Newsquawk’s US Market Open: Mixed trade amid conflicting China drivers & multiple geopolitical updatesFull NoteEuropean bourses are mixed, Euro Stoxx 50 -0.6%, following a similar APAC session with impetus from Shanghai’s reopening offset by activity data and geopoliticsStateside, futures are lower across the board, ES -0.4%, with the NQ marginally lagging as yields lift; Fed’s Williams due later before Powell on TuesdaySweden & Finland are moving forward with NATO bids, with Russia pushing back against this; no progress expected today on the EU’s 6th sanctions packageEUR lifted amid commentary from Villeroy on the currency, with the DXY outpacing peers but lower overall amid the Single Currencies weightEGBs slip on Villeroy, periphery hit further with the China data weighing while USTs are contained and the curve marginally flatterWTI and Brent are pressured and torn between the aforementioned China factors amid geopolitical risk/news; Wheat bolstered by India’s export banLooking ahead, highlights include NY Fed Manufacturing, Speeches from Fed’s Williams, BoE’s Bailey, Ramsden, Haskel & Saunders

The global fiscal recovery in 2021 that followed the Covid-19 shock of 2020 has slowed sharply, affected by higher commodity prices, rising inflation more generally, increased borrowing costs, slowing real GDP growth and the war in Ukraine, says Fitch Ratings.FITCH RATINGS SAYS GLOBAL FISCAL RECOVERY TO SLOW IN 2022 AND 2023

FITCH SAYS GLOBAL FISCAL RECOVERY IN 2021 THAT FOLLOWED COVID-19 SHOCK SLOWED SHARPLY, AFFECTED BY HIGHER COMMODITY PRICES, RISING INFLATION, AMONG OTHERS

FITCH SAYS GLOBAL FISCAL RECOVERY IN 2021 WILL BE AFFECTED BY INCREASED BORROWING COSTS, SLOWING REAL GDP GROWTH AND WAR IN UKRAINE

FITCH SAYS POLICY INTEREST RATES ARE RISING, AND FITCH BELIEVES THIS MARKS AN END TO ERA OF VERY LOW GOVERNMENT BORROWING COSTSFull Note

EC Cuts 2023 Euro Zone Economic Growth Forecast to 2.3% From 2.7% Seen in FebInflation, which the European Central Bank wants to keep at 2.0% will be 6.1% this year, the Commission forecast and fall only to 2.7% next year. Before the war, the Commission expected prices to grow 3.5% in 2022 and 1.7% in 2023.The forecast is the first comprehensive estimate of the economic cost of the war in Ukraine for the 19 countries sharing the euro and the wider 27 nation EUThe stagflation vibes continue

A weekend report of comments from a „top official“ in Iran. Bloomberg (gated) carry the report, citing  Mohsen Khojastehmehr, managing director of the National Iranian Oil
Co.. he spoke with reporters Saturday in Tehran.

Iran has capacity to double oil exports if there’s sufficient demand

Iran will “exert maximum effort to recoup its crude oil market
share and revive its customers,”

Iranian crude exports have plunged ever since previous US President Trump dumped the Iran nuclear deal in 2018. Talks between the European Union and Iran on attempts to revive the deal are ongoing. I’ve been updating on the negotiations for months and months but they are persistently stalemated. We get positive and negative indications on the talks on a seemingly never-ending cycle. Resuscitation of the deal, if it comes, will eventually bring more Iranian oil to market, over time. 

Oil price update – trading resumes Monday morning Asia time/Sunday evening US time:

Friday report on a Barclays note eyeing EUR/USD under 1.00. Not that’s 1.00 is too far away!
„If Russia closes its gas taps (to Europe), we expect EURUSD to fall below parity,“ 

„Our economists estimate that a total loss of Russian supplies, combined with rationing of the remainder, could dent euro area GDP by more than 5 percentage points over one year“.
The heightened concern over supply of Russian gas into Europe has been ongoing for weeks/months since Russia launched its invasion of Ukraine. As for euro, its been heavy all year with monetary policy divergence between a tightening Federal Reserve and a much more hesitant European Central Bank also a factor. 
EUR/USD:

Iraq’s state-run North Oil Company spoke with a media outlet on Saturday, saying a Kurdistan Regional Government (KRG) force had seized two oil wells in Bai Hassan oilfield in northern Kirkuk.

