ProfZero

ProfZero

INVESTMENT CONTEXT In the wake of robust demand despite mounting recession fears, Saudi Aramco hiked its crude oil prices for Asia's market to near record on July 5. In August Arab Light crude price will sit at USD 9.30/boe above the regional benchmark For the first time since May 11, WTI crude oil fell below USD 100/boe. According to Citigroup, oil price...

ProfZero

INVESTMENT CONTEXT For the first time in over three decades Germany reported monthly trade deficit in goods, which accounts for EUR 1bn, against analyst expectations of EUR 1.2bn surplus. The spike in energy prices translated into higher import costs, while the sanctions imposed on Russia and China’s coronavirus lockdowns negatively affected exports Iran...

ProfZero

INVESTMENT CONTEXT Inflation in Eurozone climbed from 8.1% in May to 8.6% in June, growing in 17 of 19 countries, with the notable exception of Germany (slide from 8.7% to 8.2%) and the Netherlands (from 10.2% to 9.9%). ECB officially scrapped its EUR 20bn/months bond-buying program on July 1 S&P 500 energy sub-index fell 17% in June, ranking as the...

ProfZero

INVESTMENT CONTEXT S&P 500 Energy Sector has registered 10-trading day decline dropping by 23.7% as fears of recession and lower demand pushed traders to liquidate longer-dated positions On June 23, all 33 of the U.S. biggest banks, some of which considered as systemically important, successfully passed the Fed's annual stress tests, confirming their...

ProfZero

INVESTMENT CONTEXT Fed Chair Jerome Powell confirmed the key priority of the Fed is bringing down inflation, even while acknowledging that monetary policy can't address critical components like food and energy. Powell also a stated a recession is “certainly possible,” but not in the near term as the U.S. economy remains “in good shape.” Turkey's central...

ProfZero

INVESTMENT CONTEXT Inflation in the UK reached 9.1% in May, up a tad from 9.0% reading in April IEA warned the EU to brace for a potential full cut of energy supply from Russia, with outsized repercussions on the bloc's GDP Germany’s finance minister called the EU ban on sales of combustion engines cars by 2035 a “wrong decision” Goldman Sachs upped...

ProfZero

INVESTMENT CONTEXT Lithuania limited railway cargo transit across its territory from Russia to Kaliningrad; Russia dubbed the move as "openly hostile" Russia overtook Saudi Arabia as China’s biggest supplier of crude oil. Russian crude exports to China surged 55% in May Turkey, Sweden and Finland met to discuss Turkey's opposition to the Nordic...

ProfZero

INVESTMENT CONTEXT Analysts sharply raised the probability of a recession, while the Fed announced its support to yet another 75bps rate hike in July A worldwide measure of people’s inflation expectations over the next year was more than 4% in May, up from 2.3% a year ago Russia cut 60% of natural gas supply to Europe via Nord Stream 1 pipeline; cuts...

ProfZero

INVESTMENT CONTEXT U.S. stocks dropped sharply on growing fears of recession. S&P 500 dropped 3.27% on June 16, recording its steepest weekly decline (more than 6%) since March 2020 To calm the fears of a new debt crisis in EU, the ECB is reportedly structuring a specific bond-buying program specifically aimed at supporting its most indebted economies ...

ProfZero

INVESTMENT CONTEXT Markets reacted positively to the Fed's 75bps rates hike on June 15. Traders in particular appreciated the positive tone on 75-50bps increase next month According to the latest Fed forecast, inflation is expected to top 4.3% by the end of 2022 and 2.7% in 2023; unemployment is said to reach 3.9% in 2023 and 4.1% in 2024 On June 16...

ProfZero

INVESTMENT CONTEXT Markets are weighing a possible 75bps rates hike at today's FOMC meeting. Were the Fed to follow suit on traders' expectations, it would be the steepest tightening since 1994 Traders price 255bps rate hikes from the Fed in its five remaining meetings this year China's central bank refrained from cutting the interest rate to protect...

ProfZero

INVESTMENT CONTEXT The worst trading week since January was followed by yet another market meltdown on June 13, with Nasdaq shedding 4.68% after dropping more than 7% in the previous 5 trading days, and S&P 500 finally entering bear territory just 2 years past the last one The U.S. 10-year Treasury yield, regarded as a global benchmark for borrowing...

ProfZero

INVESTMENT CONTEXT S&P 500 and Nasdaq recorded their worst week since January, sliding 5.1% and 5.6%, respectively; Nasdaq compounded losses close just shy of 7% in 2 days (June 9-10) ECB plans to stop its bond-buying program to cool record-high inflation (8.1% reading in May). The gap between Italian and German 10-year bond yields hit 227bps, the highest...

ProfZero

INVESTMENT CONTEXT On June 9, the ECB governing council announced its intention to raise interest rates by 25bps in July; a "larger increment", possibly sized at 50bps, is envisaged for September if inflation persists For the third time this year the World Bank cut its economic growth forecast for 2022, this time to 2.9%, after January and April revisions...

ProfZero

PROFZERO'S TAKE - RADAR RECAP Ever since the very first edition of our daily Parlay, Profs have repeatedly cited their radar to keep track of ongoing macroeconomic developments and forming views. It's about time then for a first full-blown recap of what we are looking at right now, and how do we see the next steps moving: World politics: The war in Ukraine...

ProfZero

INVESTMENT CONTEXT The epicenter of the Ukraine conflict is now Severodonetsk, where 70% of the strategically important eastern city had been captured by Russia, until a Ukrainian counterattack claimed it back The World Health Organisation (WHO) reported that there have been 780 confirmed monkeypox cases over the past three weeks in countries where the...

ProfZero

INVESTMENT CONTEXT President Vladimir Putin said that Russia was not blocking Ukrainian wheat from being exported, and that the grain could be dispatched via ports controlled either by Russia or Ukraine. Before the war, Russia and Ukraine accounted for ca. 29% of international annual wheat sales U.S. economy added 390,000 jobs in May, beating analyst...

ProfZero

INVESTMENT CONTEXT While OPEC+ agreed to boost crude oil production in the coming months, in a gesture of reconciliation to the U.S., it still remains unclear whether Saudi Arabia, the cartel's largest producer, will agree to further isolate economically Russia BlackRock's CEO, Larry Fink, sees inflation to remain high for "years" due to the persisting...