Friday, January 28, 2022

A country-house getaway in the north

The Backhouse room at Rockliffe Hall gets its name from the Backhouse family, who founded the Backhouse’s Bank in the mid-18th century. The family were Quakers, originally in the linen industry, moving onto banking then railways, but they were also passionate botanists. The bank’s headquarters were in Darlington, which is where Alfred Backhouse moved to manage it. It was a pleasing synchronicity to learn he had married his wife Rachel in Plaistow, not far away from where I had travelled from in east London. 

The room is one of Rockliffe Hall’s Old Hall suites, all of which feature a king-size bed draped in luxurious linen, a lounge with a smart television, and sweeping views of the resort gardens and surrounding woodlands. We were lucky enough to call it home for two days, and it really did feel like it.

Original plans for the hotel date from 1774, but it wasn’t until 1863 that it became the Rockliffe Hall estate. Today, it is a golfer’s paradise, foodie haven and spa destination, with kind, attentive and friendly staff. Shortly after we checked in we were whisked away to the aforementioned spa, where we were the lucky recipients of a bespoke, hour-long facial that left us revitalised and glowing. The spa also offers Indian head massages, anti-ageing treatments, body scrubs and massages. The Old Hall suites and the spa are connected, meaning you can go from your bed to the treatment room in the comfort of your swimsuit and complimentary bathrobe and slippers, so that you’re ready for a dip in the heated pool straight afterwards.

Or if you’ve worked up an appetite after your treatment, you could also head to the hotel’s latest offering, Nu Sana, also linked to the spa. The laid-back feeling of relaxation in the spa extends to its restaurant, which focuses on healthy, nourishing dishes. I had the flake-in-your-mouth tender grilled sea bass, accompanied by a zingy fennel and citrus salad and lemon and herb new potatoes. My partner had the belly pork ramen, a hearty, rich broth that warmed the insides, perfect to counter the icy wind that swayed the chairs on the outdoor terrace. 

Breakfast in bed, Rockliffe Hall

© Rockliffe Hall

Time for cocktails

Before dinner, make time for a visit to the cocktail bar, which is stocked with what I am sure must be every spirit under the sun. The bar is nestled in a cosy nook of the hotel, and the bartenders are knowledgeable and classy.

If you’re only staying for a night, book dinner at The Orangery. It’s the hotel’s fine-dining experience, serving innovative, seasonal à la carte and tasting menus. We were treated to the nine-course tasting menu, to which you can add a wine pairing (£50) or a premium wine pairing (£90). We opted for the former. Our excellent sommelier talked us patiently through the light white wines that paired with the hand-dived Orkney scallops, topped with pork cheek and coconut, and the cured chalk-stream trout served with cucumber and marigold. Full-bodied reds followed along with tender salt-aged Ripon lamb, and finally sweet, thick dessert wine to accompany my favourite course, the chocolate orangery, a sweet orange ice-cream ball coated in velvety dark chocolate that melted in the mouth.

The indulgence of dinner meant all alarms were snoozed the next morning, meaning we missed our reservation for breakfast at the same restaurant, which is open for afternoon tea too. The staff booked us in for brunch at the Clubhouse instead, the hotel’s more laid-back restaurant serving English staples, overlooking the vast golf course.  

Gold course, Rockliffe Hall

© Rockliffe Hall

It wouldn’t have been a true British getaway if the weather hadn’t been rainy and grey. Luckily we escaped this in the spa, which extends outside the treatment rooms to encompass a 20-metre long pool and a Hydropool, a round, heated pool with a wide array of timed pressured jets that massage the body. The spa also features several unique saunas, and an ice room for the very brave. The spa garden is also well worth a visit. The outdoor space has a heated infinity pool, comfortable enough to make us forget about the cold breeze and mild rain, as well as a sauna and tepidarium beds. It only allows about a dozen people at a time, guaranteeing peace and quiet. 

If you’re the type to choose a walk over lounging by the pool after a hefty meal, there are several walks through the hotel’s surrounding woodlands and alongside the river, perfect for birdwatching, or just to help make space for the next meal. 

