Mastercard: Will Fed’s Rate Hike Be Its Tailwind?

Last week, the Federal Reserve (Fed) increased its benchmark rate by 50 bp to 0.75%-1.00%,  the largest single hike since May 2000 in an attempt to tackle a 40-year high in US inflation. In addition to reducing asset holdings, Fed Chair Powell signaled a couple of rate hikes by 50 bp in the coming meetings. He also reiterated that the central bank will go down to rate hikes of 25 bp “if inflation comes down”.

Fig.1: US Non Farm Payrolls and Unemployment Rate. Source: Trading Economics

On the other hand, the Non-Farm Payrolls in April 2022 recorded an increase of 428K in employment, marking job gains above 400K for twelve consecutive months. The unemployment rate stayed flat at the previous level of 3.6%, slightly higher than consensus estimates at 3.5%. Labor force participation marked its lowest level since January, at 62.2%. In addition, average hourly wage hits new low since March 2021, at 0.3% – this may be an indication of inflation slowing down. Regardless of the results, the CME watch tool shows that the Fed’s decision for tightening monetary policy remains unchanged.

Tightening of monetary policy may not be friendly to the stock market. In this circumstance, its fairly essential to locate stocks that could possibly withstand a rising-rate environment. Mastercard Inc. may be one of the candidates. Being one of the conglomerates in the global payment space, Mastercard facilitates payment transactions in more than 200 countries with more than $7 trillion flow through its network and over 2.5 billion cards in circulation. Following the central bank’s rate hike, Mastercard will collect higher fees for each transaction by serving as a middleman between sellers and consumers.

However, it is also worth noting that the economic conditions plays a great role in determining the outlook for the company. If economies fall into recession, reduced demand and spending may inevitably hurt the business of all global payment companies. On a positive note, collaboration with Microsoft and Zeta offers a more competitive edge for Mastercard in aspects such as safety, security, convenience of e-commerce, online banking and contactless transactions.

Technical Overview:

The daily chart shows #Mastercard trading within an ascending wedge, currently testing the lower line at $341.30, or FR 38.2% extended from the highest point ($399.90) in February’22 to the lowest point ($305.15) in March’22. Breaking below the level would indicate bearish possibilities for the company’s share price to test the next support zone $324.00 – $327.50, and $300.15 – $305.15. On the other hand, $352.50 (FR 50.0%) serves as the nearest resistance to watch. A strong candlestick close above the said level as well as the 100-day SMA may suggest more buying pressures towards the next resistance at $363.70  (FR 61.8%) $379.60 (FR 78.6%) and the highest point seen this year at $399.90.

Click here to access our Economic Calendar

Larince Zhang 

Market Analyst

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 distribution.

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Investment Bank Outlook 09-05-2022

Credit AgricoleAsia overnightThe USD has extended its gains against all its G10 FX peers at the start of this week, as the Antipodeans’ FX are underperforming in the wake of broad equity losses. Of special note, NZD/USD has dipped below 0.6350 for the first time since H120, while AUD/USD has slipped back toward the big psychological support of 0.70. The publication of resilient Chinese external trade data for April gave them no relief whatsoever, as the concerns expressed by China’s Premier Li Keqiang over the Covid situation in Beijing and Shanghai have possibly weighed more. Meanwhile, the CAD and NOK have only been marginally spared by the steady oil prices following the G7 announcement over the weekend that it will gradually phase out imports of Russian oil, without giving too much details either. Outside of the commodity bloc, the low-yielders are also struggling against the USD, as UST yields have for now held up well at the start of the week. USD/JPY has rallied back to 131, while marginally above-consensus labour earnings data in Japan are unlikely to sway BoJ policymakers just yet.CitiEuropean OpenMonday morning saw risk-off tones permeate through markets, with concerns over geopolitical risk prevailing on Russia’s Victory Day holiday. USD was the only currency in the green in the G10 complex, with DXY up 0.34%. AUD and NZD were down over 1% as high beta currencies were hit. The former currently sits close to the psychological resistance of 0.7000. INR set a new record low, breaking above the 77 handle, while CNH dropped despite a stronger than expected yuan fixing that was set for the fifth consecutive day. Chinese trade balance data saw exports and imports come in above the consensus figures. Oil markets pared losses from an initial dip early in Asian trading to trade slightly in the green. Meanwhile, equities continued their decline from Friday. UST front end yields were down slightly.Today’s focus will likely remain on the risk of escalation in the Russia-Ukraine conflict. PHP will await the results of today’s Presidential, vice presidential, and general elections. CZK will await industrial output data, TWD a trade balance print and MXN a CPI print. We remind that HKD and RUB are on holiday today.G10: AUD was the biggest loser at -1%, and faced a test of the psychological 0.7000 support. Other high beta currencies were close behind in losses, with NZD -0.98%, NOK -0.7% and CAD -0.55%. CHF and JPY lost the least at -0.25% and -0.3% respectively–EM currencies saw major losses as well. INR set a new record, breaking past the 77 handle and sitting -0.5% at 77.32. CNH was also of note, trading 0.45% lower on a stronger dollar, despite a stronger than expected yuan fixing was set for the fifth consecutive day.–CE3 currencies were down over 0.5% as well, while risk proxy ZAR was down 0.8%Equities continued their decline seen on Friday, with both S&P eminis (-1%) and Nasdaq100 futures (-0.9%) down. Asian equities saw Kospi down 1.14%, and Nikkei down 2.29%. Kospi in particular will be watched as in heads towards the lowest close since November 2020. HSI was closed due to a HK holiday.

