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Week in Review: 31 October-4 November 2022

Summary:

This was another exciting week, with the release of important numbers regarding the economic and financial situation.

Monday and Tuesday everybody was awaiting for the FED decision (FOMC meeting) regarding the FED funds rate increase and, most importantly, the president speech and its tone regarding future monetary policy. The 0.75 % rate increase was no surprise (currently the rate is at 4 %), but it was accompanied by a slightly dovish note, which sent the markets up. Then, during Jerome Powell's speech and Q&A session, the tone was very hawkish again. The markets tanked. The specialists debate whether the rate hikes will fix inflation or not (most likely not, unless demand is destroyed due to a recession/depression). Inflation is usually a monetary phenomena (excessive money supply) - in this case, demand is high, due to the stimulus in 2020-2021, and supply has still not recovered from the supply chain disruption, lockdowns and economic war against China and Russia. Additionally, we have an energy crisis and green transition forcing, which feeds into all products and services, further pushing prices up. Fixing this inflation problem is not going to be an easy task...

Still in the US, ISM Manufacturing PMI fell to 50.2 in October 2022 from 50.9 in September, pointing to the slowest growth in factory activity since the contraction in mid-2020. 

Regarding the JOLTs report, the number of vacancies in the United States  rose by 437,000 to 10.72 million in September 2022, up from 10.2 million in August and easily beating market expectations of 10.0 million. The level of openings remained close to record highs seen at the end of 2021, which could add to inflationary pressure coming from raising wages to attract and keep staff.

Non Farm Payrolls revealed that the US economy added a stronger-than-expected 261K jobs in October of 2022, above market forecasts of 200K. Although it is the weakest reading since December of 2020, figures continued to point to a strong albeit slowing labor market, as workers shortages persist.

The unemployment rate in the US increased by 0.2 percentage point to 3.7 percent in October 2022, up from September's 29-month low of 3.5 percent and slightly above market expectations of 3.6 percent. The jobless rate has been in a narrow range of 3.5 percent to 3.7 percent since March, suggesting that the labor market is very tight, which, in turn, is likely to contribute significantly to inflationary pressure. The number of unemployed persons rose by 306 thousand to 6.06 million in October, while the number of employed decreased by 328 thousand to 158.6 million. The labor force participation rate edged down to 62.2 percent from 62.3 percent.

Inflation rate in the Euro Area is at 10.7 %, higher than expected, and the BoE increased rates to 3 %.

Next week, in the US, the inflation rate data will be closely watched followed by several speeches by the FED officials. The results of the midterm elections might help to stir up the markets in either direction. In Europe, investors will monitor the UK Q3 GDP growth rate and retail sales for the Euro Area. Finally, China is set to publish foreign trade and inflation rate figures. 


 

A Look Into the Energy Markets


Video: There Is Much Pain Ahead - Be Prepared | Rick Rule

Channel: Liberty and Finance


 

 

Currencies are on a Run to Zero!!!

Video: Epic Derivative Unwind & Systemic Banking Failure | Alasdair Macleod

Channel: Liberty and Finance




Censorship is Around the Corner

Video: They are NOT going to get away with this, we caught them| Redacted with Natali and Clayton Morris

Channel: Redacted




We May be Heading This Way...

Video: NETWORK, Sidney Lumet, 1976 - I'm Mad As Hell and I'm Not Gonna Take This Anymore!

Channel: Filmstruck

 


 

 
OIL
 
 
WTI crude futures surged more than 4% toward the $92 per barrel mark, a level not seen since late August, as headlines suggesting that China could relax its coronavirus-induced restrictions in the coming months lifted the outlook for demand. On top of that, prospects that global oil markets would remain extremely tight continued to lend optimism to bulls. OPEC+ has recently agreed to cut production by 2 million barrels per day in November, the most since the pandemic, while speculation grows that the oil cartel will further intervene in markets to shore up prices. Keeping a lid on prices were persistent concerns about a potential recession-driven demand downturn triggered by an aggressive tightening from major central banks. The US benchmark rose almost 4% this week, putting it on track for a third consecutive weekly gain.
 




Natural Gas
 

US natural gas futures jumped more than 7% to near $6.4/MMBtu on Friday, widening a weekly gain to over 12%, on expectations of higher demand and lower supply. Weather is set to turn colder in mid-to-late November boosting heating demand. At the same time, LNG exports are set to resume. Energy's Cove Point LNG plant in Maryland returned to operations on October 28th after a month-long maintenance and the Freeport LNG plant in Texas is set to at least partially resume production in mid-November. On the other hand, the latest EIA data showed US utilities added 107 bcf of gas to storage during the week ended October 28th, more than market expectations of a 97 bcf build, and above an increase of 66 bcf in the same week last year, as mild temperatures allowed utilities to keep injecting gas into storage.
 

 

 
US Stock Markets
 

US stocks swung to the upside Friday following a volatile session in the wake of a mixed jobs report, with the Dow gaining 1% and the S&P and Nasdaq about 1.2% each. US employers hired more workers than expected in October, but unemployment rose more than Wall Street forecasted. Also, Fed Collins hinted that the pace of future increases could be smaller but did not rule out another 75 bps hike in December. Regional president Thomas Barkin echoed a similar view but noted that the US central bank might need to raise rates above 5%. Chinese stocks listed in the US jumped on hopes of an imminent relaxation of China's COVID-19 curbs. DoorDash and mobile payment company Block rose after upbeat earnings reports, while Carvana fell after missing expectations, and Twilio and Atlassian tumbled on disappointing guidance. The Dow fell 1.8% this week, ending 4 weeks of gains. The S&P and Nasdaq declined 3.6% and 6.3%, respectively, ending two weeks of gains.



 
Bitcoin
 

Bitcoin US Dollar traded at 21170 this Sunday November 6th, increasing 36 or 0.17 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin gained 8.28 percent. Over the last 12 months, its price fell by 66.57 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 18775 by the end of this quarter and at 14017 in one year, according to Trading Economics global macro models projections and analysts expectations.


 
Gold
 

Gold prices increased nearly 2% to approach $1670 an ounce on Friday, as the dollar rally paused and as investors digest the monetary policy outlook. The recent payrolls report showed the US labour market remains resilient, with payrolls rising by a bigger-than-expected 261K, strengthening the case for the Fed to pursue its tightening plans. However, with the jobless rate rising above forecasts, investors also consider that much more tightening won't probably be necessary. On Wednesday, the central bank delivered its fourth straight 75 basis point rate hike and Fed Chair said interest rates would need to go higher than initially anticipated and that it is “premature to discuss pausing”.





 
Silver
 

Spot silver jumped to above $20 per ounce, the highest in four weeks, tracking a rise in other metals, after the US payrolls report raised hoped the Fed will not raise rates that much. The jobs report showed the unemployment rate rose above forecasts, despite a strong payrolls number. On Wednesday, the Fed delivered its fourth straight 75 basis point rate hike and Chair Powell said interest rates would need to go higher than initially anticipated and that it is “premature to discuss pausing”. Despite a recent spike, the cost of silver is more than 25% below its March peak when Russia’s invasion of Ukraine spurred a rally in precious metals.

 


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