Week In Review: 7-11 November 2022

Summary:

This week's highlights were the US midterm elections, the CPI report and the FTX crypto exchange bankruptcy.

The annual inflation rate in the US slowed for a fourth month to 7.7% in October of 2022, the lowest since January, and below market forecasts of 8%. It compares with 8.2% in September. Compared to the previous month, the CPI rose 0.4%, the same as in September and below expectations of a higher 0.6% rate. After the release of the CPI data, the markets rallied amazingly. What a reaction! But the bear market is not over. If a serious recession is on the way, the next 6 months will not have an upwards direction on the stock markets. Geopolitical instability and the energy crisis are not over! If we continue with a relatively high inflation, with declining earnings and with a softening economy the stock valuations will have to continue the re-pricing over the next months.

The University of Michigan consumer sentiment for the US fell to 54.7 in November of 2022, the lowest since July, from 59.9 in October and below market forecasts of 59.5. The current economic conditions index sank to 57.8 from 65.6 and the expectations gauge tumbled to 52.7 from 56.2. Meanwhile, inflation expectations increased for both the year ahead (5.1% vs 5% in October) and the next 5 years (3% vs 2.9%).

Next week, in the US, the most important economic releases include retail sales, producer prices, and housing data.

Economic data source: Trading Economics

Politics in the US

Video: Celente and the Judge: How Low Can Amerika Go

Channel: Gerald Celente

A Stock Market Relief

Video: A Fierce Reaction in Markets

Channel: Bloomberg Markets and Finance

The Cryptocurrency Collapse and What to Look for in the Markets and in the Economy

Video: Crypto Scandal - Collapse Has Just Begun | Doomberg

Channel: Liberty and Finance

A Walk Around the Markets

 

OIL

 

Source: Trading Economics

 

WTI crude futures rose more than 2.5% toward the $90 per barrel mark, extending a 0.8% gain in the previous session as news of China relaxing some of its stringent coronavirus-induced restrictions lifted the outlook for demand. The world's top oil importer shortened quarantines by two days for close contact with infected people and inbound travelers and removed airlines' penalties for bringing in too many cases. 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. 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 fell more than 4% this week, putting it on track for its first weekly decline in four.

 

Natural Gas

 

Sources: Trading Economics

US natural gas futures are set to close a volatile week 9% lower at around $5.8/MMBtu, the lowest since November 1st, as temperatures are expected to remain higher than usual next week. Meanwhile, the Freeport LNG export plant has not yet submitted a request to federal safety regulators to resume operations in November after being offline since June, making more gas available for domestic use. Elsewhere, the latest EIA data showed US utilities added 79 bcf of gas to storage last week, below market expectations of an 84 bcf increase and compared with an increase of 15 bcf in the same week last year.

 

 

US Stock Markets

 

Source: Trading Economics

US equities closed Friday session higher after a choppy morning session, extending Thursday's sharp gains prompted by weaker-than-expected CPI reading for October which reinforced the case for only a modest 50 bps hike in December. The S&P 500 closed up 1%, bringing the weekly gain to 5.9%, the strongest since June. The Nasdaq 100 rose 1.9%, closing the week almost 9% higher, the best performance in 2 years as a sharp decline in Treasury yields brought respite to beaten-down technology and other high-growth stocks. Meanwhile, the Dow was up 0.1%, adding 4% on the week as China eased some Covid restrictions sparking gains for US-listed Chinese stocks and commodities while fresh turmoil in the crypto space spooked some investors. FTX exchange has officially filed for bankruptcy, pushing cryptocurrencies sharply down while sending shockwaves through other risk asset classes.

 

Bitcoin

 

Source: Trading Economics

Bitcoin US Dollar traded at 16500 this Sunday November 13th, decreasing 254 or 1.52 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin lost 13.95 percent. Over the last 12 months, its price fell by 74.81 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 14888 by the end of this quarter and at 10927 in one year, according to Trading Economics global macro models projections and analysts expectations. 

 

Gold

 

Source: Trading Economics

 

Gold prices extended their rise to $1,760 an ounce on Friday, the highest in nearly three months and booking another strong week as softer-than-expected US inflation data raised hopes for peak inflation and a slower pace of interest rates hikes from the Federal Reserve. The annual inflation rate in the US eased for a fourth straight month to 7.7% in October, rising at the slowest pace since January and coming in below expectations for a milder drop to 8%. Investors revised expectations for the terminal rate lower, while money markets are currently priced for a more moderate 50 basis point Fed rate hike in December after it delivered four consecutive 75 basis point increases. Gold is up about 5% so far this week after Thursday’s rally brought the metal to its strongest levels in over two months.

 

Silver

 

Source: Trading Economics

Silver futures rose sharply to above $21.8 per ounce, the highest since June, and tracking other bullion assets after cooler-than-expected inflation pressured the US dollar and Treasury yields. Consumer prices rose by 7.7% annually in October, slowing for the fourth month from the peak hit in June. The Federal Reserve is expected to raise interest rates by 50bps in its December meeting before reaching a terminal funds rate of 5% in March, well below bets of 5.5% from before the CPI print. While bullion is commonly used to hedge against inflation, higher interest rates increase the opportunity cost to hold non-interest-bearing assets, denting its appeal.