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Market Update – May 9 – USD dominance rips through every marker on FED

Monday Markets Blues

Sometimes the cause take place after the effect? This is what looks to be the case this week. The USD surged to 2001 to has been bought and fixed income sold on ideas that the Fed had taken a hawkish turn, with investors searching for safety.  The hikes will be front-loaded with the next 50 bp hikes discounted for the next two meetings (June and July) and a strong leaning for the same in September (~66%). Yields 10-year is up 1.0 p at 3.14%. Stock markets are broadly lower, with Japanese markets underperforming and the Nikkei down -2.5%. Tighter lockdowns against in Beijing and Shanghai raised pressure on its economy, while China reported faster-than-expected growth in exports for April, while imports were flat.

Meanwhile in the market, speculation that President Putin might declare war on Ukraine in order to call up reserves during his speech at “Victory Day” celebrations could hurt further market sentiment.

The week ahead is important because it may be the first signs that may be peak inflation is at hand.

• USDIndex above 104.10. 
• Equities – Nikkei down -2.5%. The ASX closed with a loss of -1.2%, the CSI is currently down -1.4%, while Hong Kong was closed today. USA500 led the way with a drop of 1.1%, while USA100 shed 1.0%
• Yields 10-year is up 1.0 p at 3.14%, Australia’s long yield also continued to climb and the German 10-year rate is up 0.4 bp at 1.13% this morning. 
• Oil back to 109, after  EU and G7 mull Russian oil imports while Saudi Arabia cut prices for buyers in Asia as China’s lockdowns weigh on demand in the region.
• Gold drifted back to 1869 as it looks less attractive from the safety of USD, while elevated yields further weighed on prices.
• Bitcoin hammered! Gapped down to at 33,228. The start of a sharp technical fall ?
• FX markets – EURUSD ιs just over the 1.05 mark, AUD and NZD also struggled against the largely stronger USD. USDJPY climbed above the 131 mark and Cable is at a near 2-year low at currently 1.2259.

Biggest FX Mover @ (06:30 GMT) USOIL (-2.17%) drfted to  S1 at 108.15 in the EU open. MAs & Stochastics bearishly crossed, and RSI is at 41 sloping lower. H1 ATR 0.91, Daily ATR 4.43.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

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 distribution.

