Yesterday’s session was one of those sessions that are useless. Even if we understood once again that inflation was becoming a problem that we no longer controlled at all and that all the recurring blahs were not going to change anything; all the world indices have more or less ended in the red based on this theme and on the fact “that we had to wait for the results of the quarter” to know if we wanted to know the direction of the next three weeks, but frankly the end result was not THE funniest day of the decade. Fortunately we could hang on to the fact that tonight we would know …

The Audio of October 13, 2021

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Under the sign of inflation

We are therefore not going to go there by 4 paths; the problems are always the same, the anxieties are always the same and the main fear is always centered on one thing: inflation. I’m not going to redo a drawing on the subject, but let’s say that the speakers each go there with their theory and their analyzes. Yesterday we had an intense concentration on the subject, since the IMF even took the time to warn the whole world that inflation was on the rise and that it could be super-scary in the next few days.

It is true that we would not have suspected it and that we really needed the advice of a reliable institution like the IMF to know where we were. As the rise in oil, gas, cotton, coal, coffee or stuffed sheep’s stomach had not yet served enough as proof, it was important that someone like the IMF come and bring its strawberry back to the subject. and push all the open doors necessary to put the church back in the middle of the village. Unless it’s a mosque or an Apple Store.

But that was not all

And then, as if that wasn’t enough, we also had one of the FED members Raphael Bostic, president of the Atlanta FED, who said that high inflation may persist. Mr. Bostic is this year’s voting member of the Fed committee.

Here are his words:

“I continue to believe that the current high inflation is episodic, fueled by pandemic conditions such as disruptions in supply chains and labor markets. One important caveat, however, is that serious and pervasive supply chain problems are likely to last longer than most of us originally anticipated ”.

As you can see, we wouldn’t have suspected for a second that we were in such a situation. It was important that we come and repeat the same things that we have been told for weeks, even months. Things that are obvious like the nose in the middle of the face. But as in the wonderful world of finance, we understand very quickly, especially after the 324th once we are told the same thing, all the markets have expressed their anxieties by lowering a few percent dust everywhere. However, the lack of vigor in the intensity of the decline will also have shown that the speakers were not completely “stunned” by this news and that deep down, deep down, they were patiently awaiting the publication of the CPI. this afternoon to find out a little more. Yesterday at the close, there was no longer any doubt that Wednesday would be the turning point of the week. The moment of the rebound or the knockout that would lead to the breaking of levels that we do not want to break at all.

Saved by the numbers

While we took our heads with this famous inflation, we observed the oil which did not want to fall any more and we listened to Nouriel Roubini tell us that the FED should apply its tapering from November , BUT that the FED could interrupt it at any time, if necessary, one began especially to wonder about the figures of the quarter which announced their beginning “for real” as of this Wednesday.

I would therefore not dwell on Roubini’s comments, which clearly reflect that he does not know more than you do, but when in doubt, he must still get people talking and he reminds me of the comments of certain weather forecasters who say regularly: “the sun will be there, but we cannot exclude that the rain will give us a few scattered showers, showers which could be sustained and last until the end of the day. Let us not forget either that the cold front which is heading towards us, in the center of Europe, could also branch off to the North or the South, while not excluding that it remains on its path and that in this case, Moderate to heavy snow showers are possible ”. Roubini did the same… The FED could act – or not and if it acts it could stop acting – or not. It was definitely worth it to come and talk about it. Well, at the same time it allowed me to tell something in ten lines, because this morning, it was not won.

Still, today, in addition to the CPI, we will have figures from JP Morgan, BlackRock and Delta Airlines. We do not expect miracles, especially since banking figures are often diametrically opposed to analysts’ expectations, since it is common knowledge that the expectations of the banking sector are played at roulette and never in history. finance we were able to read, the day after the publications of a bank: “the figures were in the expectations of the analysts” – that never happens in the banking sector, the analysts all make a point of honor to be the as far as possible from reality.

Either way, if the numbers are “better” than expected, stakeholders may jump to conclusions, thinking that if the banking industry is fine, everything is fine. It is however often false and not necessarily the case, but I am not sure that we are in a period during which we privilege the reflection and the deep analysis of the economic fabric. A low figure on the CPI could also be enough for our happiness.

Asia on Eggs

This morning Asia is walking on eggshells and does not seem to want to deviate from the investment policy implemented in the USA. To put it simply, we wait for the figures to find out more and when we know more, we will know what to do. The risk appetite is huge and the vision for the future is about as clear as the streets of London on an autumn morning. Hong Kong is closed due to the onset of a typhoon and the rest are slightly in the red, a bit like the Wall Street fence last night.

For the rest, it is Waterloo morne plain. Oil is still above $ 80 and getting ready for its run towards $ 100, looks like a climber at the last Everest base camp; we don’t know when he is going to go, but he is going to go, afterwards whether he will come back, that is another question. Gold – I pass. And the cryptos are pretty much where we left them yesterday. Bitcoin at $ 56,000 and Ether at $ 3,500.

News of the day

In today’s news, we are talking about the fact that the shortage of raw materials and electronic components is starting to take its place. Apple has announced that they will have to cut production of iPhones drastically due to lack of components. The news is not really surprising, the problem will mainly come from the fact that this kind of announcement will be repeated over and over again in the next few days. The title at the apple ended down 1% last night and put a layer after close, bringing the final balance to 2% on the day.

Otherwise Deutsche Bank is still involved in a Forex scandal, the bill could amount to 500 million. It is a great classic of European finance, when it is not one it is the other. And then we also talk about “shortage of truck drivers”, England no longer knows how to unload the cargo ships arriving at the port. We also learned in the employment figures that more and more people are leaving their jobs to rethink their way of living and working, it seems that this is a consequence of COVID. One more.

As for today’s figures, in addition to the CPI there will be the Trade Balance and GDP in England, then the CPI in Germany, industrial production in Europe and the OPEC report. Then it will be the CPI and our life will change. Or not.

Today on, we are pleased to publish a novelty that will be of interest to all those in charge of allocation within the portfolios. This is the Equilium model developed by Stéphane Alec (a type that made the EPFL) and already used – among others – by large Swiss pension funds. Each month we will provide our readers with the expected developments of the main market factors as well as their impact on a typical balanced portfolio. Plan one more slide for your next investment committees!

Until then, have a nice day and see you tomorrow at the same time with a little more hours of sleep in my case !!!

Until tomorrow.

Thomas Veillet

“Housekeeping is like being caught in a revolving door.” —Marcelene Cox

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