Nicole was a guest of Rockliffe Hall. Rooms from £239. See rockliffehall.com



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Market update – January 28 – Gold set for a biggest weekly fall

 Confidence that the US economy will be able to cope with the series of rate hikes that are penciled in by the Fed has returned – at least for now. Markets are also positioning for another hike from the BoE next week, while the ECB is increasingly under pressure to justify the commitment to ongoing net asset purchases for much of the year.

  • Geopolitics:  Biden Administration warned a Russian invasion of the Ukraine is imminent.
  • Economic Data: The stronger than expected US GDP numbers helping to lift indexes out of negative territory. Australia’s PPI rate jump to a whopping 3.7% y/y in Q4, which added to inflation concerns, but didn’t prevent local bonds from rallying, after the sharp sell off yesterday.
  • USDIndex gapped up to 97.35.
  • 10-year rate has lifted 1.6 bp to 1.182%. JGB rates are up 0.7 bp at 0.16%.US 2-yr yield hits highest since Feb. 2020.
  • EquitiesGER40 and UK100 futures are mixed thought, with the GER40 futures down -0.1%, the UK100 future up 0.17%, after European markets managed to close with broad gains yesterday. By contrast Topix and Nikkei are up 1.9% and 2.6% respectively and the ASX rallied 2.2%. USA100 declined -1.4% but currently back to 14100 area, with the USA500 -0.54% lower but currently back to 4350 area.
  • China bourses underperforming ahead of the Lunar New Year holidays and with concern over China’s slowing growth, Covid policies and regulatory crackdowns weighing.
  • Earnings: Apple posted record revenue of $123.9bn in the Q4 of 2021, an 11% gain from a year before as its services business expanded and chip shortages were largely confined to iPad sales.
  • USOil – steady at $86.00.
  • Gold – extended losses below 200-DMA to $1791.
  • FX marketsEUR has remained under pressure and EURUSD slipped to 1.1125, while GBP strengthened, with Cable at 1.3370, and EURGBP slipping to 0.8311. As risk appetite improved, USDJPY is at 115.66.

European Open –  The March 10-year Bund future is fractionally higher, Treasury futures are underperforming slightly, while in cash markets the US 10-year rate has lifted 1.6 bp to 1.82%, as stock market sentiment continued to improved, also helped by positive earnings reports from Apple.

Today –Today’s data calendar has preliminary GDP readings for Germany, France and Spain, as well as Eurozone ESI economic confidence. In US, the focus will be on Q4 ECI, personal income and Michigan consumer sentiment.

Earnings:  Today’s earnings calendar features reports from Chevron, Caterpillar, Charter Communications, Colgate-Palmolive, Phillips 66, Weyerhaeuser, Synchrony Financial, and Booz Allen Hamilton.

Biggest FX Mover @ (07:30 GMT) GBPJPY (+0.34%) Breached 155 breaking 38.2% of Decembers downleg. Fast MAs turn flat now with all momentum indicators keep pointing further higher. ATR (H1) at 0.176 and ATR (D) at 1.064.

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 distributed without our written permission.



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Daily Market Outlook, January 28, 2022

