Google pays billions of dollars each year to Apple, Samsung and other telecom giants

Headlines

·         China's inflation slows in August.

·         Kishida orders fresh stimulus package in October.

·         Twitter paid whistle-blower $7 million, lawyer says.

·         Citigroup’s $500 million blunder ends in victory.

·         Google pays billions of dollars each year to Apple, Samsung and other telecom giants to illegally maintain its spot as the No. 1 search engine, the US Justice Department claims

·         Bitcoin miners struggle to cope with crypto winter.

·         An $11 billion US stock exodus.

·         Biden rallies Democrats. 

·         US Treasury Secretary Janet Yellen used a speech in Detroit to provide a sweeping review of what she saw as the Biden administration’s bragging points on the economy.

·         ECB speakers doubled down on the need for more rate hikes.

·         The BOE pushed back its next meeting after the Queen's death.

·         King Charles will take a left turn on new UK currency.

·         Germany is considering direct intervention in the energy market amid soaring gas prices.

·         Ukraine continues to gain ground.

·         The global housing squeeze has only just begun.

·         Australia looks to scrap rich visa. 

·         A Covid outbreak at one of China’s top media schools should be stamped out in the “shortest period of time,” Beijing government officials have said.

Although the Euro recovered above parity with the USD, it was more USD weakness as investors dial back expectations on rate hikes to the end of the year with perhaps a 75,50,25 approach. The Euro is also closely linked to the power market and any further price rises in gas will push the currency lower again.

We see markets fall and rise on a regular basis and this is natural and healthy for the markets. Simply put the markets go through accumulation and greed (bullish phase) then distribution and fear (bearish phase) and guess what happens next…yes, it repeats it!

As we have seen with high inflation, higher rates and the potential for a recession, one thing to keep remembering is bonds hate inflation and equities hate a recession.  

Crypto bounced, with BTC back over $20k, dragged up partly by Nasdaq and crypto hype around the Merge. The Merge, simply put is where ETH will change from PoW to PoS which will reduce the energy consumption by anywhere between 90% and 99%. ETH Miners used around the same amount of energy as Chile!

Energy companies are offering to cap profits, but at what level and only to prevent a higher windfall tax. Comments from governments on how serious Iran is to negotiations leaves doubts they will have sanctions lifted and be allowed to export oil.

Global News

China's Covid approach leads to lower inflation as demand slackens, and a leading Hong Kong businessman urged the government to loosen curbs on travelers. China's campaign to support the yuan means the PBOC may limit liquidity injections, and commodities could tumble if that campaign fails.

Price growth cools. China's consumer inflation unexpectedly eased in August as sporadic lockdowns suppressed spending. Producer price growth also slowed more than predicted, giving policy makers more room to support the economy if needed. The CPI rose 2.5% from a year earlier, slowing from 2.7% in July. Factory-gate inflation slowed to 2.3%.BB

Commodities traders are warily watching the currency. China typically buys its raw materials in dollars, so the weakening of the yuan may depress demand and force prices lower.BB

Fumio Kishida ordered the putting together of a fresh stimulus package in October and may consider an extra budget to fund it. And BOJ chief Haruhiko Kuroda met with Kishida, a sign of Tokyo's heightened alert levels after the yen slid sharply against the dollar this week.BB

ECB rate hikes will continue until inflation improves, Governing Council member Klaas Knot said. Other speakers echoed the same sentiment as markets digested yesterday's jumbo move.

·         The decision was necessary and correct, Peter Kazimir said, adding there's no other way but to keep increasing.

·         Central bankers must avoid a repeat of the 1970s, when they waited too long to respond to surging prices, Francois Villeroy told BFM Business.

·         Christine Lagarde said that for the ECB to be successful in tamping down inflation, governments must ensure their fiscal response to the energy crisis doesn’t get in the way.

·         Speaking of energy: The ECB is intensifying discussions with banks over their readiness for a potential surge in company defaults and a drying-up of energy-market liquidity.BB

A Ukrainian counteroffensive appears to be progressing in the north. Ukrainian officials and Russian military bloggers described a push that surprised in its speed, marking the first time forces have been able to break through Russian defenses on a more-than-tactical level.BB

EU energy ministers won't back a price cap on just Russian gas, according to diplomats, but they want officials to find other ways of curbing the cost of imported gas. Some want a cap on all gas imports and the idea of joint purchases is also being floated. There's support for skimming off energy companies' excess profits and providing liquidity for traders hit by ballooning margin calls.BB

California's power crisis may worsen as wildfire dangers emerge. Edison's Southern California unit warned it may need to cut electricity to more than 50,000 customers to reduce the risk of blazes. Smoke also threatens to reduce power from solar generation. The grid operator canceled its emergency warning late last night but another for today is already in place.BB

