Tuesday 29, March 2022

Emerita Resources deemed a scam by Grizzly Research

Wrap

Generally, this was a risk-on day. There are some rumours that Zelenskyy and Putin will sit down to negotiate an end to the war in Ukraine. In response to this:

• oil prices continue to sag, although at a slowing rate relative to the last few trading days,
• equity indexes, globally went up. High beta stocks (e.g. $TSLA) disproportionately,
• most commodities were dragged down with oil, lumber being an exception,
• most sovereign bond yields went up, in a more-or-less parallel shift across the curve,
• the dollar went down, by about 67bp. Most other currencies followed suit, except GBP, which sank alongside the dollar (GBP/USD = 1.31).

In other news, Russia’s demands to be paid in RUB for its oil and gas was resisted by the EU. In the US there was a proposal to tax billionaires on unrealized capital gains.

On practically all measures (5-30s, 3m-5y, OIS 30-10, etc.) yield curves are inverting with a widespread acceptance that this indicates that the short-term rate is above “r-star”, the rate which can co-exist with full employment. In other words, we are heading for recession, but the stock market is only 3.5% off its ATM. Bears such as Sven Henrich and Stanphyl Capital are wailing. At some point they will be right.

Image of the day

📸Helder Vinagre Rue des Fossés Saint-Jacques pic.twitter.com/2gj1to8klk

— Iconic (@Iconic___Images) March 28, 2022