James Brodie
Head of Learning & Development, Flux
NASDAQ Down, Funds Cut Global Equities, Singapore Jet Fuel
Risk-off: Nasdaq dips, dollar rises, commodities scarce; Asia hit hardest, no equity washout yet, energy crisis drives inflation fears.
Nasdaq falls 0.8% and finds temporary support from September lows, while precious metals bounce, and the dollar break key resistance as the US economy will be far less impacted by the energy supply crisis than Asian and Europe, from both an inflation & growth perspective.
Meanwhile energy, fertilizer, helium, etc supply dries up in Asia. The big difference between financial markets (equities, bonds & FX) and commodities is availability. In financial markets there’s always a seller…..
While S&P multiples fall hard (Chart 1, Bloomberg) only 11% of S&P stocks are oversold right now. Still nowhere close to the levels we saw during Liberation Day, the 2022 Bear Market, COVID, or the Dec 2018 meltdown. There’s been no real washout yet.
Goldman Sachs - Funds cut global equities for a 6th straight week - Europe macro product shorts are at a 10-year high - US selling hit the 3rd-largest in a decade (Chart 2, Goldman Sachs)
Iran parliament approves bill to levy fees on Strait of Hormuz transit
Brussels says Europeans should cut back on unnecessary travel to prevent energy shortages – Politico
Pakistan introduces a shortened workweek, cuts fuel allowances for public employees, and will take a majority of government vehicles off the road
BASF Pharma announces up to 20% price hike on pharmaceutical excipients
South Korea weighs first public driving restrictions in 35 years due to trump energy crisis
US spot petrochemical prices continue rising. Spot methanol climbed to $1.27 a gallon on Friday, the highest since April 2022.
Iran has bombed Israel’s Teva pharmaceutical factory - largest generic RX drug manufacturer on earth
El Paso natural gas pipe declares force majeure
Australian Newcastle coal futures for April hit $144.25/ton on Monday (the March contract expired Friday at $135.60) Asian countries are expanding use of coal to cut reliance on LNG. (Chart 3, Bloomberg)
US ISM was highly correlated to Korean exports (think semiconductors) until the Middle East conflict (Chart 4, Steno Research, Bloomberg & Macrobond).
The Asia crisis…. Singapore Jet fuel just touched $200 (Flux)
German economy minister: Signs of a significant slowdown in the German economy are already visible. While German inflation jumped from 1.9% in Feb to 2.7% in March, driven by a sharp rise in energy prices linked to the war in Iran.
China NBS manufacturing PMI 50.4 (est 50.1), services 50.1 (est 49.9)
Data today – US JOLTS, Chicago PMI, EZ core inflation, German unemployment
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