the increasingly obvious one – is that with most markets looking expensive and inflation building, good homes are hard to find.

One way to look at this – possibly the only way – is to think as long term as you can. With valuation risk and interest rate risk (central banks might find that the effect of supply crunches on prices mean they have no choice but to raise rates) overhanging everything we must assume there will be a nasty correction (possibly a crash) at some point fairly soon and we must just buy the investments that we think will be the least bothered by such disruption in ten years’ time.

One thing to look at in this context is how a market is priced – the UK stockmarket remains far too cheap (I know you are bored with me telling you that). Another is the extent to which its internal dynamics and growth might make any fuss over short-term valuations look silly in a decade – in the way that those of us who fussed over the price of the likes of Google and Amazon a decade ago now look very silly indeed.

There are lots of reasons to be keen on India

And so to India. Only a few months ago the news from India seemed utterly appalling, with stories of uncontrolled Covid infections and overflowing hospitals. But, after hitting a nasty peak in early May, cases have fallen fast and the vaccination programme has stepped up a pace (the working population should all be done by early next year).

And as for the stockmarket, the Sensex index of top Indian shares has more than doubled since last year’s March lows; it is up 22% in the year to date and hit 60,000 for the first time last week.

There is a lot going on here. The first thing to say is that all the long-term structural reasons to be keen on the Indian market – the ones you already know about – remain in place. It has a fast- growing and increasingly affluent middle class (around 50 million people today and heading for well over 400 million); a very young and educated population (you can’t say both those things about many countries); and wages that are low relative to those in much of the rest of the emerging world – one-third of China’s for example.

India also has a reform-minded government – the country now regularly ranks among the top ten improvers in the World Bank’s “Ease of Doing Business” rankings. In the shorter term, there is, says Chris Wood of US investment bank Jefferies, “growing evidence of a new residential property cycle” under way after a seven-year downturn: affordability remains at historically attractive levels and sales have been rising.

The Julius Baer Global Lifestyle Report puts Mumbai at number 22 in its index of liveable cities calling it a “dynamic and diverse financial hub” where residential property costs half the global average and “the only truly expensive items are cars”.

India’s unicorns are coming

However, there are two new things to watch in India. The first is its technological revolution. India’s open-minded young tend to be early adopters, says India Capital Growth’s David Cornell and the rollout of the world’s largest 4G network combined with lockdowns, low-cost data and widespread smartphone usage (1.1 billion users) has massively accelerated the advent of ecommerce and digital banking. In India, 99% of all online activity happens on phones.

This transformation is not yet reflected in the stockmarket: the digital and technology sector makes up only 1% of market capitalisation versus 30% in the US. That is about to change. There is, says Mick Gilligan of Killik & Co, a “wave of IPOs coming down the tracks”. In other words, the unicorns are coming.

The second change in India, partly accelerated by the pandemic, is a growing realisation that the country is not China. The past few years have alerted multinationals to their overdependence on Chinese manufacturing in a time of political tension. They need to diversify, and where better for this than cheap English-speaking India, with its well-established chemical, electrical and pharmaceutical manufacturing base?

Investors might have the same sort of feeling: in the wake of a spate of anti-market regulatory crackdowns in China, they appear to fancy moving some of their emerging markets exposure too – and where better than fast-growing digital-savvy and investor-friendly India?

None of this comes cheap: the average price/earnings ratio across the Sensex is just over 30 times. But with earnings at what Wood calls an “inflection point” on the upside and a possible tech boom to come, that number should look rather better soon – and perhaps be a distant memory when you come to draw your pension.

How to invest in india

There are a few good investment trusts in the area. You might start with the Baillie Gifford-managed Pacific Horizon Investment Trust (LSE: PHI). It is not just India-focused but there is surely a message in the fact that it has invested in three new Indian companies pre-IPO (10% of the firm’s assets can currently be invested in private companies) in the last financial year to July and in the rise in the share of the portfolio held in India from 7% to 29% in the same year, while Chinese exposure fell from 41% to 27%. Long-term manager Ewan Markson-Brown has recently stepped down (you can find him at Crux Asset Management where he will be launching a similar fund but inside a smaller management firm) but the portfolio has been left in good shape.