Daily Market Outlook, January 28, 2022 Overnight Headlines Tokyo Inflation Slows, Bolstering BoJ Case For Standing Pat IMF Urges Japan To Scale Back Pandemic Support, Raise Taxes IMF Urges BoJ To Consider Targeting Shorter-Term Yields Argentina, IMF Reach Understanding On Fiscal Path For Deal Aus, NZ Dlrs Nurse Painful Losses As Markets Go Mad For Rate Hikes Fed Should Sell Bonds, Not Just Let Them Roll Off, Pozsar Says Oil Rally Gathers Pace As WTI Heads For A Sixth Weekly Advance Asian Stocks, U.S. Futures Regain Footing After Fed Rate Shock Apple Sales & Profit Top Estimates As iPhone Dodges Supply Chain HitsThe Day Ahead Asian equities are up this morning with the exception of most Chinese indices. Positive news on profits has been cited as a support. Chinese markets will be closed next week for the lunar new year. Meanwhile, reports suggest that Chinese holiday travel has so far been slow, possibly due to the ongoing spread of Omicron. US President Biden voiced his concerns about a potential mid-February attack by Russia on Ukraine yesterday. There are no UK data releases today but the calendars for both the Eurozone and the US are busy. Already released Q4 GDP data for France saw a quarterly rise of 0.7%, better than expected but down from Q3‘s gain. This morning’s GDP releases for Spain and Germany are expected to paint a mixed picture. Spanish output is forecast to post a sizeable quarterly rise but German GDP is thought to have probably fallen reflecting the impact of the latest Covid restrictions. GDP data for Eurozone as a whole are due on Monday. Eurozone January confidence measures will provide further insight on the impact of the latest restrictions on economic activity. Other data such as the PMI measures appear to show a greater impact on services than on manufacturing. A similar result is expected from the latest confidence measures. In the US, the focus continues to be on the extent to which inflationary pressures are building. Today’s December reading for the Fed’s preferred inflation measure, the consumer expenditure deflator, is forecast to show a rise in both annual headline and core inflation in line with the already released CPI measure. Headline inflation is predicted to be up 5.8% (from 5.7% in November), which would be its highest in almost 40 years and almost treble the Fed’s inflation target. Inflation seems likely to have risen again in January not least because energy prices are up sharply in early 2022. The US Q4 employment cost index (ECI) may add to concerns that labour market tightness could further fuel inflation. The ECI is a more comprehensive but less timely gauge of labour costs compared to the measure in the monthly labour market report. It posted a record jump in Q3 and the Q4 reading is expected to have slowed only modestly. Fed Chair Powell has noted that the ECI is one of the things the Fed watches closely. Meanwhile, yesterday’s Q4 GDP data pointed to a fall in today’s reading for December consumer spending growth. Government bond markets remain under pressure in the wake of Wednesday’s US Federal Reserve monetary policy update. US shorter-dated yields rose most sharply as the market remained uncertain over how many interest rate hikes to expect this year. On Wednesday, Fed Chair Powell refused to rule out the possibility that they could rise after every subsequent policy meeting in 2022.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls )EUR/USD: 1.1075 (442M), 1.1100 (734M), 1.1130-35 (515M) 1.1150 (1.3BLN), 1.1200-10 (1.64BLN), 1.1270-75 (1.0BLN) 1.1300-10 (1.0BLN), 1.1320-25 (675M), 1.1350 (290M)1.1400 (475M), 1.1500-10 (535M)USD/JPY: 113.15 (655M), 114.00 (748M), 114.50 (645M)115.00 (1.38BLN), 115.50-55 (1.98BLN), 115.90-00 (1.7BLN) 116.50 (352M).USD/CHF: 0.8900 (500M), 0.9550 (500M)USD/CAD: 1.2555 (410M), 1.2630 (390M), 1.2695-00 (750M) 1.2800-10 (665M).AUD/USD: 0.6950 (210M), 0.7050 (458M) 0.7145-50 (700M).NZD/USD: 0.6735 (520M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.15 Bullish above EUR holds near recent lows vs USD, JPY, GBP EUR in a holding pattern in Asia for the most part near recent lows EUR/USD quiet between 1.1138-55 EBS, low yesterday 1.1131 Some chunky option expiries in area today, help contain action, cap 1.1100 E734 mln, 1.1125-40 total E615 mln, 1.1150 E1.3 bln EUR/JPY tad bid on pre-weekend/Lunar New Year position adjustments Asia 128.45-76 EBS, chunky option expiries also in area Today 126.25 E1.2 bln, 129.30 E472 mln, 130.00 E1.2 blnGBPUSD Bias: Bearish below 1.36 Bullish above. Bid as resilient stocks cap the U.S. dollar +0.1% - USD slipped with Asian stocks up and E-mini S&P futures +0.5% Strong Apple results behind equity rebound - traded +5% after hours Trades towards the top of a 1.3381-1.3395 range with moderate interest UK's empty shop numbers dip for the first time since 2018 Charts; 5, 10 & 21 day moving averages crest-fall, 21 day Bolli's expand Momentum studies slip, negative setup suggests further losses, but USD leads 1.3300, 76.4% December-January rise is initial significant support Break above 1.3560 21 day moving average needed to end downside biasUSDJPY Bias: Bullish above 114.50 Bearish below USD/JPY sandwiched between large option expiries at 115.00, 115.50-55 $1.4 bln 115.00, total $1.8 bln 115.50-55, 115.90-116.00 $1.7 bln too Tokyo mood risk on, Nikkei +2.1% @26,720, chunk of losses yesterday recouped Pre-weekend/Lunar New Year position adjustments tipped after recent falls US yields off recent highs but buoyant, Tsy 10s @1.815%, Thurs high 1.880% Decent Japanese importer demand at Tokyo fix, more bids on dips Japanese investors also likely buyers on dips, GPIF noted earlier in week Japanese exporters, option-related players, spec longs up top with offers EUR/JPY 128.45-76 EBS, GBP/JPY 154.19-70, AUD/JPY 81.02-33 Crosses up from recent lows but essentially heavy with risk mood volatile EUR/JPY option expiries - 126.25 E1.2 bln, 129.30 E472 mln, 130.00 E1.2 blnAUDUSD Bias: Bearish below 0.7250 Bullish above Trades towards top of a 0.7028-0.7044 range - busy early then moderate flow PPI beat expectations, +1.3%q/q vs 1.1% f'cast, 3.7%y/y vs 2.9% - no impact RBA rate decision a statement major event risk next week 5, 10 & 21 daily and weekly moving averages slide, 21 day Bolli's expand 0.7057 lower 21 day Bollinger band suggests AUD is oversold short term Targets a test of 0.6990-94, Nov 2020 and 2021 low's - major support Falling 0.7149 10 DMA and 0.7186 21 DMA initial significant resistance