Reuters follow up with 

the Kurdish government denied „all allegations and rumours which claim that the regional government had occupied and took over oilfields in Bai Hassan … with the support of an armed force“.

Something to keep an eye on come oil trade reopening on Monday morning (Asia time, Sunday evening US time)

MUFG recommends selling AUD/JPY in a new trade this week and also re-emphasizes its call for buying EUR/GBP.
In AUD/JPY, they recommend selling at spot at 89.50 with a target of 84.50 and a stop at 92.50.
„We are recommending a new short AUD/JPY trade idea to reflect our view that the curret period of risk aversion is likely to extend further in the near-term,“ MUFG notes. 
„We believe there is room for the JPY to continue to rebound in light of short positioning and stretched valuations. The AUD alongside other commodity currencies are coming under more selling pressure as global growth fears intensify,“ they wrote.
They also maintain a long EUR/GBP trade with a target at 0.8800 and a stop at 0.8440. Spot is at 0.8500.For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

Luna — recently at top-5 crypto — has imploded down to nearly nothing. It’s been shattered along with a disastrous plan to use it to back the UST stablecoin. Both are in shambles.
Yet the amount of people I’m seeing say some variation of this is sky high, both online and in my real life.

This isn’t to say that it can’t go for 1-cent to 10-cents. Money can be made in any kind of market.
The bigger lesson is that trying to catch a falling knife is a terrible habit.
It’s a psychological flaw in nearly all new traders. As humans, we benchmark things. We have a sense of what gasoline should cost, what an apple should cost and hundreds of other things. When things ‚go on sale‘ we tend to want to buy them because humans have a deeply ingrained fear of scarcity.
Who among us didn’t think of ways to stockpile gasoline at the depths of 2020?
I real life these are generally good instincts and habits.
The problem is that we then transpose this to financial assets, especially ones without intrinsic value.
Currencies are one of the most-powerful examples of this. For a generation, traders relied on cable gravitating to 1.60. When it go too high, it was time to sell, when it got too low it was time to buy. If you went offside you could hunker down and wait it out.
It worked from the mid-1980s to the mid-2010s… a 30-year stretch.

In the currency market, there is some basis for that kind of thinking. The relationships between strong, developed economies rarely shift dramatically over a few years. There’s some mean reversion built in. But the combination of Brexit, the economic malaise in continental Europe and US dominance in technology appears to have broken the regime.
In assets without intrinsic value, or a strong floor, betting on mean reversion is diasterous. Just because something has fallen doesn’t mean it will bounce back. It’s like the periods of bizarre buying we’ve seen in bankrupt companies.
In a stock, you can find a level of price-to-earnings (hopefully forward earnings), where there’s a floor. Cash flows are cash flows and that’s intrinsic value.
But far, far too often traders think that because something has fallen from 200 to 100 that it will bounce back, even if the economic situation has changed.
Trading is often about habits and the better habit is to sell things that are falling and to buy things that are rising. If something is at an all-time high or an all-time low, it’s there for a reason.
This seems to be a lesson the new traders need to learn over and over. The trend is your friend. Resist whatever urge you have to buy things that are ‚cheap‘ unless you have a strong and reasonable basis of value or a reason for a turn. Even then, what’s the rush? Let it level out first. Let the other guy have the first leg of gains.
It’s an emotional market right now. Don’t get caught in this classic trap.

himRebound. US stocks move higher today, but still down on the week
Silver trades to the lowest level since July 2020 on dollar buying and bearish technicals
WTI crude oil futures settle at $110.49
Oil is now higher for the week. Why that’s so remarkable
Baker Hughes US oil rig count 563 vs 557 prior
Fed’s Mester: Inflation risks to the upside given Ukraine war/China lockdown
European major indices close with solid gains
More from Kashkari: Inflation is much too high
Fed’s Kashkari: We will do what we need to do to bring inflation down
Rising yields highlight the difficult backdrop
UMich May prelim consumer sentiment 59.1 vs 64.0 expected
Gold falls through $1800 to the lowest since early February
The AUD is the strongest and the JPY is the weakest as the NA session begins
US April import prices 0.0% m/m vs +0.6% expected
ForexLive European FX news wrap: Dollar lightly lower, risk bounces

