Apple jacked up its price tiers on apps and in-app purchases from Europe to Asia

Headlines

• Goldman tells investors to keep up their guard

• Apple jacked up its price tiers on apps and in-app purchases from Europe to Asia, protecting its margins as major currencies tumble against the US dollar.

• Santander is probing whether bankers were pressured into visiting a strip club after work.

• Turkey ruled out urgent intervention in its plunging stock market after an emergency meeting.

• Hungary caved to EU demands to curb corruption after the bloc threatened to freeze funds.

• Germany is closing in on a deal to nationalize gas giant Uniper.

• The Fed is set to deliver another jumbo rate hike. 

• Soaring costs spook Japanese investors.

• World leaders pile against Russia at the UN assembly.

• Equities pushed the S&P more than 10% below its mid-August high as about 93% of its companies were in the red.

• Hurricane Fiona strengthened as it bore down on Turks and Caicos and the Bahamas.

• Hertz plans to order up to 175,000 GM electric vehicles by 2027. Shares of both companies fell.

• Morgan Stanley will pay $35 million to the SEC over its failure to secure the personal data of millions of customers.

• Christine Lagarde says the ECB isn't done tightening.

• China’s spending on Russian energy products hit a record $8.3 billion last month.

• BOJ announces unscheduled bond buying.

• Shares fall as Putin steps up war in Ukraine.

Todays the day we discover how BIG the Fed will increase rates. I expect 75 bps although they could try to shock consumers with a full 1% increase.  Markets will react regardless of the decision and expect high volatility.

Central banks are committed to lowering inflation by raising rates to a level that pushes economies into recession. It is the only way they can regain control of inflation and reset the economy. Expect higher rates to remain throughout 2023 and we will not see cheap money again for many years!

Power prices have been dropping for the past couple of months, however, this is not being reflected in prices yet. Companies are enjoying the highest profit margins for decades and will not cede them willingly. It will require a drop in consumer demand to force them to lower prices.

Although house prices seem currently stable, with such an increase in interest rates this year it is obvious less people will move home due to higher costs and affordability. In the U.S mortgage rates are around 6.3% taking monthly payments on an average loan from $1k to $2.6k, and I expect that to go higher.

If recessions are triggered, we have certainly not seen the low in the stock markets. I am long put options (the right to be short) and these are a great way to maximise risk!

Oil has rallied as tension rises with Russia. The USD has strengthened in anticipation of the Feds rate increase. Gold is firmer and stocks pretty flat at the moment. Keep an eye on the Pivot Points😉

Global News

Stay defensive on US stocks as two-year yields head higher and signal peak Fed hawkishness, Goldman recommended. Defensive names generally outperform cyclicals at such times, the firm's strategists said.BB

The policy-sensitive two-year Treasury rate hit the highest since 2007 and is poised to push beyond 4%. The yield is already up more than 320 basis points this year and is headed for its biggest annual increase since 1994.BB

Another jumbo rate hike—this time from the Riksbank, which surprised with 100 basis points, suggesting Jerome Powell & Co. might raise by that magnitude tomorrow. The Fed announcement kicks off more than a dozen central bank decisions between Wednesday and Thursday, including from the UK, Japan and Brazil.BB

Elon Musk's Starlink is looking to be exempted from sanctions on Iran in order to provide internet services to the country. Musk said the satellite system is active on all continents.BB

Dockers at Britain’s fourth-biggest container port in Liverpool have voted unanimously to reject their employer’s latest pay offer and walk off the job for two weeks in a strike that gets into full swing on Tuesday. BB

Japan inflation | Japan’s inflation quickened to the fastest pace in over three decades excluding tax-hike distortions, creating headaches for the central bank as it seeks to justify its emergency monetary settings. BB

Toward ‘normal’ | Australia’s central bank said interest rates are getting closer to “normal settings,” according to minutes of its latest meeting when it raised the benchmark by a half-percentage point.BB

· Traders have priced in a third 75 bp increase in a row from the Fed tomorrow. Money markets bet the BOE will follow suit with two big jumps, implying a UK benchmark of 3.75% by December.

· Don't worry too much about higher rates slashing growth, the ECB's Madis Muller said. Slowing inflation "takes quite a long time" and borrowing costs are still near historical lows. Even so, policy makers may be in firefighting mode for longer as risks mount.BB

Russia is moving to stage votes on annexing the regions of Ukraine its forces still control. The so-called Donetsk and Luhansk People's Republics, plus Kherson, may hold their ballots this weekend, Interfax reported. The move may potentially give Vladimir Putin a formal legal basis to use nuclear weapons to defend what he'd consider Russian territory.BB

Russia's Ukraine annexation plans were slammed at the UN. NATO Secretary General Jens Stoltenberg joined the condemnations of the "sham" referendums in occupied parts of Ukraine. Olaf Scholz said the move to hold votes in four regions between Sept. 23-27 is in clear breach of international law and Emmanuel Macron called it "a provocation." President Erdogan told PBS that Moscow should return occupied territory as part of a peace settlement. IMF officials will visit Ukraine next month to discuss support, PM Denys Shmyhal said.BB