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Dollar set for sparkling week as hike expectations surge



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Thursday, January 27, 2022

Crypto giant Binance hopes Russia will help regional growth



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Markets continue to adjust to FOMC outlook

Markets are mixed in the wake of the FOMC that left more questions than answers. About the only thing the markets know is that the Fed is on the move to unwind accommodation. Join Andria now for live analysis ahead of a big US data day!


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 distributed without our written permission.



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AUDCAD – Continues to test 2021 lows

AUDCAD, H4

The RBA will have its next interest rate decision meeting next week, on Tuesday February 1. The interest rate was kept at 0.1% in December, and while it is not yet possible for the RBA to decide how and when bond purchases of A$4 billion should fall, it will depend heavily on employment, inflation and spending data. The latest Q4 2021 inflation report was up 3.5% year over year from 3% in Q3 and above the 3.2% expected by the market, while the quarterly CPI was 1.3%, the highest in the past five quarters. This was mainly due to the increase in oil prices and global supply chain problems.

The Australian S&P/ASX 200 stock index was down -1.9% at 6,829 this morning, after the Fed last night showed a clear stance of raising interest rates in March with the end of its QE program, boosting stocks in the tech sector. Although there was a biotech decline In Australia’s economic data this morning, import prices for the fourth quarter of 2021 rose for the fourth quarter at 5.8% and export prices rose for the fifth consecutive quarter at 3.5%.

On the Canadian side, the BoC yesterday announced it kept interest rates unchanged at 0.25% at its first meeting of 2022, and dismissed previously provided guidance to maintain interest rates at a low level, as the overall economy is getting better. This will pave the way for the first rate hike since 2018.

Technically, AUDCAD is testing the 2021 low zone into the second week. As a result, in the H4 timeframe, a round descending triangle is seen where prices are below the MA50 line and are in line with the falling MACD in negative territory and the RSI at 41, so if the price breaks the previous low of 0.8975 there will be next support at the 161.8 Fibonacci level at 0.8780 (drawn from the December lows). Conversely, if the price is able to regain above the MA50, there will be next resistance at 0.9070 and the MA200 at the 0.9140 zone.

