Comment of the Day
Video commentary for December 14th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Fed raises rates and issues hawkish statement, dollar weak, bond yields contract, oil firm, gold unchanged, recession inevitable stocks stable.
Powell Says Fed Still Has a 'Ways to Go' After Half-Point Hike
This article from Bloomberg may be of interest to subscribers. Here is a section:
“I wouldn’t see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” he said. “Restoring price stability will likely require maintaining a restrictive policy stance for some time,” he said.
Eoin Treacy's view - The Fed’s preferred yield curve spread the 18m3m swap over 3-month Treasury yields is as inverted as it was in 2019, 2006/07 and 1999. That virtually ensures a recession is on the way. This is now the time to take big risks, there will be very attractive buying opportunities in 2023 because it takes time for the lagged effect of interest hikes to appear and rates have gone up very quickly in 2022.
Moderna, Merck Cancer Vaccine Combination Cuts Deaths in Trial
This article from Bloomberg may be of interest to subscribers. Here is a section:
A personalized Moderna Inc. cancer vaccine combined with collaborator Merck & Co.’s biggest-selling drug reduced melanoma deaths in a mid-stage trial, helping for now to ease concerns about the biotechnology company’s second act following the success of its Covid-19 vaccine.
The combination of the vaccine with Merck’s Keytruda cut the risk of death or recurrence of the lethal skin cancer by 44%, the companies said Tuesday in a statement. The drugmakers plan to move the combined treatment into final-stage studies next year. Moderna shares rose as much as 26% as of 1 p.m. in New York, while Merck’s gained as much as 2.1%.
Eoin Treacy's view - During the pandemic, the Nasdaq Biotech Index was dominated by vaccine providers. COVID-19 was all anyone was interested in. For a couple of years, everyone was willing to suspend concern that there are causes other than coronaviruses. We are now returning to more normal considerations in that the biggest causes of death are heart disease and cancer and obesity is a massive chronic issue.
China's Covid Pivot Set to Worsen the Global Energy Crunch
This article from Bloomberg may be of interest to subscribers. Here is a section:
China’s pivot away from Covid Zero is poised to boost natural gas demand in the world’s biggest importer, potentially curbing supply to Europe and other Asian nations.
China National Offshore Oil Corp. is now looking to secure more shipments of the super-chilled fuel for next year. The return to the market of one of the nation’s largest liquefied natural gas buyers follows a period of subdued demand, due to virus curbs suppressing economic activity, and may herald a rebound in imports.
Beijing’s move to reopen its economy and live with Covid-19 has seen most internal restrictions being dismantled over the last few weeks. Provided that’s not rolled back as cases surge, that will increase the challenge for Europe next year as it prepares for the winter of 2023/24 with little or no natural gas from Russia.
Chinese gas imports are likely to be 7% higher in 2023 than this year, according to Wang Zhen, president of Cnooc’s Energy Economics Institute.
The forecast belies still-weak industrial demand. Many factories will send workers home earlier-than-usual for the Lunar New Year holidays, while local production and Russian pipeline flows are rising.
There are already signs China will need to increase LNG purchases to prepare for next year, however. Inventories at northern ports are depleting faster than normal amid cold weather and have dropped to the mid-to-low level, according to ENN Energy’s research group, while domestic LNG prices are trending higher.
Eoin Treacy's view - The Chinese economy is going to experience significant issues as COVID cases ramp higher. The sheer volume of ill people will mean lower productivity over the first quarter. However, peak infections will likely be reached within 10 weeks. After that, there is clear scope for the fiscal measures already introduced to support the property market will become evident.
Eoin's personal portfolio: stock market index positions closed at profit and shorts opened December 6th 2022
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary on a daily basis until there is a change.