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Daily Market Outlook, May 9, 2022

Daily Market Outlook, May 9, 2022 Overnight Headlines China Export Growth Slows To Lowest In Almost 2 Years, Imports Flat China Paper Sees Q2 GDP Slow To 2.1%; RRR Cut Unlikely In May China Stimulus Fails To Ignite Housing Sales Over Key Holiday China Premier Warns Of ‘Grave’ Jobs Situation As Lockdowns Weigh Shanghai Tightens Lockdown To Hit Zero-Covid Goal By Late May Some In BoJ Called For Keeping Easy Policy In The March Meeting Minutes Japan March Real Wages Fall For First Time In Three Months Biden To Give Remarks On Inflation Tuesday, Contrast Plan GOP’s Pelosi Urges Congress To Approve $33Bln In Aid For Ukraine By End Of May EU’s Borrell: EU Should Seize Russian Reserves To Rebuild Ukraine ECB’s Holzmann: Two Or Even Three Steps To Hikes Appropriate This Year UK Deputy Prime Minister: UK Moving Fast To ‘Fix’ Northern Ireland Protocol Putin To Send 'Doomsday' Warning To West At Russia's WW2 Victory Parade Yuan Touches New 18-Month Low As Lockdowns Cloud Economic Outlook Bitcoin’s Value Drops By 50% Since November Peak Last Year Oil Prices Slip As Investors Eye EU Vote On Russian Oil Embargo G-7 Leaders Commit To Banning Imports Of Oil From Russia Asian Stocks Follow Wall Street Futures Lower On Rate, Lockdown WorriesThe Week Ahead This week's data calendar is dominated by U.S. consumer prices as inflation fears hang over global financial markets. April headline CPI is expected to rise 8.1% year-on-year, down from 8.5% in March. A hotter-than-expected reading will raise concerns the Federal Reserve is behind the inflation curve. Other U.S. data this week includes April PPI and University of Michigan consumer sentiment. Germany's ZEW will be the key release out of Europe this week. Other euro zone data includes industrial production and German CPI. The main event in the UK this week will be preliminary Q1 GDP. The Bank of England highlighted growth concerns while raising rates last week, making the pound the worst-performing major currency. The UK will also be releasing trade and manufacturing output data. China is due to release trade data on Monday and the focus will be on the import and export components rather than the net trade balance. Chinese PPI and CPI are also on tap this week; monthly credit data may be released as well. Japan released services PMI data early Monday ; trade, current account and household spending data are due during the week. In Australia it will be the NAB business survey, along with consumer sentiment and retail trade. No top-tier data is due in New Zealand or Canada.CFTC Data This week’s positioning data from the CFTC show a massive buildup in the aggregate USD long position to its highest level of the year ahead of the Federal Reserve’s policy decision on Wednesday. The bullish USD position rose by USD6.0bn to USD19.4bn in a period when the DXY traded at its strongest level in close to two decades. In terms of currency performances, only the MXN managed to gain ground against the dollar in the week to Tuesday (+0.7%) among the currencies we cover in this report, with the JPY weakening the most (-2.2%). The EUR net long was sharply slashed to a small net short of USD839mmn as it followed two consecutive USD1bn+ declines with a massive USD3.8bn bet against it this week. The currency has held close to the 1.05 mark over the past seven sessions and struggling to make up much ground. This is the first time investors have held a negative position on the EUR since the first week of the year; outstanding short contracts are at their highest level since November. Investors’ sentiment in the GBP continued to worsen as the pound’s short climbed to a new high since Q4-2019. Accounts increased the bearish GBP position by USD295mn to USD5.8bn ahead of the Fed and BoE decisions—with the latter’s dovish hike yesterday contributing to the GBP briefly trading below 1.23 this morning. After the shift in the EUR position, the CAD’s net long fell the most with a USD925mn drop to USD703mn—its lowest level in five weeks—that still represents the largest bullish bet of the currencies shown in this report. The MXN, which led its report peers this week followed by the CAD, saw its small net long fall by USD132mn to USD360mn (roughly half of the CAD’s). The large JPY short retraced about a quarter of last week’s improvement with investors placing a USD295mn bet against the yen taking its aggregate short to USD9.7bn (almost USD4bn more than the GBP’s). The CHF, which also underperformed over the period with a 1.6% drop, saw its bearish position grow by USD105mn to USD1.8bn as the franc is also on the backfoot amid surging US yields. Finally, the AUD short climbed by a marginal USD54mn to now sit at USD2bn in a week that included a larger-than-expected hike by the RBA on Tuesday—while Aussie remains pressured by a weak risk mood in markets. Neutral NZD sentiment turned into a net short of USD 425mn owing to a USD430mn wager against the kiwi.FX Options Expiring 10am New York Cut EUR/USD: 1.0500 (391M), 1.0520 (500M), 1.0600 (688M), 1.0630 (301M) AUD/USD: 0.7100 (1.4BN), 0.7125 (76M) USD/CAD 1.2780 (290M), 1.2805 (588M), 1.2820-30 (1.09BN) Technical & Trade ViewsEURUSD Bias: Bearish below 1.0950 Bullish above Falls to 1.0500 as USD rises while equities swoon EUR/USD opened around 1.0550 after closing unchanged around 1.0545 Friday USD firmed in Asia after E-minis gapped nearly 1% lower at the open Risk currencies bore the brunt of USD buying while EUR/USD eased to 1.0503 Support for the EUR/USD is at the April 28 low at 1.0469 Bids below 1.0500 have underpinned EUR/USD over the past week A break below 1.0450 targets the 2017 trend low at 1.0340 Resistance is at the 10-day MA at 1.0543 and 21-day MA at 1.0690 USD should remain firm while risk assets remain under stressGBPUSD Bias: Bearish below 1.30 Bullish above. Heavy, as domestic factors cap and USD climbs -0.35% amid broad safe haven USD strength, as stocks fall, E-mini S&P -1% Trades towards the base of a 1.2287-1.2359 range - plenty of activity on D3 UK urge N. Ireland to agree way forward after Sinn Fein win Sterling to slide until confidence in policy returns... Charts; momentum studies edge lower, 5, 10 & 21 day and week MA's slide 21 day Bollinger bands fall, as the strong bearish setup remains in play 1.2478 10 DMA resistance tested last week - now the first major barrier 1.2276 early Europe low Friday and 1.2252 June 2020 base initial supportsUSDJPY Bias: Bullish above 125 Bearish below USD/JPY powers above 131.00 again on wider Japan-US int rate diffs Interest rate differential on 10s as high as 291 bps early Asia Diverging central bank policies could see differential 300 bps+ soon USD/JPY from 130.59 early to 131.05 EBS, nearing 131.25 spike high Apr 28 Japanese exporter sales post-Tokyo fix only take it back to 130.68 Heavier offers 131.00+ but not enough to cap, spec sales too to book profits Stops on 131.25 break, above presumed option barriers at 131.50 Tokyo, most of Asia risk-off, Nikkei -2.1 @26,432, E-Minis -1% @4077 EUR/JPY steady with EUR/USD heavy but holding above 1.0500, 137.51-82 EBS GBP/JPY 160.72-161.41, heavy, AUD/JPY heavy too, 91.58-92.40 Japan April PMI services 50.7, flash 50.5, comp 51.1, Mar 50.3AUDUSD Bias: Bullish above .7300 Bearish below Holds above 0.7000 – China trades better than expected AUD/USD made fresh session low at 0.7004 but holding above 0.7000 for now China exports and imports for April came in a bit better than expected The better China data may give the AUD/USD a short reprieve after sell-off Sellers are now tipped at former support at 0.7030 AUD will continue to struggle while equities and metals remain pressured.

