Comment of the Day
October 24th 2022
Here is a link to today's video commentary.
Some of the topics discussed include: H-Shares hit 2008 lows, Renminbi weak, no Yen follow through, no Dollar or gold follow through, Gilt yield compress, oil pauses, US natural gas steadies, EU gas compresses, TIPS under report QT
This section continues in the Subscriber's Area.
BOE Says Markets 'Remain Febrile' But UK Regaining Credibility
This article from Bloomberg may be of interest to subscribers. Here is a section:
“Credibility is hard won and easily lost,” Ramsden said. “That credibility is being recovered. That has to be followed through. A return to the kind of stability around policy making and around the framing of fiscal events will be really important.”
He said the issue with the Sept. 23 statement was that “it had one side of the fiscal arithmetic in it” and that the decision to include forecasts from the Office for Budget Responsibility will help underpin the confidence investors have in assessing the UK budget due out next week.
“What we are going to get on Oct. 31 will be very important,” Ramsden said. “My sense is that will take account of all the statements on both the revenue and on the spending side.”
Eoin Treacy's view - The bond market has become relevant in politics again for the first time in decades. Liz Truss was unfortunate to find that out in real time. Donald Trump demonstrated that you could engage in procyclical policies and manufacture a swifter expansion. Now most politicians think they can do the same thing. The problem is he did that before inflation took off. Now, the quantity of debt has multiplied, inflation is problematic and fiscal austerity is back on the menu.
China's Plunging Market Has Become a High-Risk Bet on Xi Jinping
This article from Bloomberg may be of interest to subscribers. Here is a section:
Chinese stocks tumbled by the most since 2008 in Hong Kong and the yuan hit a 14-year-low after Sunday’s confirmation that Xi’s policies of stronger state control over the economy and markets will continue unchallenged for years.
Unlike in places like the US or UK -- where dramatic market reactions can force policy pivots or even overthrow entire governments -- it’s becoming apparent that investors are only an afterthought for Xi. That narrative was reinforced by Beijing’s move to delay the release of a raft of economic data without explanation, and risks further alienating money managers who are already leery of Chinese assets.
Investors have to decide if Xi’s policy objectives -- such as common prosperity and dual circulation -- are palatable, according to Hao Hong, chief economist at Grow Investment Group. “One has to examine whether these new sets of values align with your own” investment goals in the years ahead, he told Bloomberg TV on Monday.
Monday’s market reaction -- especially offshore -- suggests international investors are becoming increasingly leery of Xi, who has implemented tough curbs on one-time market favorites from Alibaba Group (NYSE:BABA) Holding Ltd. to education firms. With a new leadership team packed with his allies, analysts also expect little dissent against Xi’s Covid Zero strategy.
Eoin Treacy's view - The ejection of Hu Jintao from the Party Congress over the weekend has been much discussed. The headline is that he was experiencing health issues. That’s reasonable from an octogenarian. However, there is an eerie historical comparison.
Texas Natural Gas Prices Drop Toward Zero as Supplies Boom
This article from Bloomberg may be of interest to subscribers. Here is a section:
Insufficient pipeline capacity has actually been a long-term problem that has dogged Permian Basin gas producers for years. The choke points worsen when pipeline operators must perform repairs and preventative maintenance work that forces temporary reduction in pressure or halts to shipping.
Permian pipeline constraints “have never been relieved,” making the region more susceptible to sudden gluts and price volatility, said Campbell Faulkner, chief data analyst at OTC Global Holdings LP.
Eoin Treacy's view - The world is not running out of natural gas. What we are dealing with at present is a supply bottleneck. These kinds of problem can be solved. It would be a lot worse if there was a genuine shortage of global natural gas supply. However, to bring prices back to acceptable levels significant investment in pipeline, LNG import and export facilities, and shipping will be required.
Speaking Engagements - World Money Show October 2022
I have agreed to speak at The World Money Show in Orlando on October 30th.
I will also be speaking on day 2 of the NAIMM conference on October 25th in Dallas.
Eoin's personal portfolio: profit taken on Index short October 13th
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 daily until there is a change.
The Chart Seminar London November 21st and 22nd 2022
We are living through fast moving markets so the next venue for The Chart Seminar will be November 21st and 22nd this year in London.
In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at sarah@fullertreacymoney.com.
The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.