Weekly News 2022/03/14-2022/03/18

All three major U.S stock indexes are likely to record their biggest weekly gains since November 20, 2020. Both the S&P 500 and the Nasdaq 100 rose for four straight days, with technology stocks leading gains in U.S stocks, as investors weighed mixed signals from Russia-Ukraine talks and options expiry added to market volatility. Friday coincided with the “three witches” day, stock options, stock index options, and index futures expired on the same day, so the market trading volume surged. Data shows about $3.5 trillion in stock and index options were expired on Friday. This “Four Witch Day” coincides with the so-called “rebalancing” of the constituents of benchmark indices such as the S&P 500, which often leads to the highest single-day trading volume of the year. 

Optimism about the economy from Federal Reserve Chairman Jerome Powell lifted stocks this week. “All signs point to a strong economy. The economy will be able to thrive even if monetary policy is less accommodative,” Powell told a news conference after the Fed announced a 25 basis point rate hike on Wednesday. 

Investors also rejoiced this week at signs that Ukrainian-Russian talks may be progressing, but that enthusiasm appears to be fading. Market analyst Michael Hewson said: “Sentiment remains fragile, and despite the gains over the past two weeks, the risk of a further escalation in the Russia-Ukraine conflict remains a real concern.” 

According to the regulatory report submitted by Berkshire (NYSE: BRK) to the US SEC, the company accumulated 18.1 million shares in Occidental Petroleum (NYSE: OXY) in the first three trading days of this week, worth nearly $1 billion. This also means that since February 28, Berkshire has accumulated nearly $7 billion in Occidental oil. 

According to reports, Nvidia (NASDAQ: NVDA) has notified graphics card licensing manufacturers (AICs) that its chip production costs have dropped by 8%-12%, and asked them to pass this part of the price reduction to system integrators. 

According to Tesla (NASDAQ: TSLA) China's official website, the price of the rear-wheel drive Model Y has been increased to 316,900 yuan, an increase of 15,060 yuan. The price of Model Y's long battery life and high-performance version remains unchanged. 

Game Station (NYSE: GME) due to continued supply chain restrictions recording a loss of $1.86 per share in the fourth quarter way below analyst expectations for earnings per share of $0.84. 

FedEx (218.91, -9.07, -3.98%) with a net profit of $1.1 billion in the third fiscal quarter, lower than market expectations as omicron led to staff sickouts and reduced demand. 

Boeing (192.83, 2.64, 1.39%) negotiated a potential order for 100 737 Max planes with Delta Air Lines. 

In an interview with the media, Billionaire investor Michael Novogratz pointed out that “I don't think Bitcoin will rise quickly unless we hit the pause button on rate hikes.” Earlier, he had predicted that Bitcoin would fluctuate between $30,000 and $50,000 in 2022. 

Michael Novogratz explained that the liquidity provided by the Fed over the past two years has allowed Bitcoin to soar to all-time highs along with other risk assets, but now that the Fed will tighten monetary policy, investors need to re-evaluate risk assets. 

Previously, the cryptocurrency market fluctuated violently due to the conflict between Russia and Ukraine. Michael Novogratz believes that the possibility of the Russian government using cryptocurrency to evade sanctions is zero. 

In addition, El Salvador‘s President Nayib Bukele said that he plans to issue the country’s first $1 billion bitcoin bond in March, and use the proceeds to purchase cryptocurrencies and build what El Salvador calls “Bitcoin City.” 

However, the market is not optimistic about the prospects of the Bitcoin bonds issued by El Salvador. 

Some analysts pointed out that the annual nominal interest rate of this batch of bitcoin bonds is only 6.5%, which is far lower than the yield of El Salvador's sovereign bonds, and such a low yield is not too attractive for investors. 

Gold prices fell on Friday, with spot gold down 1.09% closed at $1,921.41 an ounce. It fell 3.34% this week, the biggest weekly drop since June last year, in hopes of progress in peace talks between Russia and Ukraine and the prospect of a U.S interest rate hike. The fallout hit safe-haven demand for gold. 

Strategist David Jones said that over the past 10 days, we have seen a significant cooling of the momentum and speculative frenzy in gold driven by the Russia-Ukraine conflict. We may expect that barring any unforeseen events in the Russia-Ukraine conflict, gold prices will stabilize around $1,900 an ounce over the next few weeks.  

The Fed this week, as widely expected, raised the federal funds rate by 25 basis points to combat soaring prices, the first rate hike by the central bank in nearly three years. The Fed also expects to raise interest rates six times this year, each by 25 basis points. “Apart from the easing of geopolitical tensions, the market appears to be belatedly realizing that this week's FOMC meeting is likely to be hawkish, and that doesn't help gold gain,” analyst Jeffrey Halley said in a note. 

Yet another strategist Ole Hansen, said he remains bullish on gold because inflation is likely to remain elevated as global growth slows. That could eventually force central banks, especially the Fed, to forego any further rate hikes and start fresh stimulus instead. 

U.S. oil prices are set to fall for two consecutive weeks this week. Factors weighing on oil prices, including both supply and demand concerns, have eased. The conflict between Russia and Ukraine has eased and the epidemic has suppressed it. However, the market still believes that if there is a long-term problem with Russia's crude oil supply, the outlook for oil prices is still broadly optimistic. 

The IEA said the oil market was in a “state of emergency and could get worse, days after the agency noted in its monthly report that the loss of potential Russian oil supplies cannot be underestimated.” 

Crude oil market analyst Smith said, “Whatever the reason for the recent sell-off, this decline looks overdone and Russian energy purchases dwindling in recent weeks and seaborne traffic dwindling, prices should rebound”. Market analyst Naeem Aslam pointed to data showing hedge fund managers slashed their net bullish positions in Brent to an all-time low. The pullback suggested that the sharp volatility in the oil market was part of a broad unwind, with speculators unwinding positions in WTI, Long contracts for diesel and gasoline futures. He said according to ICE data the decline in Brent crude oil prices was driven by the biggest drop in outright bullish bets since 2018. 

The dollar index rebounded from recent losses on Friday as Fed officials said the central bank may need to be more aggressive in tackling inflation, the dollar hit a six-year high against the yen, although the dollar recorded its first weekly loss since mid-February. Most G-10 The currency moved higher. The Fed's two most hawkish policymakers say the Fed needs to take more aggressive steps to fight inflation. Fed Governor Christoper Waller said the central bank should consider raising interest rates by half a percentage point at future meetings and shrinking its balance sheet starting in July to curb “raging” inflation.  

Market analyst Joe Manimbo pointed out that for the dollar, the Fed's hawkish speech has brought new impetus. This is playing up a more hawkish outlook for Fed policy. Although the Fed has turned hawkish this week, its outlook for interest rates remains broadly in line with market expectations. 

The dollar rose as much as 0.69% to 119.39 against the yen, a six-year high. The Bank of Japan kept its ultra-easy policy unchanged on Friday, in line with expectations. The Bank of Japan is an outlier relative to other developed country central banks that are exiting emergency measures amid the pandemic. 

OnePro Special Analyst

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