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Three stocks that will profit from electric-vehicle growth

Professional investor Konrad Sippel of Solactive, index provider for the Electric Vehicle Charging Infrastructure ETF, picks three firms solving the electric-vehicle charging challenge.

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Why Elon Musk's Twitter takeover could mark the end of the reign of the CEO

The overlords of the corporate world have had their day, says Matthew Lynn. Long live the Technokings!

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China housing market bubble could be a new headache for CCP

Mortgage lending growth in China is slowing amid ongoing downturn in real estate market, caused by defaults among developers, lockdowns and worsening consumer sentiment.The total volume of outstanding mortgage loans in China at the end of March was 53.2 trillion yuan ($8 trillion), rising by 6% compared to the same month of 2021 - the lowest pace since the start of tracking these data by the PBOC, in 2009.In 2021, the volume of mortgage loans in China grew by 7.9%.According to preliminary data from China Real Estate Information Corp., home sales by China's top 100 property developers fell nearly 60% in April amid lockdowns in a number of major cities, despite easing of restrictions in the housing market in more than 60 cities in China.China's average mortgage rate stood at 5.42% in March, down 17 basis points year-to-date, the PBOC said on Friday.China mainland Yuan has been declining for the third week in a row as the government tries to cushion the blow from devastating lockdowns by stimulating exports. USDCNY rallied 5% since April 15 and is expected to continue devaluation as the CCP pledged to boost support to the ailing economy.