Germany's jobs market is so hot that candidates are ghosting prospective bosses. More than half the 400 recruiters surveyed by Indeed said the trend deepened in the last year, with a quarter saying it happens at least once a week. Almost one in 10 lose contact with a job seeker every day. BB

The four-day workweek is working. Well, for most. Almost 90% of the 70 UK organizations trialing a truncated schedule said they went well and will continue after pilots finish in November. Almost half said productivity improved while 46% said it remained stable. Six-month pilots are underway in the US, New Zealand, Australia, Ireland and Canada.BB

A right-wing coalition is widely expected to win Italy's election on Sunday, bringing fresh uncertainty. Such an outcome may raise doubts over the path of reforms that are a condition for the country to receive EU funds. To be sure, Giorgia Meloni, who is seen as most likely to become the next PM, has advocated working constructively with Brussels.

· In the run up to the vote and immediately afterward, the equity market may see increased volatility, Olympia Wealth said. The bigger worry, however, is for the medium term as the next government will face a difficult autumn and social tensions are possible. Banks are in better shape compared with past crises after years of restructuring.BB

EU members, including Poland and the Baltics, are pushing back against a change that they fear will weaken sanctions on Russian coal. We’re told that the commission quietly issued new guidance that allows EU companies to help transport, finance or insure the sale of Russian coal, wood and some cement products to third countries “to combat food and energy insecurity around the world.” The loosening comes at an awkward time as Russia is hastening its annexation of the parts of Ukraine its forces still control. The Kremlin suddenly announced plans to hold referendums as soon as this weekend, even as Ukrainian forces continue their advance across several fronts.BB

The EU's energy watchdog is poised to set a firm upper limit for daily power prices to help curb the impact of the energy crisis on homes and businesses. The review comes as the continent rushes to find solutions to temper soaring energy costs following Russia’s invasion of Ukraine. All the while, blackouts are looming. BB

Meta’s Facebook suffered a setback in its EU appeal of a German antitrust decision ordering an overhaul of its entire business model. Competition authorities can also consider the EU’s data regulations and other rules in its probe, an adviser to the bloc’s top court said in a non-binding opinion. Such a ruling would hit at the heart of Meta’s challenge.BB

Christine Lagarde says euro-area borrowing costs will continue to rise over the coming months. That's even after the ECB frontloaded initial moves. However, the central bank chief sees the risk of a wage-price spiral as contained for now.BB

Liz Truss signaled she may deliver some of her tax cut promises this week. The prime minister indicated she's prepared to take unpopular decisions including cuts that benefit the rich more than the poor and scrapping caps on banker bonuses. The Times says she'll cut stamp duties on home purchases.BB

The BOJ conducted an unscheduled bond-purchase operation, buying 150 billion yen ($1.04 billion) of debt due in five to 10 years, and 100 billion yen maturing in 10 to 25 years. The move may be a warning against "some misguided speculation" about possible policy tweaks ahead of tomorrow's BOJ decision, said Mari Iwashita at Daiwa Securities. Japan is ready to intervene in currency markets if needed to support the yen, and it doesn't need to wait for a green light from the US to do so, a former finance ministry official said. BB

The number of millionaires in Britain surged ahead of those in France and Germany last year as a property boom and rebounding stock markets sent wealth levels surging. The UK is host to 2.85m people with a net wealth of more than $1m (£877,000), according to Credit Suisse's annual Global Wealth Report, putting the country behind only US, China and Japan. - Telegraph

Commodities

European natural gas prices fell, poised for their longest losing streak since July, as Germany earmarked billions for gas purchases to avoid shortages and the Netherlands unveiled a support package for households. That follows moves by the UK and the European Union to curb a crisis that has brought the region’s economy to the brink of recession. Another bright spot for the market is the steadily filling stockpiles, now slightly above the five-year average.BB

Climate change, conflict decimate Syria's grain crop - UN FAO - Climate change, a faltering economy and residual security issues have decimated Syria's 2022 grain crop, leaving the majority of its farmers in a precarious position, the United Nations Food and Agriculture Organization (FAO) said. Syria's 2022 wheat harvest amounted to around 1 million tonnes, down some 75% from pre-crisis volumes, while barley was almost non-existent, Mike Robson, FAO's Syria Representative told Reuters. 

As war, drought hit global crops, Argentina gambles on GM wheat - Many environmental and consumer groups have resisted GM wheat, fearing unforeseen side-effects from changes to the genome in a grain used in bread, pasta and other staples. Bioceres is leading the way globally towards commercializing GM wheat, Reuters found from interviews with the firm and importers, documents on U.S. field trials obtained through a freedom of information request and a rare visit to the Argentina test fields.

BHP coal mine workers in Australian state set to vote on industrial action - Workers at four mines of the BHP Mitsubishi Alliance (BMA), which owns Australia's largest metallurgical coal fields, will vote on strike action over working conditions and job security, their union said on Wednesday. The possibility of industrial action at some sites of BHP Group's joint venture with a unit of Mitsubishi Corp in Australia's Queensland state comes as prices slump due to weaker steel demand in China.