Click here to view the economic calendar

 

Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand

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.



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The Federal Reserve has turned inflation-fighter – how do you invest now?

Ever since the late 1980s or so, the Federal Reserve, America’s central bank,  has earned itself a justified reputation for being a pushover when it comes to markets.

This manifested itself in the phrase the “Greenspan put”. This was the idea that Alan Greenspan, Fed governor between 1987 and 2006, would always act to cushion markets if they looked wobbly.

The “put” survived Greenspan. His successors, Ben Bernanke and Janet Yellen, always managed to be more “dovish” than markets had expected.

Last night, current Fed chair Jerome Powell bucked the trend. And investors didn’t like it one bit.

Why the Federal Reserve has changed course

The Federal Reserve had its first interest-rate setting meeting of the year this week. Last night (UK time) they told us what they’d decided.

The actual decision wasn’t a surprise to markets, but the tone – showing no signs of concern about the recent market sell-off, for starters – was a lot more hawkish than investors had expected.

As a result, markets now expect interest rates to rise further and faster than they did before.

So what did the Fed say? Come March, the Fed will stop printing money to buy assets (ie quantitative easing – QE – ends). Not only that, but it’ll probably raise interest rates – maybe even by half a percentage point, not just a quarter point. Not only that, but it’ll quite likely start quantitative tightening (QT) at some point soon after that.

QT involves the Fed reversing QE. In other words, it doesn’t just stop printing money to buy assets, it starts to sell off the assets that it has already bought.

The real shift was in Jerome Powell’s tone. Markets quite often expect to get a bit of coddling from the central bank boss, particularly if rates are going up.

Not a bit of it this time. Powell emphasised that he’s worried about inflation. He emphasised that he sees inflation as a risk to workers and the labour market (usually, the labour market has been seen as a reason to keep rates low).

Most importantly, as John Authers points out on Bloomberg, “the central bank has also shown that it can live with the amount of equity market turbulence that it’s created so far”. There may well be a “Powell put”, but if there is one, it kicks in at a much lower price than investors have grown used to in the Greenspan/Bernanke/Yellen years.

What’s behind the change of strategy? As we’ve noted before, this is all driven by inflation. Powell’s predecessors had it easy. When you’re more worried about deflation than inflation, you can just print more money. That makes you popular.

Inflation is much harder to tackle. It’s now a headline issue, which means it’s a political issue (both here and in the US), which means that suddenly it’s public enemy number one, which means that Wall Street needs to fend for itself.

From that point of view, it’s better for Powell to talk tough now and get the market to tighten financial conditions for him (a stronger dollar and a weaker stockmarket are both forms of tightening), rather than leave it until he needs to do something much more drastic.

In effect, he’s hoping that a stitch today will save nine later. Because if inflation doesn’t go away, the level that interest rates might have to rise to would be very damaging indeed. So I wouldn’t expect Powell to shift course until there are either signs of serious financial distress (in credit markets say) or signs that inflation is alleviating (though I think he’d want to see more than just one or two readings before he changed tone).

What does this mean for your money? Buy banks, for one

We’ll keep an eye on all that. But meanwhile, what does this hawkishness all mean for your portfolio?

It’s easy to get caught up in the idea that a sliding US stockmarket will drive everything down with it. That’s a reasonable assumption, because it very often does.

However, the good news (for UK investors in particular) is that there are some industries that like rising interest rates. Bank stocks finally seem to be waking up from a lengthy slumber.

For example, Lloyds (which I own) is up around 5% so far this year. For perspective, the FTSE 100 – which of course also benefits from big oil, as well as the banks – is just about flat, and the Nasdaq composite is down nearly 15%. And Lloyds is far from being the only one.

It’s striking that the tech bubble and bust of the late 1990s saw the big tech companies falling out of favour and being neglected by investors for a good decade or more. After the fallout from that bubble, during the 2000s, the places to be were commodities and – in some cases – the financial sector.