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Britain’s post-Brexit trade chaos

The government has yet again postponed introducing post-Brexit checks on EU imports. Why has it done this, and does it matter?

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MacKenzie Scott: America’s fairy godmother

MacKenzie Scott pledged to keep on giving money away till the safe was empty when she split from husband Jeff Bezos. That’s easier said than done when you own a chunk of Amazon.

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FOMO Friday: GBP Plunges To Fresh Lows

GBPUSD CollapsesIt’s been another exciting week in financial markets. Several key moves have kept traders on their toes this week and as we draw to a finish the main attraction appears to be the sell-off in GBP. We’ve had plenty of record action recently, such as the massive decline in JPY, and this week was no different. GBPUSD fell to its lowest level since June 2020. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If not? There’s always next week.What Caused the Move?BOE Issues Dire WarningThe main catalyst behind the latest plunge in GBP was the May BOE meeting on Thursday. While the bank hiked rates by .25% as expected, the accompanying statement highlighted a much bleaker outlook than bulls were hoping for.BOE governor Bailey warned that the UK was facing a “massive downturn” over the remainder of the year as a combination of soaring energy prices, rampant inflation and ongoing supply-chain issues takes its toll. The BOE’s latest forecasts included heavy upward revision to its inflation view with the bank now forecasting CPI to peak around 10% by early next year. Bailey warned that severe impact on real incomes was unavoidable and that inflation would take around two years to moderate and fall back to the bank’s 2% target.With the bank now forecasting an even tighter squeeze on consumers over the rest of the year, rate path expectations have moderated. Nevertheless, two members of the BOE were seen voting in favour of a larger .5% hike, reflecting the growing rift within the BOE as it tries to deal with current UK economic conditions.Political Uncertainty Grows in the UK Away from the BOE, the latest set of local elections in the UK put further downward pressure eon the pound. The leading UK Conservative party was seen losing 131 seats while the main opposition gained 87 seats. The results have added to the sense of political uncertainty in the UK on the back of a long list of government scandals.Technical ViewsGBPUSDThe sell-off in GBPUSD this week has seen the market breaking down through the prior 2022 lows at 1.2426. Price is currently testing the bear channel support level and, while beneath the 1.2426 level, the focus is on a further push lower. Bearish MACD and RSI readings support a continued decline with 1.2022 the next bear target to note.

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GBP after BoE flagged stagflation risks

We saw another dovish rate hike from the BoE, as the central bank delivered a strong stagflation warning alongside a quarter point lift to Bank Rate, which now stands at 1.00%. The BoE’s projections implied that market pricing had been too aggressive on future rate hikes, which saw Gilts rallying in the wake of the statement, despite the bank’s announcement that it will now consider starting to sell its bond holdings. ECB members, which seem at loggerheads over the timing of the first rate hike, may take note, as Fed and BoE moves this week are a showcase on how to deliver “dovish hikes”.

The BoE hiked Bank Rate by a quarter point to 1.00% – as widely expected, as pretty much flagged at the last meeting. The decision brings the policy rate to the highest since 2009, although the 6-3 vote and warnings of a sharp slowdown in growth and a contraction in activity for most of next year highlights that there is now more caution on the policy outlook. Indeed, while the statement states that “most members of the Committee judge that some degree of further tightening in monetary policy may still be appropriate in coming months”, it added that “there are risks on both sides of that judgement and the range of views among these members on the balance of risks”. Nevertheless, with the policy rate now at 1% the Committee will still consider beginning the process of selling U.K. government bonds held in the Asset Purchase Facility.

The fourth consecutive hike from the BoE came against the background of higher than expected growth at the start of the year and a further tightening in labour markets, which left the risk of second round inflation effects on the table. Business confidence indicators have remained robust and continue to signal strong growth momentum, while consumer confidence has already been hit by the cost of living crisis. On balance the majority of Committee members didn’t expect the pain inflicted on households to slow consumption and demand sufficiently to bring inflation sustainably back to target down the line. The majority still saw the need for another rate hike today.