Another option is the India Capital Growth Fund (LSE: ICG) which invests in mid- and small-cap companies only. Performance has been good recently and you can buy it on an 8% discount to its net asset value. This seems like good value: the board has arranged for investors who want to redeem their holdings to do so at a discount of 6% at the end of the year).

Finally, there is the Ashoka India Equity Investment Trust (LSE: AIE) which again focuses on mid-sized and smaller companies. It has a performance fee (I don’t like these) but it is definitely earning it – the shares are up 34% this year alone.

• This article was first published in the Financial Times

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Dollar Retains Strength on Rising Yields; Nonfarm Payrolls Eyed

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Daily Market Outlook, October 5th, 2021

Daily Market Outlook, October 5th, 2021 Overnight Headlines Biden Tells Progressives Spending Package Needs To Be Between USD 1.9-2.2T US Senator Schumer Forces Debt Limit Vote To Squeeze Republican Resistance GOP Warns Biden Not To Replace Trump Fed Chair With Liberal Brainard Japanese PM Kishida, US President Biden Commit To Defending Senkaku Islands Australia's Trade Surplus Surprises With Record High On Commodity Demand RBA Leaves Cash Rate On Hold As Expected, Maintains Plan For Asset Purchases France And Spain Urge Pan-European Response To Surge In Energy Prices US Dollar Drifts Below One-Year High As Payrolls Test Friday Looms Large Oil Prices Edge Lower In Wake Of Jump On OPEC+ Producers Supply Restraint Chinese Technology Index Heads For New Low As The Global Selloff Continues The Day Ahead Today’s data calendar is dominated by reports on September service sector activity. In the Eurozone and the UK these are second estimates and not expected to be much revised from initial outturns, although new data will be released on individual Eurozone economies. In both cases, first estimates were down from August with the accompanying commentary suggesting that supply issues more than offset any boost from the relaxation of restrictions over the summer. In the case of the UK, where the activity index fell to its lowest since February, recruitment challenges were cited frequently as an issue for firms. In the US, the September ISM survey for services is published. The index slipped back in August but that followed an unexpectedly strong July print and so remains at a level that has historically been consistent with strong growth in GDP. The already published US PMI Services report for September pointed to a further slowing in activity. Supply issues were again cited as an important factor behind the deceleration, but it also noted that a summer pickup in Covid cases may have led demand growth for some consumer services to slow. The PMI and ISM have not always moved together on a month-to-month basis but with other measures also pointing to a near term softening expect the ISM to have fallen to 60.7 from 61.7. Today’s speaker schedule is relatively light. In the US, Fed Vice Chair Quarles will talk about Libor transition, while ECB President Lagarde will address a conference this afternoon. Early Wednesday morning the New Zealand central bank will issue its latest monetary policy update. It is widely expected to raise policy interest rates by 25 basis points to 0.50%. Concerns over building inflationary pressures and an overheating housing market are likely to be cited. The policy move was originally expected in August but delayed by a pickup in Covid infections.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby) USDJPY - 112.50 600m. 112.00 845m. 110.80/111.00 1.18bn (762m P). EURUSD - 1.1790/1.1800 745m. 1.1750 415m. 1.1730 716m. 1.1620/30 514m. 1.1600 505m. AUDUSD - 0.7440/50 1.12bn (697m C). AUDNZD - 1.0410 2.09bn (1.41bn P). USDCAD - 1.2800/10 1.13bn (1.07bn C). 1.2670/80 570m. 1.2610/20 2.01bn (1.41bn P). 1.2410/20 476m. AUDJPY - 80.00 525m. GBPJPY - 151.90 400m. USDZAR - 14.10 450m. USDMXN - 20.00 460m. 19.95 460m. USDCNH - 6.46 577m. Technical & Trade ViewsEURUSD Bias: Bearish below 1.17 Bullish above Gives back some of Monday's gain as USD bid in Asia EUR/USD opened +0.22% at 1.1622 after USD broadly eased on Monday Risk assets slipped lower in Asia and USD struck a bid tone EUR/USD traded down to 1.1602 and was 1.1605/10 into the afternoon EUR/USD trending lower with 5, 10 & 21-day MAs in bearish alignment Resistance is at the 10-day MA at 1,1652 and break eases downward pressure Support at yesterday's 1.1588 low and double-bottom at 1.1560/65 EUR/USD likely to remain range-bound ahead of Friday's US non-farm payrollsGBPUSD Bias: Bearish below 1.36 Bullish above. GBP/USD pivots 1.36 after two cent rise Friday – Monday Cable pivots 1.3600 after retreating from Monday's six-day peak of 1.3640 Profit-taking on shorts aided the rise to 1.3640, from Friday's 1.3434 low Friday's low was 22 pips shy of Wednesday's nine-month low (Sept 29) 1.3575 (Friday's high) is now a support point. 1.3532 was Monday's low Resistance levels beyond 1.3640 include 1.3659 (Sept 24 low) and 1.37 Brexit cold turkey: UK tries to kick imported labour habitUSDJPY Bias: Bullish above 109 Bearish below USD/JPY better bid in Asia, bouncing from 110.82 EBS low overnight Asia 110.88 early to 111.13, good bids from 110.80-90 Mix of Japanese retail specs, institutional investors below Talk bids trail down, investors active again at start of fiscal half 110.80-111.00 $1.2 bln in option expiries now supportive Steady to higher US yields too, Treasury 10s 1.472-1.491% range Nikkei off large on surge in crude oil prices, -2.3% @27,796 JPY crosses mostly steady despite fall in stocksAUDUSD Bias: Bearish below 0.75 Bullish above Moves lower in Asia – muted impact from RBA decision AUD/USD opened +0.28% at 0.7288 after USD broadly eased Monday After trading to 0.7293, it came under pressure as equity markets swooned... AUD/USD traded down to 0.7262 before basing and bouncing to 0.7278 It was around 0.7275 when the RBA decided to keep policy unchanged as expected RBA was optimistic economy would bounce back, but said wage growth was retrained AUD/USD eased to 0.7265 and remains offered into the afternoon Support is at the 10-day MA at 0.7254 and break eases upward pressure Resistance is at 0.7310/20 where daily highs and 55-day MA converge