Since the global financial crisis, banks outside the US have been largely neglected or treated as pariahs, certainly the boring old UK ones, which were detested by consumers (in many cases, rightly) and also subject to one of the biggest backdoor “QE for the people” schemes in history, the PPI scandal.

It’ll be fitting if the bursting of the current tech bubble (because arguably that’s what it is) coincides with a new bull market in neglected financials and other “dinosaur” stocks.

In fact, Julian Brigden of Macro Intelligence 2 Partners puts it very well in the latest MoneyWeek podcast, when he tells Merryn: “the first shall be last and the last shall be first”. You should definitely listen to this one if you haven’t yet – just click here.



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The Federal Reserve has turned inflation-fighter – how do you invest now?

Ever since the late 1980s or so, the Federal Reserve, America’s central bank,  has earned itself a justified reputation for being a pushover when it comes to markets.

This manifested itself in the phrase the “Greenspan put”. This was the idea that Alan Greenspan, Fed governor between 1987 and 2006, would always act to cushion markets if they looked wobbly.

The “put” survived Greenspan. His successors, Ben Bernanke and Janet Yellen, always managed to be more “dovish” than markets had expected.

Last night, current Fed chair Jerome Powell bucked the trend. And investors didn’t like it one bit.

Why the Federal Reserve has changed course

The Federal Reserve had its first interest-rate setting meeting of the year this week. Last night (UK time) they told us what they’d decided.

The actual decision wasn’t a surprise to markets, but the tone – showing no signs of concern about the recent market sell-off, for starters – was a lot more hawkish than investors had expected.

As a result, markets now expect interest rates to rise further and faster than they did before.

So what did the Fed say? Come March, the Fed will stop printing money to buy assets (ie quantitative easing – QE – ends). Not only that, but it’ll probably raise interest rates – maybe even by half a percentage point, not just a quarter point. Not only that, but it’ll quite likely start quantitative tightening (QT) at some point soon after that.

QT involves the Fed reversing QE. In other words, it doesn’t just stop printing money to buy assets, it starts to sell off the assets that it has already bought.

The real shift was in Jerome Powell’s tone. Markets quite often expect to get a bit of coddling from the central bank boss, particularly if rates are going up.

Not a bit of it this time. Powell emphasised that he’s worried about inflation. He emphasised that he sees inflation as a risk to workers and the labour market (usually, the labour market has been seen as a reason to keep rates low).

Most importantly, as John Authers points out on Bloomberg, “the central bank has also shown that it can live with the amount of equity market turbulence that it’s created so far”. There may well be a “Powell put”, but if there is one, it kicks in at a much lower price than investors have grown used to in the Greenspan/Bernanke/Yellen years.

What’s behind the change of strategy? As we’ve noted before, this is all driven by inflation. Powell’s predecessors had it easy. When you’re more worried about deflation than inflation, you can just print more money. That makes you popular.

Inflation is much harder to tackle. It’s now a headline issue, which means it’s a political issue (both here and in the US), which means that suddenly it’s public enemy number one, which means that Wall Street needs to fend for itself.

From that point of view, it’s better for Powell to talk tough now and get the market to tighten financial conditions for him (a stronger dollar and a weaker stockmarket are both forms of tightening), rather than leave it until he needs to do something much more drastic.

In effect, he’s hoping that a stitch today will save nine later. Because if inflation doesn’t go away, the level that interest rates might have to rise to would be very damaging indeed. So I wouldn’t expect Powell to shift course until there are either signs of serious financial distress (in credit markets say) or signs that inflation is alleviating (though I think he’d want to see more than just one or two readings before he changed tone).

What does this mean for your money? Buy banks, for one

We’ll keep an eye on all that. But meanwhile, what does this hawkishness all mean for your portfolio?

It’s easy to get caught up in the idea that a sliding US stockmarket will drive everything down with it. That’s a reasonable assumption, because it very often does.

However, the good news (for UK investors in particular) is that there are some industries that like rising interest rates. Bank stocks finally seem to be waking up from a lengthy slumber.

