Markets

As we pointed out yesterday, the big Santa effect has been front loaded over the past years, but there is one last possible final push higher for the believers of the Santa rally.

From the Market Ear: Fat and flat This market lacks a new trend.

BofA Global Research with the note: Demand concerns are filtering into oil markets… Global crude oil and petroleum product prices have come down sharply in recent weeks (Exhibit 4), with middle distillates pressuring the complex lower.

Morgan Stanley with the note: This week, investors will be hyper-focused on the November CPI release on Tuesday and then the Fed’s reaction to it on Wednesday.

  AUD/USD Looks unwell to me…….

The Albanese Government has flagged increased regulation of both the ‘buy now, pay later’ (BNPL) sector and cryptocurrency exchanges.

Russian President Vladimir Putin has given a speech ordering “a special operation in Donbas”: Russian state media is also confirming.

Investment guru Ray Dalio is all in on the Fed/ECB print orgazmo and says to borrow like no tomorrow: “This printing of money and buying of debt assets has driven interest rates so low that cash and bonds are stupid to own,” he wrote in a post on LinkedIn.

Wall Street couldn’t wait for the new year to hit new time highs, having lifted nearly 30% in 2021, capping off one of the best years in history.

Morgan Stanley with the note: Tesla reported 4Q unit deliveries roughly 15pct ahead of consensus, annualizing to over 1.2mm units BEFORE contribution from Austin and Berlin which we ultimately expect to be far larger plants than Fremont and Shanghai.

Societe Generale with the note: The ongoing post-pandemic monetary easing cycle started with the first rate cut of July 2019 after tightening reached a peak in December 2018.

Mizuho with the note: Central banks are often viewed as the guardians of inflation, but the Fed and ECB now face a predicament: with rapidly rising prices a political issue in the US and elsewhere, central banks that remain dovish have come under increased criticism and been forced to reframe some of their commentary.

Goldman with the note: The November FOMC minutes provided little new insight into the FOMC’s tapering plans.

TS Lombard with the note: Not all inflation periods are created equal: when inflation is “demand-pull”(pro-cyclical), corporates are able to pass on PPI increases to customers.

I had a fascinating space investment conversation (podcast) yesterday with Dr Andrew Barton, an engineer specialising in space technologies with a long career in both Australia and internationally.

Runaway inflation is the theme du jour.

The Q1 2021 reporting season is in full swing in the US, Europe and Japan and profits are booming.

Quelle surprise. His Royale with Cheetos has decided at the last minute to squash the long awaited yet extremely underwhelming stimulus bill from the US Congress, wanting more money in the stimulus cheques ($2000 vs the paltry “let them eat cake” $600) and removing a lot of riders and other “unnecessary” spending.

Markets move in cycles. The last 40 years have seen interest rates down from 20% to less than 1%, quietly fuelling a rise in bond returns over the same time. This has driven the return of the benchmark 60/40 portfolio (60% stocks and 40% government bonds).