Europe upstages China as main driver for copper outlook - Shrinking copper demand in Europe due to a manufacturing recession caused by the energy crisis will dominate market sentiment for some time with prices likely to retreat towards two-year lows early next year. Copper prices typically react to the ebb and flow of demand in China, which accounts for half of global consumption estimated at around 25 million tonnes this year.

Germany nationalises gas importer Uniper  - Germany has agreed to nationalise Uniper by buying Fortum's stake in the gas importer to secure operations and keep its business going, the three parties involved said on Wednesday. The agreement comprises a capital increase of 8 billion euros for an issue price of 1.70 euros per share excluding the shareholders' subscription rights, Uniper said in a statement.

Europe energy crisis may deepen with looming liquidity crunch - Europe's problems in sourcing oil and gas this winter after a dispute with Russia may be exacerbated by a new crisis in the market where prices are already red-hot: a liquidity crunch that could send them spiralling higher still. But European governments have only belatedly rallied to offer financial support to power providers on the brink of collapse, in an effort to ease pressure on a market whose smooth operation is vital to keep people warm.

Indian rice shipments stuck at ports, traders seek government help - At least 20 ships are waiting to load around 600,000 tonnes of rice at Indian ports as New Delhi's surprise export restrictions have trapped cargoes for nearly a fortnight, forcing sellers to pay demurrage charges, industry officials told Reuters. India banned exports of broken rice and imposed a 20% duty on exports of various other types on Sept. 8, as the world's biggest exporter of the grain tries to boost local supplies and calm prices after below-average monsoon rainfall curtailed planting. 

Brazil's September corn export view shy of monthly record as Anec revises data - Brazilian corn export estimates were revised lower on Tuesday, narrowing the chance of a monthly record in shipments, according to data from the National Association of Cereal Exporters (Anec). Anec reduced September's corn export estimate by more than 200,000 tonnes, to up to 7.618 million tonnes.

Crypto/Digital

US regulators should act now to impose much-needed rules in the crypto market that imploded before reaching critical mass, Bloomberg editors write. Officials needn't wait for Congress. Bank regulators have the power to create a limited charter for stablecoin issuers: Those that met the standards would receive privileges while others would face strict scrutiny and possible sanctions.BB

The plunge in crypto prices and blowups of major blockchain projects like Terra have cast a pall over the digital-asset industry; as a result many of the venture capitalists who helped fuel last year’s boom aren’t as free with their money now. In the past few months, they’ve pulled back on funding, leaving some startups with less financing than planned or at lower valuations — or in some cases even unable to seal a deal at all.

There is, curiously, a notable exception: nonfungible tokens. VCs are still bullish on these tokens even as demand for NFTs continues to languish along with the rest of the asset class.

Global NFT sales totaled $634 million last month, down from more than $4 billion during the same period last year, according to NFT data tracker CryptoSlam. And yet funding for NFT gaming ventures, at $842 million in August, was 66% higher than a month earlier, according to data from The Block Research. Startups from Ready Player Me, which creates metaverse avatars and NFTs, to Limit Break Inc. obtained ready financing from firms such as Andreessen Horowitz and Paradigm even as general crypto venture funding fell for the fourth month in a row.

For venture capital firms investing in digital-asset startups, NFTs are a gateway to broader mainstream usage of crypto. Games involving these tokens are often fun, low-stakes ways to introduce people to blockchain. The widespread success of one could ultimately legitimize and popularize NFTs to the point where they find a firmer real-world presence and represent things like airline tickets, house deeds or music singles. 

The rise in funding for NFT-focused startups reflects this kind of optimism, despite the fact that this sector has experienced some of the industry’s most high-profile struggles during the downturn. To name a few, there’s the hack involving Bored Ape Yacht Club NFTs, the fact that blue-chip NFTs took bigger price hits than Bitcoin, the embarrassingly rocky debut of Coinbase’s NFT marketplace and the graveyard of abandoned NFT projects in Hollywood. 

Gaming NFTs have seen their own slew of setbacks in the past year. NFT game Axie Infinity faced a $600 million hack in March. In April, buyers sent transaction fees soaring on Ethereum as they raced to buy Otherdeeds NFTs, representing virtual land plots in a Bored Ape-related game called Otherside. But after investors shelled out thousands of dollars on the assets, their price steeply dropped. It’s also hard to ignore that many players in the traditional gaming world don’t want anything to do with NFTs.

Recent history has shown the damage that can ensue when the crypto hype machine fuels big investments in platforms that fail — the Terra implosion being one glaring example. With NFTs, the stakes are arguably even higher. 

The complexity of an algorithmic stablecoin may not draw in a non-crypto-native audience, but colorful cartoon apes embraced by celebrities like Snoop Dogg and Eminem already have. And the collapse of a major NFT platform flush with VC money could do a lot to cool enthusiasm among this crowd. After all, this winter isn’t over yet. BB

Market levels (all analysis is based on CME futures contracts)

 
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The content of this daily newsletter should only be considered a guide and views, opinions or content contained in this email is provided solely for information purposes and does not constitute investment advice or a solicitation to trade or invest.

Chris Tubby

Senior Director Trading and Education

Symax Fintech