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Una caída millonaria para Mark

Social networks Facebook, Instagram and WhatsApp have fallen globally and as never before as the social networks began to have intermittent problems since yesterday during the day, but as of today left 2.9 billion Facebook users, 2000 million WhatsApp users and the same from Instagram were unable to access the services . The most reported problems for Facebook are 56% of the desktop website, 24% with connections to the server and 20% in the application, for WhatsApp 37% sending messages and Instagram with 36% in the app.

“We are aware that some people have problems accessing our applications and products. We are working to get everything back to normal as soon as possible and we apologize for any inconvenience.” as published in the Facebook account in Twitter.

Fuente: https://krebsonsecurity.com/2021/10/what-happened-to-facebook-instagram-whatsapp/ — Internet traffic server Source :https://krebsonsecurity.com/2021/10/what-happened-to-facebook-instagram-whatsapp/

After 6 hours, very slowly and intermittently, the network connections began to be reestablished, saying with a message to users and workers on Twitter: ”To the great community of people and companies around the world that depend on we are sorry. We have been working hard to restore access to our applications and services and we are pleased to report that they are now back online. Thanks for supporting us.”

At first the issue was not very clear at all, although it was later confirmed according to reporter Brian Krebs on Twitter: ”Confirmed: DNS records that tell systems how to find http://facebook.com or http://Instagram.com were removed this morning from the global routing tables. Can you imagine working on FB right now, when your email is no longer working and all your internal FB-based tools are crashing?” In addition, the director of Kentik, Doug Madory said that, someone on Facebook had an update made to the company’s Border Gateway Protocol (BGP) records which is a mechanism through which the world’s Internet service providers share information about which providers are responsible for routing Internet traffic to which specific groups of Internet addresses. All this means that someone from Facebook deleted the Internet BGP tables (basically they deleted themselves from the Internet, removing all possible connections) and no one could gain access to reconfigure the BGPs because Facebook hosts its own DNS servers and therefore, their own emails, which led to Facebook employees not being able to communicate with each other.