For example, Lloyds (which I own) is up around 5% so far this year. For perspective, the FTSE 100 – which of course also benefits from big oil, as well as the banks – is just about flat, and the Nasdaq composite is down nearly 15%. And Lloyds is far from being the only one.

It’s striking that the tech bubble and bust of the late 1990s saw the big tech companies falling out of favour and being neglected by investors for a good decade or more. After the fallout from that bubble, during the 2000s, the places to be were commodities and – in some cases – the financial sector.

Since the global financial crisis, banks outside the US have been largely neglected or treated as pariahs, certainly the boring old UK ones, which were detested by consumers (in many cases, rightly) and also subject to one of the biggest backdoor “QE for the people” schemes in history, the PPI scandal.

It’ll be fitting if the bursting of the current tech bubble (because arguably that’s what it is) coincides with a new bull market in neglected financials and other “dinosaur” stocks.

In fact, Julian Brigden of Macro Intelligence 2 Partners puts it very well in the latest MoneyWeek podcast, when he tells Merryn: “the first shall be last and the last shall be first”. You should definitely listen to this one if you haven’t yet – just click here.



from Moneyweek RSS Feed https://moneyweek.com/economy/us-economy/604395/the-federal-reserve-has-turned-inflation-fighter-how-do-you-invest-now
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Market Spotlight: Dollar Soars As Fed Signals March Hike

Fed Turns Up The HawkUSD bulls were not left disappointed by last night’s FOMC meeting. The Fed satisfied hawkish expectations, noting that “it will soon be appropriate to raise the target range for the federal funds rate”. With tapering of QE due to end by early March, the market expects the Fed to lift rates at that month’s meeting with Powell himself noting during the post-meeting presser that members are “of a mind to do so”.The greenback was firmly bid in response to the meeting with the Market now fully pricing in a March hike and upside risks starting to grow. The Fed is currently projecting four hikes this year though some players already suspect it might end up being as many as six. With this in mind, incoming data will be key to mapping the USD move over coming months. If the December/January omicron dip proves to be short-lived, this should keep USD upside intact near-term.Technical ViewsDXYThe Dollar Index is currently tracking the second scenario mapped out. The breakdown below the consolidation block between 95.83 -97.08 saw price trading lower to test the bull channel low and structural support at the 94.63 level. This region saw strong demand with price subsequently turning higher and now fast approaching a test of the 97.08 highs. A break here will put focus on 97.90 next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-dollar-soars-as-fed-signals-march-hike"
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The Crude Chronicles - Episode 121

Oil Longs Hit Ten Week HighsThe latest CFTC COT institutional positioning report shows that oil traders increased their net long positions last week by a further 26,000 contracts. This latest increased takes the net upside position back up to ten-week highs. Oil has been steadily bought over recent weeks, reflected in the ongoing rally in crude prices which has continued again this week. Oil prices have rallied a further 7% this week, extending the move off the December lows to an almost 40% rally now. Indeed, the latest push higher this week comes despite a fresh surge in USD buying and despite a bearish report from the Energy Information Administration.Geopolitical Tensions Supporting Oil PricesIn terms of upside drivers then, the key element supporting oil prices this week is the uptick in uncertainty around Russia/Ukraine tensions. The risk of a military conflict appear to be growing, with reports that Russia is planning to invade Ukraine by early February. The US and the UK have outlined plans to send troops to Ukraine in a bid to match Russia’s military build up along the border. With tensions growing and fears of a global fallout, Chinese and US officials have been engaging this week to try and de-escalate the situation. However, with the risk of military conflict remaining at elevated levels, oil prices look set to remain supported near term with the potential for dramatic gains if conflict ensues.EIA Reports Further Surplus Despite Strong DemandThe EIA reported a further build in US commercial crude stores last week. The group reported inventory surpluses of 2.4 million barrels, well above the 1-million-barrel surplus forecast and a sharp uptick on the prior week’s 0.5 million barrel reading. While demand remains strong, the heavy increase in production has seen the domestic market levelling off somewhat in recent weeks. Given that the winter is typically quieter, the opposite to the busy summer driving season, some uptick in stocks is to be expected. Looking at demand, however, the total products supplied number remains near all-time highs (the reading used as a gauge for overall demand), which is encouraging for bulls.Technical ViewsCrudeFor now, crude prices continue to track higher within the broad bull channel. Price recently retested the 83.75 level, which held as support, and with both MACD and RSI bullish, the focus is on a continuation higher towards the 90.85 level next and the channel top above. Worth noting bearish divergence creeping in on momentum indicators here which is something to monitor as we continue higher here.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-crude-chronicles-episode-121"
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Dollar Hits 2022 High as Market Prices in More Fed Hikes