However, the case for additional tightening all but evaporated and the new projections suggest that market expectations for the rate path are much too pessimistic. Indeed, while U.K. inflation is set to peak above 10% later in the year, the policy report suggests that tightening in line with market pricing would leave inflation well below the BoE’s target. Market expectations had priced in a succession of hikes to bring Bank Rate to 2.5% by the middle of next year.  While today’s statement still suggests that most MPC members agree that “some degree of further tightening in monetary policy might still be appropriate in the coming months”, it is pretty clear that in the central scenario there won’t be as much tightening as the 150 basis points that markets had expected.

The central bank’s new projections warn that the economy is now expected to shrink for most of next year, with a technical recession on the horizon, as “sharp rises in global energy prices” are hitting household income and companies’ profit margins. The BoE now expects the economy to be around 2% smaller than was anticipated back in February, and inflation is estimated to peak just over 10% in the final months of this year. This would be the highest inflation rate since the early 1980s. Against that background, the labour market is expected to suffer next year, with joblessness anticipated to rise in every quarter until 2025 and the ILO unemployment rate to peak around 5.5%.

The policy report said “Conditioned on the rising market-implied path for Bank Rate and the MPC’s current forecasting convention for future energy prices, CPI inflation was projected to fall to a little above the 2% target in two years’ time, largely reflecting the waning influence of external factors, and to 1.3% in three years, well below the target and mainly reflecting weaker domestic pressures. The risks to the inflation projection were judged to be skewed to the upside at these points, given the risks of more persistent strength in nominal wage growth and domestic price setting than had been assumed.”

In projections conditioned on the alternative assumption of constant interest rates at 1%, CPI inflation was expected to be 2.9% and 2.2% in two and three years’ time respectively.” That would be a tad higher than target, but much closer than the outcome under the market implied path. While market rates declined, many consumers still face higher bills on top of the spike in the cost of living that has been hitting confidence already. Indeed, BoE’s Bailey said the peak in U.K. inflation is likely to be later than in other economies. While he also suggested that when CPI inflation starts to fall it will decline rapidly, though that won’t help consumers now. Bailey said the BoE recognises the hardship facing many in the U.K., but again that won’t mean much to those already feeling the squeeze.

It will increase the pressure on the government though to address the problem, and for Boris Johnson, who is facing tough local elections today, the BoE’s move couldn’t have come at a worse time. The IMF already put the UK’s growth forecast at the bottom of the G7 economies, and we suspect that even if steady rates still show inflation slightly above target at the end of the forecast period, the bank will take a pause now. Fine tuning via a careful and gradual reduction of bond holdings will likely be sufficient at this point and pressure not to squeeze household income further and endanger the housing market will likely mean caution on additional hikes.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

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 distribution.

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A simple lesson from Warren Buffett that even children can learn

Warren Buffett has an incredible investment record. And at the core of his strategy there is one very simple principle. Rupert Hargreaves explains what it is and how it can help you.

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Investment Bank Outlook 06-05-2022