Source: https://finviz.com/map.ashx?t=sec

Mark Zuckerberg throughout September lost $19 billion dollars, and that, coupled with the huge amount of $7 billion dollars in a matter of hours of this incident, cut his fortune to $121,600 billion dollars, leaving Mark in fifth place on the Bloomberg Billionaires Index. At the same time, Facebook fell -5.26% to $324.98 but managed to recover to -4.89% leaving the price at $326.23. In addition, as a whole, the shares of the networks have accumulated losses of -15.22% in one month due to the increase in the yield of the Treasury bonds.

On the other hand, the Wall Street Journal published “The Facebook Files” on the damage to mental health that Instagram produces in adolescents and other obscure data, along with the existence of a group of five million famous Facebook users who are not subjected to the same criteria of moderation as the rest, in addition to facing the misinformation it caused in the 2016 elections where Donald Trump won. Added to the Capitol riots in January 2021, where Facebook was also accused of causing misinformation and allowing the spread of far-right speeches, it has not been the best year for Facebook.

H4 Technical Analysis

Facebook stock reacted strongly to this issue, and the bullish rally that Facebook has had since March has staggered leaving a high at $384.41, marking a double top and outlining a fall that has not only broken the 21.50-period SMA and 100-period in 4H chart (in addition to a possible golden cross), but also the psychological level of $350. The price has left a minimum of $322.65 and is currently at $326.06. Next support is at 50% Fib. level at $318.86, followed by the range between the psychological and key level of $300 on 61.8% Fib. level at $303.38 and from there to the 78.6% Fib level at $281.36. Resistances on the broken 38.2% Fib. level the psychological level of $350, the 50- period SMA in 4-hour chart and the highs at $384.41.

ADX is at 18.77 with + DI at 11.26 and -DI at 20.93 outlining the beginning of a downtrend if it crosses 25.

Click here to access our Economic Calendar

Aldo Zapien

Market Analyst – HF Educational Office – Mexico

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Sources:

https://www.dineroenimagen.com/mercados/bajan-5-las-acciones-de-facebook-tras-caida-de-sus-redes-sociales/137856
https://elle.mx/celebridades/2021/10/04/mark-zuckerberg-7-mil-millones-dolares-caida-facebook
https://www.bloomberg.com/news/articles/2021-10-04/zuckerberg-loses-7-billion-in-hours-as-facebook-plunges?srnd=premium
https://krebsonsecurity.com/2021/10/what-happened-to-facebook-instagram-whatsapp/
https://cnnespanol.cnn.com/2021/10/04/reportan-fallas-en-whatsapp-facebook-e-instagram/
https://twitter.com/Facebook/status/1445061804636479493
https://es-us.finanzas.yahoo.com/noticias/reportan-fallas-servicio-whatsapp-facebook-154924545.html
https://elpais.com/tecnologia/2021-09-15/facebook-admite-en-documentos-internos-que-instagram-perjudica-la-autoestima-de-muchas-jovenes.html

from HF Analysis /275946/
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Dollar Up, but Falls Below Year High as Investors Await U.S. Jobs Data

from Forex News https://www.investing.com/news/forex-news/dollar-up-but-falls-below-year-high-as-investors-await-us-jobs-data-2634593
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Dollar drifts below one-year high as payrolls test looms large

from Forex News https://www.investing.com/news/economy/dollar-drifts-below-oneyear-high-as-payrolls-test-looms-large-2634572
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Monday, October 4, 2021

