News review 21.09.2022
INTERNATIONAL NEWS
U.S. plans to establish a naval base in the Greek port of Alexandroupolis
Is this Turkey's answer?
Eurozone balance of payments remains negative
The current account is almost minus €20 billion, compared to plus €5 billion a year earlier. A bad backdrop for the euro.
French President Macron calls for reform of the UN Security Council
He proposes including new permanent members and "limiting the right of veto over mass crimes". Now it turns out that the aggressor-Russia is blocking the imposition of sanctions against itself at the UN level, taking advantage of its position.
MARKET NEWS
U.S. home prices in August showed the largest monthly decline since 2011
Home prices fell the most in San Francisco and Los Angeles, down 3.4 percent.
Expensive mortgages have cooled demand sharply - the typical monthly mortgage payment for a new home jumped from $897 in August 2019 to $1643 this year - an increase of 83%.
Sweden's central bank raised the discount rate by 1% to 1.75%.
Expected +0.75%.
Jim Cramer got more pessimistic on the stock market and gave reasons for a possible bigger drop in tech stocks
The strong U.S. dollar and the energy crisis in Europe are making businesses more frugal.
The Fed may want a drop in the stock market for the sake of lower inflation.
In Europe, the biggest IPO in 10 years is mega-successful - Porsche AG shares will be subscribed until September 28
Demand has already far exceeded supply.
The price range for the preferred shares is set at 76.5 to 82.5 euros per share.
The price range corresponds to a placement volume (including possible additional placements) of €8.71 billion to €9.39 billion.
QIA, Norges Bank Investment Management, T. Rowe Price and ADQ will subscribe to up to €3.68 billion worth of preferred shares as cornerstone investors if the final offer price is at the upper end of the range.
In preparation for the IPO, the share capital of Porsche AG has been split into 911 million shares, 50% of which are preferred stock and 50% are bearer common stock.
Volkswagen AG (VOW3) will receive all proceeds from the IPO. Volkswagen stock has already previously benefited from this, as success was predicted.
The CEO of automobile company Stellantis (STLA) expects an increase in the shortage of raw materials in the next 10 years
A positive assumption for commodity assets.
Next year Chinese BYD will start actively selling electric cars in Russia
Warren Buffett will probably sell his shares in this Chinese company completely.
Barclays downgraded shares of Nike (NKE) to "in the market" from "better than the market
The target price is downgraded from $125 to $110.
"We downgrade NKE stock to 'at market' based on:
1) our thesis on demand risk in the wholesale sector,
2) continued volatility in the Chinese market,
3) excess inventories creating increased operational risk,
4) Potential declining demand in both North America and EMEA, and
5) Counter currency headwinds, primarily in Europe."
This squeezed the company's stock by 4%.
Colorado will become the first U.S. state to begin accepting bitcoin as a tax payment
Paying taxes gives the asset in question the function of money.
Nvidia (NVDA) unveils next-generation centralized computer for autonomous vehicles
The long-awaited presentation of new products from the company supported its stock a bit in early trading, but it still ended up 1.5% cheaper.
In a bull market even before the presentation, NVDA shares would have soared 10% or more. But now investors are happy with even zero.
Financial Markets
The stock market yesterday was crushed by the threat of an escalation of the largest war in Europe since WW2. However, Putin did not address the nation and that gave the markets a little bit of optimism back. The final drop in stock indices was about 1%.
Apple (AAPL) was up again. Defense stocks were also doing well, as well as biotech, oil refiners, and point-to-point agro-fertilizers.
Futures are slightly green this morning. So far, all is calm. But anxious.
After all, Powell will also be speaking tonight, summarizing the results of the Fed meeting, from which they expect a new stage of monetary tightening and a 0.75% rate hike to 3-3.25%.
The currency market is seeing a soft strengthening of the U.S. dollar - it is helped by both the threat of an escalating war and a tight Fed.
Bitcoin is therefore back to $19k and the euro is below parity.
U.S. 10-year government bond yields yesterday tested a new multi-year record of 3.6% p.a., and 1-2-years now yield 4% p.a.
Such high yields on risk-free (in terms of unlikely U.S. defaults) reduce the investment appeal of other assets, from stocks to real estate. When money is expensive, investors save it.
So it turns out that Cash is King.
So, expect to see the recorded poutine address in the morning, and the results of the Fed meeting in the evening.