Thought For A Day
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Thought For A Day
BREAKING ::::::::::::::::::::::China has plans to invade Taiwan next autumn – report
Al Jazeera cites Newsweek who cites a Russian intelligence document that says China has plans to invade Taiwan next autumn. I don’t know if that means 2022 or 2023. Either way, this is a big bombshell, though the source right now is confusing.
More to come.
Draghi: The EU Commission should set a cap on gas prices
There is too much talk about price controls in Europe for this to not be close to actually happening. He’s talking about natural gas here, not gasoline.
Ultimately, this would be wildly expensive and drive up overall consumption but it will help to save some industry and win some elections. But doing this while calling for a windfall tax on European gas producers is a baffling set of policies. And at the same time as the ECB says there’s no real inflation.
BOJ announce no change to monetary policy, as expected
The main components of policy:
- short-term interest rate target at -0.1%
- 10-year bond yields target around 0%
unchanged.
US media report Putin has placed some of his intelligence officials under house arrest
- Vladimir Putin has now put some of his own intelligence officials under house arrest, according to sources who spoke to The New York Times
- The report suggests Putin may be insulated from solid information, or worried that these aides might try to overthrow him, as former Russian Foreign Minister Andrei Kozyrev told MSNBC in a recent interview.
Thought For A Day
Russia warns Bosnia and Herzegovina against joining NATO
Given the way it’s going in Ukraine, it’s not the best time to be talking tough but Russia is on the wires warning Bosnia and Herzegovina that it will face the same fate as Ukraine if it decides to be a part of NATO.
Euro rises for the fourth consecutive day; hits session high
The US dollar remains on the defensive in the unwind from the Fed trade.
It’s tough to pin down what’s behind the euro rally. Earlier in the week, you could pin it on hopes for a ceasefire in Ukraine and stability in sanctions but with Russia cooling those hopes for today (leading to the rally in oil and gold) that’s a tough sell today.
In the technical picture, it’s all consolidation so long as we stay below 1.1121 and that might be a good level to sell against on a low-risk trade if the momentum stops after the fix.
The only thing I can see on the fundamental side is compression between the US and Europe. ECB policymakers are staying dovish (though Knot today showed some flexibility). I find it tough to believe the US will continue to tighten above neutral while the ECB is able to stay close to zero with its inflation-only mandate. That’s particularly true with the energy pressure on Europe and more of an appetite for green investment/carbon taxes.
At the same time, all that might be balanced by a deteriorating growth outlook.