·         Credit-Suisse misses, so does Alphabet

o   Slower ad sales in Europe and revenue missed for Google

·         European gas prices surged after Bulgaria and Poland decided not to pay for Russian gas in RUB (See Pisces stellium)

o   This exacerbates the economic downturn we are seeing in Poland and pressure on the PLN – no surprise

o   Concern as the Yamal Europe line that supplies Poland also supplies Germany

·         10 year treasury down to 2.76% - psychological barrier of 3% starts becoming worrying for equity and beneficial to bonds

o   The European Union threatened Elon directly by referring to their newly created legislation to ban speech they don’t particularly like

·         Surprisingly, Mercedes reported better than expected earnings on rising car prices offsetting supply chain issues

o   US supplies of weapons are being depleted at an alarming rate according to Biden’s administration

§  Key to watch is legislation to support small arm manufacturers giving them certainty of contracts for the long term

·         Geopolitical black swans building up with potential devastating consequences on global trade and the economy:

o   Chinese pressure in the Solomon Islands, Washington and Australia’s “red line”

§  Expect this story to develop, more likely to happen than Taiwan

o   North Korea further developing its nuclear arsenal on the sly, no one really talking about this at the moment

o   Transnistria terrorist attacks, risking further to extend the Ukrainian conflict into Europe and involving Nato members

o   Sweden and Finland likely to join Nato by May – no idea as to what will be Russia’s reaction, if any

o   In the UK the cost of energy has put millions of households on the poverty line

o   Australia’s core inflation accelerated to the fastest pace since 2009

o   Election is over, Macron will stop subsidising fuel prices, expect the usual riots as a result this summer

·         China covid lockdowns hurting the whole world (further on this subject in the macro notes)

·         Developed-market currency volatility just surged past highs generated by the war in Ukraine

·         Treasury’s $48bn auction of 2 year notes drew a yield of 2.585%, highest since Jan-19

What a day to be back from break – a sea of red and Covid making a gigantic come back affecting markets across the board. Last time we had this it was a question of just buying the dip, what happened this time? We had the French election on Sunday with no Brexit or Trump surprise to occupy the media for the next five years, just more of the same. Macron won the election with a smaller margin than five years ago, but regardless it was seen as a relatively non-event for markets. With the French election behind us, all eyes were on Beijing with fear of a Shanghai style lockdown – the government has already started to put a couple of million people in lockdown and is proceeding to test more than twenty million people. All risk assets were hit, and although Tuesday we saw a small recovery, markets are scared. China is down hard and the yuan is down – we remain constructive on Chinese equity, but we have to admit that the lockdown story over the last couple of days is making us question that position. On the other hand:

1)    Arguably valuations are still very low in China

2)    The risk of Ukraine sanction is not really there any longer

3)    The central bank is likely to give support if things go south with a small intervention from the PBOC (People Bank of China) on Monday

As a result, if it is an overreaction to Covid as we saw in Mar-20, what is not to like about China here?

(bargain equities to be had unless the eclipse spirals everything into overreaction on Friday!)

We have 9.5 hikes priced in at the moment for this year and last week we saw some very hawkish (rates up) comments from different Fed speakers. Powell endorsed two or three 50bps hike this year on the basis that the labour market is overheated.

Regarding the ECB, the meeting two weeks ago was fairly dovish, but some of the ECB speakers came out as surprisingly hawkish afterwards. This shows that views on the board are a lot more diverging than expected, we expect the first rate hike in September followed by another one in December (we were expecting just one prior to last week), we are talking about 25bps hike, so a total of 50bps for this year.

Back to the US: on the macro side we are due to get PCE (personal consumption expenditure) inflation data from the US on Friday, we expect another tick up; however, the bank expects things to normalise in Q2 – not necessarily something that I agree with. (astrologically i might agree with this - temporary move.) This inflation print will be crucial as it will be the last one before the May Fed meeting and will largely drive the tone of rate hikes.

In terms of the Bank of Japan, the Yen has collapsed and had one of its worst performance against its main FX pairs in recent time. The bank of Japan is to speak on Thursday and we do not expect any major policy changes, or the BoJ (bank of Japan) to intervene at those levels. Some argue that Yen weakness is a positive for Japanese export and it should “help” import inflation, which supposedly the BoJ is keen on having given their low inflation, is well below western levels now. Worth to keep in mind: the Japanese economy has the largest debt to GDP in the world at over 200%, with rates at 0.25%. My colleagues are stating that the Japanese economy is looking forward to importing a bit of inflation; I believe on the contrary that importing inflation has the capacity to destroy the Japanese economy. How can you raise rates on your debt when your economy is drowning in debt? Interest payment to supplement social programs or any type of spending the government needs to do? Whatever happens in Japan in the near term will be a good example of what will happen to Europe and its indebted PIGS (Portugal, Italy, Greece and Spain – there used to be two “Is” in PIIGS, but Ireland sorted its debt out by becoming a money laundering paradise tax efficient destination for large US corporations operating in Europe).ha

The US is also at the top of that list of indebted nations, just not as bad as Japan or some of the PIGS, yet… SEE YOU IN NOVEMBER BAE 🇺🇸

Bit of history: after the fall of the soviet Union Transnistria wanted its independence from Moldova, two years of fighting in the early nineties and a semi-independent territory was setup with forces of the Russian federation ensuring peace for the last thirty years, without any issues to report during that period. This new hotspot has the potential to change the nature of the conflict in Eastern Europe. There are only 1000 to 2000 servicemen of the Russian armed forces in Transnistria. Moldova has about 5,000 servicemen with a reserve of 60,000. In other words, any combat forces in the region would likely require Romanian and Polish troops to join, directly involving Nato troops in the fight against the Russian troops stationed there. This is why that region matters and the terrorist attacks in Transnistria could extend the fight beyond Ukraine’s borders and to start directly officially involving Nato troops. The result as expected could mean no more gas or oil trades with Europe, not good for growth.

GOLD: Gold bounced on Tuesday amid yet another risk-off session, with Comex prompts regaining USD 1900. Market sentiment is shifting between stagflation fears (escalating Ukraine crisis and Fed tightening) vs. hopes that the Fed can engineer a soft landing. Most US economic data releases (durable goods, consumer confidence, housing) all disappointed slightly yesterday. In response, nominal and real US yields fell, helping gold, though there has been some breakdown in typical correlations of late. This is particularly the case vis-à-vis the USD, which continues to strengthen. Meanwhile, gold ETFs recorded some further outflows yesterday (following substantial inflows of late), while implied vols were modestly offered and call skews continued to narrow. It seems the market currently lacks directional conviction, consistent with our view for more range-trading tactically. On the stagflation question, we get fresh insights later this week when Europe reports CPI and GDP figures.




All I can say is that there's an eclipse, in bullish Taurus on Saturday. It is conjunct Uranus and the ruler of Taurus is VENUS.

Uranus - unpredictable, reversals, shock
Venus - value, currency, worth

Venus is in PISCES, peak delusion with Jupiter and Neptune.

Whilst potentially very healing for relationships there is almost GUARANTEED market volatility! Sensational moves, big dreams, OTT responses. But then a hand-break turn.

So, keep that in mind and see you next week!

Team 8th House x


NOT FINANCIAL ADVICE!! None of it.
Whether black or purple!
Just ideas.
Do your own research!