Housekeeping: Good Morning. We will be doing a breakdown on Swap dealer risk and roles tomorrow on this program
Today:
Premium Analysis: Bank Commodity Flow Analysis
News: Bretton Woods 3 in Russia?
Premium Analysis: Bank Commodity Flow Analysis
The Fed delivered a 50 bps cut and highlighted its ‘dual mandate’ as policymakers, led by Chair Powell, shift their focus from inflationary pressures to a loosening US labor market.
In anticipation, our quarterly report highlighted key conviction views across commodity sectors including: bullish precious metals outright and/or versus energy and a rebound in copper as further Fed cuts manifest into year-end. On the more neutral-bearish side of the ledger for year-end, we focused on nickel, tin, iron ore, cocoa, and row crops. For the COT week ending September 17th, commodity index/ETF data show inflows of $2.6Bn, bringing YTD inflows to $38.2Bn.
Continues at Bottom. We will be doing a breakdown on what this all means for Swap dealer risk tomorrow on this program
US equities retreated on Wednesday after the S&P 500 and Dow Jones Industrial Average closed at record highs in the prior session. Large caps bested small caps: S&P 500 (-0.19%) vs. Russell 2000 (-1.19%). MSCI Emerging Markets (EEM) and MSCI EAFE (EFA) lost 1.05% and 0.54% respectively.
Market News:
"OpenAI is planning to convert from a nonprofit organization to a for-profit company at the same time it is undergoing significant personnel changesWSJ
"Meta debuted its first pair of augmented reality glasses — devices that show a combined view of the digital and physical worlds, a key step in Chief Executive Officer Mark Zuckerberg’s goal of one day offering a hands-free alternative to the smartphone. Bloomberg
"Micron Technology forecast first-quarter revenue above Wall Street estimates on Wednesday, betting on strong demand for its high bandwidth memory (HBM) chips used by the AI industry, sending the company’s shares up 10% after the bell. CNBC
"Google said it has filed a formal complaint against Microsoft with the European Union’s top antitrust regulator, escalating a long-running dispute over the cloud-computing business.WSJ
"Applications to refinance a home loan surged 20% last week compared with the previous week. CNBC
Politics/Geopolitics:
US, France and partners proposed an immediate 21-day ceasefire across the Lebanon-Israel border and called for a ceasefire in Gaza. US President Biden and French President Macron said it is time for a settlement on the Israel-Lebanon border that ensures safety and security to enable civilians to return to their homes and they have worked together in recent days on a joint call for a temporary ceasefire to give diplomacy a chance to succeed. Furthermore, they called for broad endorsement and immediate support from the governments of Israel and Lebanon, while the statement was endorsed by the US, Australia, Canada, EU, France, Germany, Italy, Japan, Saudi Arabia, UAE, and Qatar.
Israel and Hezbollah communicated details of the US-France proposal and will announce their response soon, while The Washington Post cited US officials stating that Hezbollah will not directly sign the ceasefire agreement.
US President Biden said an all-out war is possible in the Middle East, but there is also a possibility of a settlement and said there needs to be a two-state solution, according to an ABC interview.
French Foreign Minister told the Security Council that the situation in Lebanon may reach the point of no return and that Lebanon which is already considerably weakened, will not be able to be restored after a war between Israel and Hezbollah. Furthermore, he said war is not inevitable and there is no alternative to diplomacy. The Foreign Minister also noted that important progress was recently made on a temporary ceasefire in Lebanon and efforts will continue.
Israeli source said they are approaching a crossroads to make decisive decisions that will determine where the war is heading and noted that talks on the north aim to provide an opportunity for a settlement that prevents a major war, according to Israeli press.
Israeli press Hayom cited an Israeli source stating there is no prospect of reaching a ceasefire at least in the next few days.
Israeli UN envoy said Israel would prefer a diplomatic solution in Lebanon and if diplomacy fails, then Israel will use all means at its disposal. The envoy added that diplomacy will be better for Israel and Lebanese people, as well as noted that Israeli PM Netanyahu will arrive on Thursday and address the UN General Assembly on Friday while Israel's UN envoy also commented that Iran is the spider at the centre of the web of violence and there can be no peace in the region until we dismantle this threat.
Iran's Foreign Minister said the region is on the brink of a full-scale catastrophe and Israel has crossed all red lines, while he added that the UN Security Council must intervene to restore peace and security. Furthermore, he said that Israeli leaders must understand their crimes won't go unpunished and Iran will not remain indifferent in case of a full-scale war in Lebanon.
UN Secretary-General Guterres told the Security Council that 'hell is breaking loose' in Lebanon and diplomatic efforts have intensified to achieve a temporary ceasefire to allow for aid deliveries and pave the way for more durable peace. Guterres stated all parties must immediately return to a cessation of hostilities, while an all-out war must be avoided at all costs and that Lebanon cannot become another Gaza.
Lebanon's PM told the Security Council that Israel is violating their sovereignty, while Lebanon's PM responded 'hopefully yes' when asked if a ceasefire can be reached soon, according to Reuters.
US is reportedly preparing USD 8bln in arms aid packages for Ukrainian President Zelensky's visit, according to sources via Reuters. It was later reported that President Biden's administration announced USD 375mln for Ukraine defence aid which includes HIMARS, Javelin missiles and TOW missiles, according to the White House and State Department.
Russian President Putin proposed to update Russia's nuclear strategy and said that a number of clarifications have been proposed with regard to the definition of conditions for the use of nuclear weapons. The proposal stated that aggression against Russia by any non-nuclear state, but with participation or support of a nuclear state, is proposed to be considered as their joint attack on the Russian federation, while Russia reserves the right to use nuclear weapons in case of aggression against Russia and Belarus.
China's Foreign Minister said in meeting with EU's top official that China is committed to de-escalating the situation in Ukraine and China will not give up efforts to strive for peace in Ukraine.
South Korea's National Intelligence Service said North Korea possesses enough plutonium and uranium to make at least double-digit nuclear weapons, while it added that North Korea could possibly conduct a 7th nuclear test, according to Yonhap.
Russia's Kremlin says changes to Russian nuclear policy in the document on state nuclear deterrence have now been formulated; changes should be considered a signal to "unfriendly" countries. Will subsequently make a decision on whether or not to publish nuclear documents. There are two documents on nuclear policy. Signal to the west is that there are consequences if Western countries participate in an attack on Russia with various means.
Data on Deck: Revisionist GDP on Deck
Now that the cuts are in and the recession debate will become academic as stocks have their restored liquidity, focus will again return to inflation risks
MONDAY, SEPT. 23 PMI Sept
TUESDAY, SEPT. 24 Case-Shiller home price index/ Consumer confidence