CIBCFX FlowsTokyo saw its inflation accelerated to highest in near 30 years in April, Bloomberg said this was largely dur to soaring energy prices. One reporter noted that strong connection in Tokyo CPI to the national CPI which will be published on May 20. A similar boost will complicate BoJ message on inflation. Japan reopened today, UST yields ticked up and investors bought $YEN. Offshore $CNH took out the 6.7000 and it was nasty, sharp move to 6.7140, then above 6.7300, helped push US$ higher.According to our trader, Vaibhav said not surprising that over the first hour of bond trading we witnessed better selling interest from Japan and seems like there has been more away. We have therefore reversed some of the late day strength seen in New York but I won’t be surprised if yesterday’s lows get tested in our session ahead. 10-year UST yields rose above 3.07%.RBA published it quarterly SOMP and said it will need to raise interest rates further as unemployment is forecast to drop to the lowest level since 1974, fuelling wages growth and underpinning inflation. RBA also revised up forecasts of inflation this year at 4.6%, well above the 2-3% target band. However, RBA sees inflation lower mid-2024. AU$ slipped on back of $CNH move, got down to 0.70825 and then buyers surfaced, suspect linked to 0.7100 strikes maturing today and Monday total AU$1.7bn.EUR$ got to 1.05175 but somehow limited bounce despite the hawkish ECB comments overnight. Some rumour that small gamma play linked to downside strikes from 1.0520 to 1.0500. Market is expecting a weak German March industrial production, out at 2.00 pm Hong Kong.CitiEuropean OpenThe Asian session seemed muted, but there were undercurrents present ahead of payrolls today. UST yields pushed higher in Asia, while overnight losses in equities have spread to Asia. Tech-related FX in KRW and TWD have struggled as a result. THB opened substantially lower, although our trader noted no unusual flows. In G10, JPY was the worst performer as rate differentials came into play. AUD saw the SoMP confirm the RBA’s trajectory towards more rate hikes, for which the market is already well priced. CNH broke above the 6.70 handle that was closely watched.Looking ahead, payrolls for USD and CAD will feature prominently. We will also keep a close eye on SEK’s Riksbank minutes and EUR data in the form of Germany IP and retail sales, in addition to ECB speak. GBP will see BoE officials speak, which may add colour to yesterday’s decision. Over in EM, TWD, BRL and CLP see inflation prints, while MXN sees Gross fixed investments data.USDUSD trades on payrolls data at 13:30 BST for April. Citi Economics expects a continued slowing in the monthly pace of job gains in April, with nonfarm payrolls rising by 360k. Average hourly earnings should rise 0.5%MoM and 5.5%YoY in April, although with risks of an even larger increase in our view. We expect the unemployment rate in April to fall modestly to meet the pre-pandemic low of 3.5%, with roughly balanced risks. We also have Fed’s Williams on the agenda at 14:15 BST and Fed’s Bostic at 20:00 BST, though only the former may influence price action in the near-term.

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Daily Market Outlook, May 6, 2022

