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Week in Review: 1-5 August 2022

This week the market's expectations have been confronted with the reality of job growth in the USA, high inflation numbers coming out of the UK and a pessimistic view of the future by the Bank of England.

The bear market rally may have halted or cooled down for now. Will the FED signal additional large interest rate hikes until the end of the year? Maybe...


U.S. Job Growth Unexpectedly Soared in July

Source: The New York Times

The employment gains, which far surpassed expectations, show that the labor market is not slowing despite efforts by the Federal Reserve to cool the economy.

 

Video: Worst economic prediction for a generation - as UK heads for recession

Channel: Channel 4 News

 

Video: Jobs Report Makes Notion of Fed at Neutral 'Comical': El-Erian

Channel: Bloomberg Markets and Finance



Video: Summers: The Economy Is in an Overheated State

Channel: Bloomberg Markets and Finance


 

 

 

As Monkeypox Spreads, U.S. Declares a Health Emergency

Source: The New York Times

The designation will free up emergency funds and lift some bureaucratic hurdles, but many experts fear containment may no longer be possible.

COMMENT: Now that we are approaching winter, is monkeypox going to become the new COVID??? Maybe...



China sanctions Pelosi over 'provocative' visit to Taiwan

Source: REUTERS

China has decided to sanction U.S. House of Representatives Speaker Nancy Pelosi and her immediate family in response to her "vicious" and "provocative" actions, the Chinese foreign ministry said on Friday.

"Despite China's serious concerns and firm opposition, Pelosi insisted on visiting Taiwan, seriously interfering in China's internal affairs, undermining China's sovereignty and territorial integrity, trampling on the one-China policy, and threatening the peace and stability of the Taiwan Strait," a ministry spokesperson said in a statement.

 

 

 

OIL
 
 
WTI crude futures bounced back to above $89 per barrel recovering from a 6-month low of $87.5 hit on Thursday but still were heading for an over 9% weekly loss, wiping out all the gains triggered by Russia’s invasion of Ukraine. Concerns are growing that a global economic slowdown prompted by higher interest rates will heavily impact fuel demand. Official data showed that US crude inventories unexpectedly grew last week and US gasoline demand dropped well below pre-Covid seasonal norms. Also, signs are emerging that supply is rising, with Libya’s oil production up for the second straight week. This week’s slump also came despite Saudi Arabia raising oil prices for Asian buyers to a record and OPEC’s decision to raise oil output scantily for September and warning of “severely limited” spare capacity.



Natural Gas
 

US natural gas futures fell toward the $8.0/MMBtu mark amid prospects of weakening air-conditioning demand due to less hot weather and after EIA reported a bigger-than-expected gas storage build last week. Data showed US utilities added 41 billion cubic feet of gas to storage during the week ended July 29th, well above expectations of 29 bcf. Also, Freeport LNG, a key export terminal in Texas, agreed with regulators to restart as soon as October. Meanwhile, demand from Europe continues to support prices as the key Nord Stream 1 pipeline from Russia to Germany is currently running at 20% capacity. Russia has already halted shipments to Denmark, Finland, Bulgaria, the Netherlands, and Poland and reduced supplies to Germany for not consenting to its natural gas payments demand in Russian rubles.

 
 

 
Markets
 

The Dow rose more than 70 points on Friday, while the S&P 500 and Nasdaq dropped 0.2% and 0.5%, respectively, after the US jobs report showed larger-than-expected payroll gains and wage growth, which will keep the Fed aggressively tightening monetary policy. The Labor Department's closely watched report showed that the US economy added 528K payrolls in July 2022, well above Wall Street expectations. The data followed hawkish comments from several Fed policymakers, which made a policy pivot even more elusive as the central bank sought to cool an overheating economy. Banks and energy stocks advanced while Tesla and other tech companies slumped. Focus now shifts to inflation data due next week, with US annual consumer prices expected to rise by 8.7% in July after a 9.1% surge in June. For the week, the Dow lost 0.1%, while the S&P 500 and the tech-heavy Nasdaq have outperformed by adding 0.4% and 2.2%, respectively.



Crypto
 

Bitcoin US Dollar traded at 22996 this Sunday August 7th, increasing 34 or 0.15 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin gained 5.31 percent. Over the last 12 months, its price fell by 47.55 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 20704 by the end of this quarter and at 15164 in one year, according to Trading Economics global macro models projections and analysts expectations.

 

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