Google pays billions of dollars each year to lock out rivals and maintain its spot as the No. 1 search engine, the DOJ told a federal judge. A hearing yesterday marked the first major face-off before a trial expected to start next year. And lawmakers lambasted Apple, warning it may face an investigation if its iPhone 14 uses chips from China's YMTC, the FT reported.BB

Amazon.com sellers are bracing for a bleak holiday shopping season as consumers slow their spending. Many merchants—who sell more than half of the goods on Amazon’s web store—fear they’ll be forced to cut prices to move a mountain of unsold inventory. It’s an abrupt change from the previous two years of the pandemic, when sellers scrambled to get enough products into Amazon warehouses to meet Covid-fueled demand even as chronic shortages let them boost prices.BB

Germany is mulling direct intervention in the energy market to avoid a wave of insolvencies, the co-head of Chancellor Olaf Scholz's SPD said. "We have to pay the bill anyway," Lars Klingbeil said. "I want us to take the first step, to intervene now." Germany is increasingly importing key chemicals as power prices surge.BB

·  Centrica plans to voluntarily cap profits as part of a government plan to lower UK household bills.

·  EDF is speaking with the UK about a voluntary price cap on electricity from its five British nuclear plants, the Sunday Times reported.

·  The Czech government is likely to cap electricity bills for households and impose a windfall tax on some industries.

·  Goldman expects European natural gas prices will fall through the winter to below €100/MWh by the first quarter as demand destruction and high storage levels offset a drop in Russian supply.

The UK bond market is bracing for more losses after Liz Truss's spending plan to cap energy prices. Investors are worried longer-dated bonds will suffer from rising inflation expectations and higher borrowing. Truss's bailout may add £200 billion of extra gilt issuance over this fiscal year and next, Deutsche Bank said. That's unwelcome news for a market already grappling with high inflation.BB

In Europe, investors aren't sticking around to find out how the region surmounts its sundry troubles. Money managers yanked $3.4 billion from European stock funds in the week through Sept. 7, taking total outflows in the past six months to $83 billion, according to Deutsche Bank. "We've expected a recession in Europe for months given the energy crunch, but we don't think equities have fully priced this in," said Wei Li, BlackRock's chief investment strategist.BB

European powers voiced "serious doubts" about Iran's commitment to a new nuclear deal after almost 18 months of negotiations. France, Germany and the UK issued a joint statement criticizing Tehran's "failure to conclude the agreement" while continuing "to escalate its nuclear program far beyond what could plausibly be justified on civilian grounds." The IAEA's board meets on the issue starting today.BB

Around the world, soaring borrowing costs are squeezing homebuyers and property owners alike. From Sydney to Stockholm to Seattle, buyers are pulling back as central banks raise interest rates at the fastest pace in decades, sending house prices falling. Meanwhile, millions of people who borrowed cheaply to purchase homes during the pandemic boom face higher payments as loans reset. Already, frothy markets such as Australia and Canada are facing double-digit house-price declines, and economists believe the worldwide downswing is only getting started BB

Australia is set to review a visa for people who invest at least A$5 million ($3.4 million) in the country, with the home affairs minister saying she sees little reason to retain the program that has been criticized as providing a fast track for wealthy Chinese. The Significant Investor visa is designed to attract funds into the country, with holders required to maintain their investment for the term of the visa, which can be up to five years. BB

WTO Complaint | Dombrovskis also said the EU is assessing whether the US Inflation Reduction Act — which includes protection elements like giving tax credits for electric vehicles made in the US — violates WTO rules. These measures are also casting a pall over the next Trade and Technology Council, meant to take place by the end of the year. BB

FX Daily: Market finally prices 4% Fed Funds for next spring

It has taken some time, but money markets now price the Fed policy rate at 4% for next spring. A speech by the Fed's Christopher Waller on Friday re-iterated that a 4% Fed funds rate would be seen later this year even as inflation slowed. A high bar for the Fed to pivot and Europe continuing to struggle with the energy crisis should keep the dollar bid on dips ING

Following Thursday's hawkish European Central Bank (ECB) meeting, Friday saw an array of off and on-the-record comments from the ECB.  Most seem to point to the need for the ECB policy rate (still seen as the deposit rate) to be taken to the 2.00% area - that is 125bp higher than its new target. Money markets price the deposit rate at 1.75% for year-end and perhaps closer to 2.50% next spring - suggesting the 2% pricing could move forward to year-end should expectations solidify that the ECB hikes 75bp at its 27 October meeting. ING