Daily Market Outlook, May 6, 2022 Overnight Headlines China Orders Government, State Firms To Dump Foreign PC’s Chinese Analysts: PBoC Many Ease MonPol In Q2 Despite Fed Hiking Shanghai Says Covid Infections On Downward Trend For 2 Weeks Japan’s Tokyo Consumer Prices Rise At Highest Pace In Seven Years Japan's PM Kishida Hints At Border Reopening For Travellers In June Japan Seeks Quick Start To US-Led Indo-Pacific Economic Framework The RBA Drastically Raises Inflation Forecasts, Flags More Rate Hikes ECB Doves Put To Flight As Interest Rates Set To Rise In July Dollar Dominance Crushes Asian Currencies As Bond Yields Surge Crude Oil Gains On Supply Concerns After EU Laid Out Plans For Sanctions US Unveils Plan To Buy Back 60 Mln Barrels For Emergency Oil Stockpile Press Sec Psaki: White House Concerned About OPEC Antitrust Bill Asian Shares Slide After Wall Street Frets Over Rate Hike ConsequencesThe Day Ahead Most Asian equity markets are down sharply overnight. That follows a big fall in US equities yesterday, reversing the previous day’s rally. Markets appear to be reassessing their initial positive response to Wednesday’s Fed monetary policy update reflecting concerns that US interest rates have significantly further to rise. Former Fed Vice-Chair Clarida warned that interest rates will need to rise to at least 3.5% to tame inflation. Meanwhile, European Central Bank policymaker Holzmann said that they would discuss hiking rates at the June meeting and are likely to decide on one. Today’s US monthly labour market report will, as usual, be seen as a key bellwether of economic conditions. The April update obviously comes too late to have an impact on this week’s decision to raise rates, but both it and succeeding reports are likely to be important factors in determining the extent to which the Fed continues to hike rates. In his press conference following Wednesday’s US monetary policy update, Fed Chair Powell noted concerns about inflationary pressures not only from international conditions but also from a ‘red hot’ labour market that risks pushing up wage growth. Last week’s Q1 Employment Cost Index showed labour costs growing at their fastest pace for more than 25 years. Today’s report is unlikely to reveal any signs of labour market pressures easing. Look for another solid monthly rise in employment of 450k and a further fall in the unemployment rate to 3.5%, taking it back to its pre-pandemic low. Most noteworthy may be earnings growth which should hold close to the recent high of 5.6%y/y. The UK April PMI construction index will provide timely information from an important cyclical sector. The March reading for overall activity was unchanged from February, holding at its highest level since last June. However, business optimism fell to its lowest since October 2020 reflecting concerns about inflationary pressures and the potential economic impact of the Ukrainian crisis. A number of Bank of England and US Fed policymakers are scheduled to speak today, and attention will be on what they have to say about this week’s monetary policy announcements. In the case of the Fed, possibly of most interest will be whether policymakers have anything more to say regarding whether a 75 basis point rate hike at an upcoming meeting is a likely option after Fed Chair Powell seemed to talk down its probability. FX Options Expiring 10am New York Cut EUR/USD: 1.0425 (491M), 1.0530-35 (370M) 1.0550 (263M), 1.0570-75 (550M), 1.0600 (581M) 1.0650 (782M), 1.0700 (569M), 1.0800 (1.2BLN) USD/JPY: 128.50 (1.345BLN), 130.00 (410M), 131.00 (465M) GBP/USD: 1.2400 (441M), 1.2450 (592M), 1.2500 (415M) EUR/GBP: 0.8450 (581M), 0.8500-10 (600M), 0.8550 (731M) 0.8575-85 (933M) USD/CHF 0.9570 (300M). EUR/CHF: 1.0450 (417M), 1.0675 (710M) AUD/USD: 0.7000 (524M), 0.7100 (908M), 0.7200 (972M) 0.7300 (2.27BLN) USD/CAD: 1.2700 (988M), 1.2725 (382M), 1.2745-55 (764M) 1.2760-70 (710M), 1.2800 (912M), 1.2835-40 (1.29BLNTechnical & Trade ViewsEURUSD Bias: Bearish below 1.0950 Bullish above EUR/USD – Consolidates above 1.0500 ahead of US jobs report EUR/USD opened -0.77% at 1.0540 after USD broadly gained on higher US yields After trading 1.0550 early Asia it came under pressure when Asian markets fell EUR/USD traded down to 1.0517 before settling around 1.0535 late morning Bids are eyed ahead of 1.0490 where support has formed this week More support at the April 28 trend low at 1.0469 Resistance is at the 10-day MA at 1.0567 and 21-day MA at 1.0707 Market awiats US jobs report and reaction in the US Treasury market EUR/USD likely to remain under pressure while USD is safe-havenGBPUSD Bias: Bearish below 1.30 Bullish above. Gently bid on bargain hunting, in a busy session +0.05% in a 1.2334-1.2380 range with consistent strong interest on D3 PM Johnson's Conservatives suffer early losses in local elections Many seats still to be counted- litmus test for PM's popularity Charts; momentum studies edge lower, 5, 10 & 21 day and week MA's slide 21 day Bollinger bands fall, as the strong bearish setup is back in play 1.2525 10 DMA resistance tested this week - first major barrier 1.2786 falling 21 day moving average remains pivotal resistance 1.2325 NY low and 1.2252 June 2020 base are initial supportsUSDJPY Bias: Bullish above 125 Bearish below Bid with 2022 high in sight, as Treasury yields climb +0.3% in a 130.10-130.80 range, USD bid with firmer UST yields in Asia Tokyo consumer prices rise at fastest pace in 7 years Data may be an indicator of more broad based inflation in Japan Techs - 5, 10 & 21 daily, weekly and monthly moving averages head higher Rising Kijun line adds to the strong bullish trending setup Close below 126.45 Kijun line needed to end the topside bias 131.25 April 2022 top initial resistance then 135.20 2002 peak Tokyo 130.10 low then NY afternoon 129.99 base first supportAUDUSD Bias: Bullish above .7300 Bearish below AUD/USD opened -1.9% at 0.7114 after USD surged on hawkish Fed outlook Early Asian buying sent AUD/USD to 0.7132 before reversing lower Asian shares fell hard and USS/CNH broke higher to send AUD/USD to 0.7082 Buyers stepped in when markets settled and AUD/USD is back to 0.7110/15 AUD/USD vulnerable as risk assets remain unsettled US payrolls today may push US yields and USD higher Resistance is at 10-day MA at 0.7121 and close above relieves pressure Strong resistance is at 0.7265/85 where the 21-day and 200-day MAs converge Support is at Monday's 0.7030 low and break targets 0.6967

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-may-6-2022"
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