2022.03.28 Weekly Note

NEWSFLOW

RUSSIA-UKRAINE

Ukraine claims Russia wants to end the war by 9 May (livemint) The Kyiv Independent on Friday posted a tweet where they claimed,” According to intelligence from the General Staff of the Armed Forces of Ukraine, Russian troops are being told that the war must end by May 9 — widely celebrated in Russia as the day of victory over the Nazi Germany.”

WAR IMPACT

War in Ukraine causes German business morale to collapse (Reuters) German business morale plummeted in March as companies worried about rising energy prices, driver shortages and the stability of supply chainsin the wake of the war in Ukraine,pointing to a possible future recession, a IFO survey showed on Friday.

CHINA

China’s Sinopec pauses Russia projects, Beijing wary of sanctions (Reuters) Beijing has repeatedly voiced opposition to the sanctions, insisting it will maintain normal economic and trade exchanges with Russia. But behind the scenes, the government is wary of Chinese companies running afoul of sanctions — it is pressing companies to tread carefully with investments in Russia.

MARKETS

High-Velocity Market Swings Have Roots in Economic Boom Thesis (Bloomberg) At times in the last few weeks, trying to glean a coherent message from disparate swings across asset classes has been an exercise in futility. Where once surging bond yields and commodity prices spelled big trouble for equities, now stocks are surging alongside them. Stiffening hawkishness at the Federal Reserve started out as a reason to panic in risk markets. Now, even the threat of supersized interest-rate hikes isn’t enough to ruffle Wall Street bulls.

COVID

Newsflow continues to highlight challenges of full reopening while Governments constantly tinker their “living-with-covid” policy measures. While cases do appear to be moderating from prior weeks surge, parts of Europe and Asia are still reporting high case numbers implying supply chain tightness and costs pressures will persist.

LAST WEEK’S ACTION

EQUITIES

RATES

COMMODITIES

Bloomberg commodities index confirmed continuation of previous week’s bar.
Bloomberg Energy and Agricultural indices continue to push highs.

CURRENCIES

TRADE VIEWS/IDEAS

My core book remains completely unchanged. For the short-term trading book, I’m still holding onto my now protected Oil longs, and have been focused on DAX and NDX and GBPUSD last week with some good results, no success trying to fade AUD however.

  • NDX and Gold short on rallies — I think these could finally crack under the pressure of higher real yields which has yet to have been affected by it.
  • AUD shorts — vs CAD as I continue to like the divergent fundamentals between Australia and Canada along with my short-risk bias, and vs JPY but only if I acquire strong conviction of a turn as there is good potential for a deep correction.
  • MXN longs — which should continue to get support from the technical breakout, an aggressive Banxico, and strong Oil prices.

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