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Weeks in Review: 19-30 September 2022

The past weeks in review:

The FED raised rates by 0.75 %. No surprise. But the speech was very hawkish and the markets are expecting rates to continue rising until something breaks in the economy or the financial markets. Other central banks have the same stance: attacking high inflation with higher interest rates. The stock market tumbled until reaching the June 2022 lows.

In the UK, a massive tax reduction was announced (without reducing government spending reduction, which will cause deficit increase), causing confusion in the markets. The GBP tumbled. The bank of England had to announce a gilt market operation, during for at least a few weeks. Will they return to quantitative tightening or not? Will the FED also pivot?

In europe, the energy crisis continues, after the sabotage of Nordstream 1 pipeline. Natural gas supply will not be re-established anytime soon.

In Ukraine, the results of the voting for the anexation of the eastern territories to Russia will allow Putin to take over the region and defend it by whatever means necessary... While this happens, NATO demonstrates the power of HIMAR weapons in Latvia.

The fortnight ends with with major stock market indices at new lows - possibly not the bottoms...



The Markets and the Economy


Video: Fed Going Bigger and Bolder, Here’s What You Should Own: Chris Versace

Channel: Stansberry Research




Video: Get ready for a hard landing as rates keep rising to contain inflation

Channel: Small Caps






 







Will the Central Banks Blink or not Blink?

 

Video: Bank of England Pivots First, Fed to Follow - Ep 844

Channel: Peter Schiff



 


OIL
 
 
WTI crude futures were trading around $80 per barrel on Friday, set to decline for the fourth straight month and on track to post their first quarterly loss since the first quarter of 2020, down over 20% since the end of June. Oil markets have been selling off since June on tightening monetary conditions that sparked concerns over a global recession and weaker energy demand. On top of that, a surging dollar added to the bearish sentiment. Meanwhile, investors are looking ahead to an OPEC+ meeting in October as weaker oil prices led to speculations that the cartel could announce another supply cut, with Russia reportedly lobbying the group to slash output by about 1 million barrels a day. Markets are also monitoring an escalating energy conflict between the European Union and Russia as an EU ban on Russian oil is set to take effect in December.



Natural Gas
 

US natural gas futures were at $6.9/MMBtu, near two-and-a-half-month lows and were set to drop for a sixth week in a row for the first time since January 2015 on the back of lower demand due to Hurricane Ian and record output. Natural gas prices have eased significantly from an over 14-year high of $10/MMBtu in August, down roughly 25% in September, as domestic supplies increased while moving in tandem with lower prices in Europe. US natural gas use has already been reduced for months by the ongoing outage at the Freeport LNG export plant in Texas, leaving more gas for US utilities to inject into stockpiles for next winter. Considering Q3, however, natural gas prices were almost 30% higher after a series of heatwaves this summer across the US sent demand from gas-fired power plants to all-time highs, at a time of increased demand for US LNG exports amid concerns of European shortages.
 

 
 

 
Markets
 

US stocks fell in volatile trading Friday, with the Dow losing more than 500 points, the S&P 500 and Nasdaq lost 1.5% each, as investors digested a slew of economic releases. The Fed's preferred inflation measure, the US core PCE price index, came well above expectations in August, worrying investors that inflation may be stickier than anticipated. On top of that, a report from the US Commerce Department showed that personal spending rebounded in August, pointing to a still resilient economy. Markets rallied early in the session as Fed Vice Chair Lael Brainard acknowledged the need to monitor the impact rising borrowing costs could have on global market stability. All three benchmarks are now on track for sharp weekly and monthly declines, with the Nasdaq losing the most in September, nearly 12%. All indices are headed for three straight quarters of decline for the S&P for the first time since 2009 and for the Nasdaq since the dot-com bubble.





Crypto
 

Bitcoin US Dollar traded at 19336 this Saturday October 1st, decreasing 88 or 0.45 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin lost 3.21 percent. Over the last 12 months, its price fell by 59.43 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 17203 by the end of this quarter and at 12685 in one year, according to Trading Economics global macro models projections and analysts expectations.






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