Week in Review: 5-9 December 2022

Summary:

    The ISM Services PMI was released and the number was higher than last month (56.5 in November of 2022, vs 54.4 in October). Business activity increased faster (64.7 vs 55.7) and employment rebounded (51.5 vs 49.1), prompted by a new fiscal period and the holiday season. Also, price pressures eased (70 vs 70.7), inventories shrank less (47.9 vs 47.2) and supplier deliveries continued to slow (53.8 vs 56.2), with increased capacity and shorter lead times accounting for an improvement in supply chain and logistics performance. Meanwhile, a slowdown was seen in new orders (56 vs 56.5) and backlogs of orders (51.8 vs 52.2).

    The Producer Price Index for final demand in the US rose 0.3% month-over-month in November of 2022, the same as an upwardly revised 0.3% increase in October and above market forecasts of 0.2%. Cost of services went up 0.4%, the biggest gain in three months, led by securities brokerage, dealing, investment advice, and related services, which jumped 11.3%. Cost of goods edged up 0.1%, led by a 38.1% surge in prices for fresh and dry vegetables while gasoline prices dropped 6%. Compared to the same month in 2021, producer prices were up 7.4%, the smallest increase since May last year, but higher than expectations of 7.2%.

    Next week, all eyes will be on the US CPI report (Tuesday) and Fed Interest rate decision(Wednesday), and, especially the conference after the decision, where the hawkishness of the central bank will probably push the markets down, avoiding further near term rallies and the easing of monetary conditions.

Economic data source: Trading Economics

 

 

Video: The Fed is Stealing Your Retirement | Michael Pento

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A Tsunami of Stupidity!

If the best argument for crypto is beauty and "aesthetics", then it is worthless. Ridiculous interview from the part of the guest. We need data, real use cases, etc. CRYPTO IS NOT FLAWLESS!!! You need the internet to transact! You need to be able to use it to buy stuff!!! "The most important in investment is direction?" Even if direction is pure speculation? Yes??? This was soooo fun to watch!!!!! This is like a religion!!!! Make your own research!!!

 

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Channel: Stansberry Research

A Walk Around the Markets

 

OIL

 

Source: Trading Economics

 

WTI crude futures fell back to below $71 per barrel on Friday, the lowest in 12 months, bringing the weekly decline to 10% pressured by growing concerns about a potential global recession-driven demand downturn, particularly among advanced economies. COVID-19 infections in China are set to surge further as some restrictions are being eased depressing economic growth in the second-largest crude oil consumer in the next few months. On the other hand, the shutdown of the Keystone pipeline added to the highly uncertain supply outlook. Investors are also assessing the impact of the latest sanctions on Russian oil and G7 price cap with President Putin warning that Moscow might cut oil production in response. Meanwhile, OPEC+ decided to stick to their existing policy of reducing oil output by 2 million barrels a day from November through 2023.

Natural Gas

 

Sources: Trading Economics

Natural gas prices in the US extended gains for a third session to $6.3/MMBtu on Friday, moving further away from a five-month low of $5.3 hit on December 6th, prompted by forecasts of cold weather from next week. Still, prices remain unusually subdued for this time of the year, down nearly 10% this month, as milder weather in most of October and November delayed the winter heating season while record levels of production added to the bearish sentiment. EIA reported that US production of dry natural gas used mostly in homes and business for heating, cooking and electricity, is set to break an annual record 98.0 Bcf/d in 2022 and to average between 100 Bcf/d and 101 Bcf/d in 2023, amid more pipeline infrastructure expansion projects in the second half of the year. EIA sees natural gas prices at the US Henry Hub to average $5.62/MMBtu in the first half of 2023.

 

 

US Stock Markets

 

Source: Trading Economics

US stocks closed lower on Friday, with the Dow losing more than 300 points, and both the S&P 500 and the Nasdaq falling 0.7% as investors digested a slew of economic releases and remained concerned about the rate hikes. The producer price index, rose 0.4% in November, while analysts expected a modest 0.2% gain. On the other hand, the University of Michigan's consumer confidence unexpectedly improved showing a drop in short-term inflation expectations to the lowest level in more than a year. Meanwhile, the Fed is set to raise rates by only 50 bps next week but it may not be possible for the central bank to architect a soft landing and prevent a recession. On the corporate side, DocuSign surged over 15% on better-than-expected quarterly results, while Lululemon tumbled 12% after issuing weak Q4 guidance. For the week, the Dow fell 2.8%, its worst week since September while the S&P 500 was down 3.4%, and the Nasdaq shed 4%.

 

Bitcoin

 

Source: Trading Economics

Bitcoin US Dollar traded at 17165 this Sunday December 11th, increasing 57 or 0.34 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin gained 2.24 percent. Over the last 12 months, its price fell by 65.75 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 15532 by the end of this quarter and at 11508 in one year, according to Trading Economics global macro models projections and analysts expectations.

 

Gold

 

Source: Trading Economics

 

Gold prices traded above $1,790 an ounce but retreated from session highs on Friday, as the dollar bounced back after fresh PPI data showed producer prices in the US rose more than expected. The next big catalyst for the bullion will be the US CPI report on Tuesday while the Fed, the ECB and the BoE will also decide on monetary policy during next week. The three major central banks are expected to deliver smaller rate hikes but attention will turn to terminal rates and any signs on whether policymakers are getting ready to pause or continue tightening. Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion and dent its appeal, and vice versa.

 

Silver

 

Source: Trading Economics

Silver futures rose to above $22.6 per ounce at the start of December, hovering at levels not seen since May amid expectations for a slowdown in monetary tightening by the Federal Reserve. Fed Chairman Powell stated that it is likely that the US central bank will slow the aggressiveness of rate hikes this month, easing demand for the dollar and driving investors toward bullion. Besides bullion, softer rate hikes in the US and a cut in the reserve ratio by the PBoC supported expectations of higher demand for industrial silver usage as electricity conductors, tracking the rebound for copper. Signs of low supply also supported prices, as New York’s COMEX inventories fell 70% in the last 18 months to just over 1 million tonnes. Also, the London Bullion Market Association stockpiles fell for the 10th straight month to a record-low 27.1 thousand tonnes in November.