New York Open: Over Ease Please

www.investing.com/analysis/new-york-open-over-ease-please-200636544

By Stephen Innes | Mar 23, 2023 06:48AM ET

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Oil and Asia FX have the most to gain as headwinds fade.

One of the biggest puzzles through this entire mess is the resilience in US equities, and I think this suggests that money managers expect the Fed not only to ease to potentially over ease.

So far, the markets have primarily treated the recent events as a surgical strike on a cohort of bank-related stocks. So, if the impact on economy-wide growth is relatively modest, we think oil and Asia FX have the most to gain as headwinds fade.

Financial contagion risk did not morph into demand contagion risk in oil markets. Still, it was perfectly understandable why oil traders drew a straight line from the oil market meltdown to the 2008 GFC.

After all, the markets witnessed the most prominent bank collapse since 2008 and the quickest and most significant repricing of a Fed curve ever. The magnitude of the shock sent tremors across all pro-cyclical markets where oil was targeted, as it always is during any apparent macro meltdown.

We initially thought oil would hold up at the $ 73.50 -74.50 zone last Friday, but the cross-asset contagion was underway when the VAR shock sent gold +2000.

Through the recent bout of macro volatility, oil, as always, was an underperformer as a combination of hedge funds selling amid worries about a US slowdown coalesced into a probable "negative gamma "event when a producer exercised a chunky option.

But the market's most considerable risk right now is tighter credit, which could negatively influence global oil demand. But, outside of a major global banking crisis, we see a relatively limited impact on supply or demand.

As markets stand now, our bullish play is for OPEC to stay the course. With the weaker dollar allowing better China fundamentals to shine through, finally, we are on the same page with Goldman Sachs (NYSE:GS) in that we now think we could enter a small global oil deficit as soon as June.

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Central Banks

Interest Rates

Next Meeting

FED

5.50%

Nov 01, 2023

ECB

4.50%

Oct 26, 2023

BOE

5.25%

Nov 02, 2023

SNB

1.75%

Dec 14, 2023

RBA

4.10%

Oct 03, 2023

BOC

5.00%

Oct 25, 2023

RBNZ

5.50%

Oct 04, 2023

BOJ

-0.10%

Oct 31, 2023

CBR

13.00%

Oct 27, 2023

RBI

6.50%

Oct 06, 2023

PBOC

3.45%

BCB

12.75%

Nov 01, 2023

US 30	33,713.9	+47.6	+0.14%
US 500	4,303.0	+3.3	+0.08%
Dow Jones	33,666.34	+116.07	+0.35%
S&P 500	4,299.70	+25.19	+0.59%
Nasdaq	13,201.28	+108.43	+0.83%
S&P 500 VIX	17.34	0.00	0.00%
Dollar Index	105.737	-0.196	-0.19%

Crude Oil WTI	91.79	+0.08	+0.09%
Brent Oil	93.17	+0.07	+0.08%
Natural Gas	2.978	+0.031	+1.05%
Gold	1,881.25	+2.65	+0.14%
Silver	23.108	+0.367	+1.61%
Copper	3.7363	+0.0243	+0.65%
US Soybeans	1,303.62	+1.87	+0.14%

U.S. 10Y	4.602	0.000	0.00%
U.S. 30Y	4.729	-0.000	-0.01%
U.S. 5Y	4.646	+0.003	+0.07%
U.S. 3M	5.511	+0.032	+0.58%
US 10Y T-Note	107.84	-0.02	-0.01%
Euro Bund	127.50	-0.15	-0.12%
10-2 Yield Spread	-53.21	+5.37	+-9.17%

Apple	170.69	+0.26	+0.15%
Alphabet A	132.31	+1.77	+1.36%
Tesla	246.38	+5.88	+2.44%
Amazon.com	125.98	0.00	0.00%
Netflix	376.36	-1.23	-0.33%
Meta Platforms	303.96	+6.22	+2.09%
Bank of America	27.56	+0.29	+1.06%

New York Open: Over Ease Please

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