from Forex News https://www.investing.com/news/forex-news/dollar-hits-2022-high-as-market-prices-in-more-fed-hikes-2750025
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Investment Bank Outlook 27-01-2022

CIBCFX FlowsNew Zealand 4Q annual CPI rose to 5.9%, highest in more than 30 years. According to Bloomberg, price increases were widespread and were particularly acute for home rentals and construction of new dwellings. Shipping disruptions that stem from closed borders and congestion at ports during the pandemic have added fuel to the inflation bonfire. The data is likely to encourage economists to increase calls for RBNZ to continue lifting rates in 2022. NZD$ did little after that number, risk-off had the pair trading down to 0.6620. Option strike at 0.6670 matures today for N$550mio. Strong resistance around 0.6700-10. Keep an eye out for NZD¥, break of 75.75 could attract selling interests.$YEN sold into and post-Tokyo fix. Some month-end selling as well. Weak risk sentiment continued to pile pressure on $YEN and YEN crosses. Japanese retail day traders have taken profit on their longs, rumoured that they are looking to position short close to 115.00 and re-enter long below 114.10.It took a bit of effort for AUD$ to break 0.7100. I guess traders are not particularly keen to go short ahead of RBA meeting next week February 1. General feel that corporate accounts are scooping this Aussie dollar on dips, probably explains the price action. Not much to speak about for option strikes, next support at 0.7040.Yield spreads of AU-NZ bonds narrowed, 2-year spread now at 115 bps, probably explained the price action of AUDNZD, traded up to 1.0710.On the BoC, both our economics and strategy teams said BoC accompanying press-conference were authoritatively hawkish. The Bank explicitly noted that they would begin a “decisive series of steps” to abandon emergency policies implemented at the start of the pandemic. It was a hawkish hold. $CAD moved higher to 1.2706, buyers we met were mostly platform names. WTI March contract has fallen beneath $87.00. Tonight we will have the January CFIB Business Barometer and November Payroll Employment Change.Death cross developed in the spot gold day charts, move under 1800 could entice sellers.CitiEuropean OpenAsia took the theme from the New York session and ran with it. Fed’s hawkish lean continued to reverberate with short-end US rates pushing higher, USD climbing and most of all, stocks plunging. US equity futures fell over 1%, upsetting the risk tone and dragging high-beta FX lower. Asia bourses were similarly battered with Nikkei sliding, which propped up JPY, while Kospi dropped 3% weighed by flighty foreign selling flows which pressured KRW.Looking ahead, we see an influx of data. The US will see Core PCE and Initial Jobless & Continuing Claims at 13:30 GMT. EUR will watch EB speak from Scicluna at 13:30 GMT as well, which will be closely watched following dovish comments from ECB officials. TRY will see a central bank inflation report, while TWD sees GDP at 08:00 GMT, and HKR trade data at 08:30 GMT. MXN will see trade balance data at 12:00 GMT. HUF sees a one week deposit rate decision at 08:30 GMT, where our economists forecast a 30bps hike to 4.30%. ZAR will see an interest rate decision, where Citi Economists expect a 25bps hike to 4.00%.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-27-01-2022"
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Dollar Up, Boosted by Fed’s Hint of Interest Rate Hike



from Forex News https://www.investing.com/news/forex-news/dollar-up-boosted-by-feds-hint-of-interest-rate-hike-2749883
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Don’t count resources out

Commodities have performed poorly over the past year, but they tend to move in long and volatile cycles. from Moneyweek RSS Feed https://m...