Week in Review: 12-16 December 2022

Summary:

    On Tuesday, the annual inflation rate in the US showed signs of slowing down, for a fifth straight month to 7.1% in November of 2022, the lowest since December last year, and below forecasts of 7.3%. The markets rallied after such good news.

    However, on Wednesday, the Federal Reserve raised the fed funds rate by 50bps. It was the seventh consecutive rate hike. During the speech and in the Q&A session, Powell insisted in keeping "a stance of monetary policy that is sufficiently restrictive to return inflation to 2%". The Fed now expects interest rates to reach 5.1% next year, 4.1% in 2024, and 3.1% in 2025, higher than previously indicated. Meanwhile, GDP growth projections were revised higher for this year (0.5% vs 0.2%) but lowered for 2023 (0.5% vs 1.2%) and 2024 (1.6% vs 1.7%). Inflation forecasts were revised higher for 2022 (5.6% vs 5.4%), 2023 (3.1% vs 2.8%) and 2024 (2.5% vs 2.3%).

    After the FOMC meeting and speech on Wednesday, the markets tanked. Will there be a Christmas rally next week?

    Next week, in the US, the PCE price index, personal income and spending, CB, and the University of Michigan's consumer sentiment and durable goods orders will be released.

Economic data source: Trading Economics

 

 

Some Realistic Commentary About the Crypto Space

Video: Bitcoin Bottom Is Not $13K It’s Worse Than That Now, Says Expert That Called $17K

Channel: Stansberry Research

About Government Intervention on Inflation and the Economy

Video: Bad News on Inflation Should Not Be a Surprise - Ep 861

Channel: Peter Schiff

 

FTX, Metals, Resource Stocks

Video: Why The FTX Meltdown Matters To You | Rick Rule

Channel: Liberty and Finance

A Walk Around the Markets

 

OIL

 

Source: Trading Economics

 

WTI crude futures fell almost 3% to around $74 per barrel on Friday, extending losses for a second consecutive session as concerns about recession-driven demand downturn, particularly among advanced economies, took the driver's seat. Global industrial activity remains weak, especially in the US and Europe, with tightening financial conditions denting economic activity while posing a significant risk to the demand outlook. Still, the US benchmark rallied roughly 4% this week amid optimism about a recovery in Chinese fuel consumption and tight global supplies. The IEA offered a somewhat bullish outlook for markets next year, citing the reopening of the Chinese economy as a critical driver for growth and demand. On the supply side, OPEC+ decided to stick to their existing policy of reducing oil output by 2 million barrels a day from November through 2023. The shutdown of the Keystone pipeline added to the highly uncertain supply outlook.

Natural Gas

 

Sources: Trading Economics

US natural gas futures dropped by 6% to around $6.5/MMBtu on Friday, moving away from a two-week peak of roughly $7/MMBtu hit in the previous session, on forecasts of milder weather and lower heating demand in late December. Still, the commodity remains on track for a 5% weekly gain, amid signs of robust foreign demand and a drop in domestic output. Recent data showed that natural gas flowing towards US LNG terminals rose to 13 bcf per day on Thursday, the most since June, pointing to firm international demand. At the same time, extreme cold from North Dakota to Texas resulted in the freeze of oil and gas wells, lowering production. Meanwhile, the Freeport LNG export plant in Texas, forced to go offline in June following a fire, expects to bring operations back online only by year's end, leaving more supply on the domestic market.

 

 

US Stock Markets

 

Source: Trading Economics

US equities closed lower on Friday, notching a second consecutive week of losses as fears mounted that aggressive rate hikes by the Federal Reserve could tip the world's largest economy into a recession. The Dow was down 282 points while the S&P 500 fell 1.1% and Nasdaq Composite shed almost 1%. For the week, all three major US stock indexes were down over 1%. Stocks have been under heavy pressure since Wednesday after the Federal Reserve reaffirmed its commitment to raise interest rates further and keep them higher for longer. Adding to the gloomy outlook was a sharper-than-expected decline in business activity in December as new orders sank to the lowest level in just over 2-1/2 years. On the positive side, Facebook parent Meta Platforms jumped more than 4% after J.P. Morgan upgraded the stock to "overweight" from "neutral.".

 

Bitcoin

 

Source: Trading Economics

Bitcoin US Dollar traded at 16700 this Sunday December 18th, decreasing 136 or 0.81 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin lost 0.24 percent. Over the last 12 months, its price fell by 64.23 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 15120 by the end of this quarter and at 11222 in one year, according to Trading Economics global macro models projections and analysts expectations. 

 

 

Gold

 

Source: Trading Economics

 

Gold steadied around $1,780 an ounce on Friday, but was still on course to end the week lower as the US Federal Reserve offered a more hawkish outlook on its policy than markets anticipated. On Tuesday, the Fed delivered a smaller half percentage point rate hike, though it projected a terminal rate of 5.1% next year, higher than previously indicated. The European Central Bank followed suit on Thursday, raising its policy rate by 50 basis points and signaling more increases in an effort to bring inflation down to sustainable levels. Monetary authorities in the UK. Switzerland, Norway and Philippines tightened policy further this week as well. While gold is considered as a hedge against inflation and economic uncertainty, higher interest rates raise the opportunity cost of holding non-yielding bullion, denting its appeal.

 

Silver

 

Source: Trading Economics

Silver traded higher in the middle of the week but has tumbled on Thursday. Price is essentially unchanged relative to the previous week. Silver futures and options contracts are used by mining companies, fabricators of finished products, and users of silver-content industrial materials to manage their price risk. As a precious metal, silver also plays a role in investment portfolios. The largest industrial users of silver are the photographic, jewelry, and electronic industries. The biggest producers of silver are: Mexico, Peru and China followed by Australia, Chile, Bolivia, United States, Poland and Russia.