It was Friday the 13th but the day was not a scary one for the markets. After sharp declines in the US stocks, bond yields and crypto coming into the day, today saw stocks rebound, yields moved back higher and bitcoin even rallied.
Fundamentally, however, there was a scare as the UMichigan preliminary consumer sentiment tumbled to 59.1 vs 64.0 estimate. That was the lowest level in 10 years.
Looking at the components they 2 showed weakness with current conditions in the expectations both falling sharply and inflation expectations remaining steady at high levels:

Current conditions 63.6 vs 70.5 expected
Expectations 56.3 vs 63.0 expected
1-year inflation expectations 5.4% vs 5.4% prior
5-10 year inflation expectations 3.0% vs 3.0% prior

In the forex market today, the USD retraced some of the gains seen of late. The greenback moved lower vs. all the major currencies with the exception of the JPY.

The strongest to the weakest of the major currencies

The AUD, CAD and NZD were the strongest of the majors as risk on sentiment increased. The JPY – which traded to yet another 20 year high on Monday before reversing to the downside on Tuesday to Thursday, rebounded back higher today on the increased risk tone and exit out of the relative safety of the JPY.
In other markets:

Spot gold fell another $10.89 -0.61% at $1811.72. The low price today did below the $1800 level for the 1st time since February 4. Last Friday, the price closed at $1882.99. The decline rate presents a 3.82% the fall for the current week.
Silver rebounded today after the short fall this week. the spot level rose $0.41 or 2.06% $21.07. That compares to a close a week ago at $22.33. The $1.26 decline represents a -5.6% fall for the week.
WTI crude oil futures are trading at $110.13 near the 5 PM level. That’s up around $4.03 on the day. The settlement price for the week was at $110.49

.
In the US stock market, the sentiment was more positive today after the S&P index got within a whisker of -20% from the all-time high during yesterday’s trade (at the low for the week, they S&P was down -19.92%).
The gains today were led by the NASDAQ index which rose 3.82%. The NASDAQ index has been hit the hardest in the move down in 2022 with the index reaching a low of –31.48% from the all-time high at session lows yesterday. The broader NASDAQ and S&P index were still lower for the 6th consecutive week, while the Dow industrial average fell for the 7th consecutive week.
In trading today, the major indices all gapped higher and did not trade lower on the day which was a breath of fresh air.

US stock indices closed higher today

In the US debt market, after declines from Monday’s highs into today’s trading, the yields along the yield curve saw a rebound back to the upside. Fed members this week continued to stress that rates would go higher until they reached a more neutral level around 2.5%. With the current yield at 1.0%, that leaves room for at least another 150 basis points. Most expressed the desire to raise ratees by 50 basis points the next 2 meetings. After that there is some debate. Fed’s Bullard, the most hawkish of members, said this week that he would like to see to the Fed to tighten to 3.5% by the end of the year. Others are more in the 2.5% camp but would be willing to increase the rates if warranted. This week, the CPI data showed a higher than expected increase (although the rate was lower from the previous month).  With crude oil prices higher and gasoline price also moving higher ahead of the Memorial Day holiday, the hopes for relief from lower oil prices does not seem encouraging.  That could lead to a more tight Fed, but could also lead to slower growth at the same time.

US yields moved higher

 Hope you all have  a good weekend.  Thank you for your support.

The major US stock indices are closing sharply higher on the day. That’s good news. The not so good news is that for the week they are all lower.For the NASDAQ and S&P index the index closed lower for the 6th consecutive week. For the Dow industrial average fell for the 7th consecutive week. The final numbers for the day are showing:Dow industrial average up 466.36 points or 1.47% at 32196.67S&P index up 93.81 points or 2.39% at 4023.90NASDAQ index up 434.05 points or 3.82% at 11805.01Russell 2000 up 53.28 points or 3.06% in 1792.66For the trading week:Dow industrial average fell -2.14%S&P index fell -2.40%NASDAQ index fell -2.81%.From all time highs:Dow industrial average is down -12.87%. The low the index was down -15.49% from the all-time high to the site below.S&P index is down -16.49%. At the low the index was down -19.92%, just short of the bear market level at -20.0%NASDAQ index is down -27.18%. At the low this week the index was down -31.48%.