Inflation Threat Puts Central Banks on Alert

Financial markets are increasingly discussing an inflation surge as shortages arising in the commodity markets increase the risk of price pressures being far more persistent than policymakers expect. After a period of consolidation, commodity prices resumed their rally in September and this coincided with major central bank becoming more hawkish in their guidance (including the Fed); with separate members increasingly voicing their concerns about a “second round” of inflation effects:It is clear that it is becoming more and more difficult to argue about the temporary nature of inflation, and central banks are forced to adjust their guidance accordingly. The dynamics of exchange rates in the near future will be determined by expectations of how seriously local central banks will take price increases. Those central banks that continue to defend the old point of view (inflation is temporary and does not require policy adjustments) are likely to face more bearish pressure on their currencies.By the way, the prospect of tighter Fed policy and associated growth in real rates in the US induced a soft downtrend in gold around the beginning of September. This week, expectations for US labor data and the report itself on Friday will most likely allow sellers to test the lower border of the downtrend and the key horizontal level:On Monday, the ECB official Guindos said that supply disruptions (one of the key supply-side inflation factors) saw emergence of a structural driver, which means there could be more than one "round" of consequences for wages and consumer inflation. Thus, the official hinted that the increased inflation could worry the ECB more than the markets had previously assumed, and perhaps one should expect some policy implications; in particular changes in duration of current asset purchases. The euro gained on the back of hawkish hints of the ECB official, in addition broad correction of the dollar contributed to rebound of EURUSD.From a technical point of view, the EURUSD rebound from the November 2020 lows is unlikely to develop above 1.17, as key US data are expected this week:This week's Non-Farm Payrolls report should help the Fed to announce QE tapering at November or December meeting and move to policy tightening later. There is much uncertainty remaining about possible timing of the start of the Fed rate hiking cycle next year, and labor data may affect expectations related to the tightening. A strong Payrolls report may well allow EURUSD sellers to test 1.15 this week.In the first half of the week, the markets will be focused on the OPEC+ meeting. An increase in production by more than 400 thousand barrels could pull oil prices lower, and NOK and RUB could erase their recent growth.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/inflation-threat-puts-central-banks-on-alert"
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US Market: Treasuries remain underwater

It is a jittery opening for US markets with Treasuries and stocks retreating from Friday’s gains. The 10- and 30-year yields are up 3.5 bps and 4.5 bps, respectively, at 1.496% and 2.072%. US equity futures are pointing to a lower opening with the USA30 off -3%, the USA500 -0.4% lower, and the USA100 down -0.57%. European stock markets have essentially moved sideways as yields nudged higher. China bourses will remain closed through to Thursday for the Golden Week holidays.

Fiscal policy uncertainties, and especially the debt limit and worries over default, are keeping buyers sidelined, ahead of key US jobs data later in the week. Concerns over Evergrande, where shares were halted, and China’s property market in general are weighing. Talk of stagflation is adding to the tensions. The demise in the viability of ‘perma QE’ is also in the mix, reflected by recent hawkish pivots at many central banks. These considerations have offset news that pharmaceutical company Merck’s experimental oral antiviral can significantly reduce hospitalisation and death risk for Covid cases. Massive US fiscal stimulus is also in the works.

Stagflation fears continue to linger and hopes that OPEC+ will help to ease the global energy squeeze by agreeing and additional boost to output at today’s meeting seem to be fading.

The US Dollar has drifted lower against most currencies today. The 10-year Treasury yield remains a driving force, and while lifting back towards 1.50% from 10-day lows near 1.46%, remained comfortably below last week’s highs near 1.55%. The USDindex posted its lowest level seen since last Wednesday, at 93.71, extending the correction from the 1-year high that was seen on Thursday at 94.50.

EURUSD concurrently extended its rebound high to 1.1619 after last week printing a 14-month low at 1.1562. Cable has lifted to a 1-week high at 1.3610. Dollar weakness mostly explains the move, while the pound has seen a modicum of gains versus the Euro and other currencies today after underperforming last week. Recent bouts of risk-aversion in global markets weighted on the UK currency, being a currency of an open, deficit economy.

At the same time, the UK economy is slowing somewhat, while price pressures are rising. BoE Governor Bailey warned last week of “hard yards” ahead” due to persisting supply chain disruptions and the sharp rise in energy prices in the UK. Bailey said said that interest rates will have to rise over the medium term to tame inflationary pressures but stressed that the economy is currently too weak to withstand such a move. It is widely anticipated that prevailing sterling gains will sustain.