Commodities

Europe’s energy woes keep getting worse, with winter coming and Russia cutting off natural gas exports. European Union leaders are trying to steer the continent away from a financial meltdown, proposing emergency interventions including skimming from energy companies’ profits, “incentivizing” power saving to price caps on all gas—and not just Russia’s. Still, a number of green hydrogen projects, a potential substitute for natural gas, are on hold. In the UK, Prime Minister Liz Truss announced a cap on household energy bills and a fund to help power companies access extra liquidity. China, for its part, may add new coal-fired power plants after a spate of power crunches. In the US, California is barely avoiding rolling power outages, underscoring how grids have become vulnerable in extreme weather as they transition from fossil fuels to renewable energy. BB

Commission President Ursula von der Leyen called for “emergency intervention” in the energy market, and this week she has to deliver. But if the energy ministers’ meeting last week was any indication, finding concrete measures supported by all is going to be tough. Proposals for mandatory cuts in power demand and Germany’s call to share any excess supply sparked tensions on Friday. More than half the countries raised the idea of capping gas prices, but were divided over how exactly to do so. Von der Leyen tweeted that this week’s preparatory meeting of commissioners will focus on re-channeling energy companies’ profits to vulnerable households and businesses, providing liquidity support and reducing demand. But her State of the EU speech will just be the start: the Czech presidency wants another emergency energy council at the end of the month.BB

Russia’s decision to completely halt gas flows through the Nord Stream pipeline will raise the euro area’s gas bill by an extra 50 billion euros, on top of a 460 billion-euro hit from earlier price increases. All told, the squeeze will exert a drag on GDP of about 2.2% annually, rising to as high as 4% if the winter is unusually cold and there’s a breakdown in European unity. Even with the government support, the economy is still heading for a recession at the end of the year, some economists say. BB

Crypto/Digital

"Wen merge?" The question Ethereum supporters have asked for years has an answer: days away. It might even be just three days, since the merge event could happen as soon as Tuesday. In anticipation of the merge, ETH rallied 11% this week. But it's not just ETH: Solana, Avalanche, Cardano all rebounded this week too. And don't forget about Bitcoin. Is the crypto winter of this 2022 summer set to turn into a warm and bullish crypto fall?

The Merge came one step closer with Tuesday's Bellatrix upgrade. The final step before the Ethereum blockchain switches to a proof-of-stake consensus model from proof-of-work, Bellatrix prepared Ethereum's Beacon Chain for The Merge with its mainnet Execution layer.

The main event, dubbed Paris, is set for this coming week, around Sept. 14 or 15. That's when Beacon Chain (Consensus layer) validators will take over from proof-of-work miners to start finalizing Ethereum's mainnet blocks. The exact time all depends on when the the proof-of-work mainnet hits the Total Difficulty Terminal, a specific on-chain metric, of 58750000000000000000000. That's 19 zeroes, if you're wondering.

The Merge is nearly here. Ethereum's long-in-the-making network upgrade is set to become official in the coming days. The Merge will bring notable changes to Ethereum, including a reduction in both the network’s energy usage and new token issuance. Validators will replace miners. As such, Ethereum will no longer be secured by mining hardware, but by the economic value of ether tokens staked by participants. The Merge will not, however, make Ethereum more scalable or offer a reduction in transaction fees.

Article on 4 coins (NOT MY RECCOMENDATIONS)

Gala Games aims to take the gaming industry in a different direction by giving players back control over their games. The project wants to change the fact that players can spend hundreds of dollars on in-game assets, and countless hours spent playing the game, which could be taken away from them with the click of a button.

It plans to reintroduce creative thinking into games by giving players control of the games and in-game assets with the help of blockchain technology.

I see a bright future for Gala, with an all-time high of 0.7$, buying now at 0.05$ means a 12x is to be made until the all-time high will be destroyed.

ULTRA (UOS)

Ultra is a publishing platform and ecosystem for video games and video game content. Ultra’s mission is to do away with the current monopoly held by publishing platforms like Steam and provide new opportunities to game developers, players, and influencers.

Players can benefit from immediately playable games, earn UOS by using the platform, and access platform-exclusive games.

As long as UOS manages to become the next Steam, there is no doubt that huge gains are to be made. Prices today have already started to look good, so a DCA strategy might work very well for you!

Vulcan Forged (PYR)

Vulcan Forged is a blockchain game studio and NFT marketplace. They are the makers of VulcanVerse.

In this “VulcanVerse”, users can stake their coins, they can play “play-to-earn” games, there is a marketplace for NFTs or other crypto assets, and many other benefits.

Who Are the Team at Vulcan Forged?

Vulcan Forged consists of 30 core members spread out over Greece, the UK, and Ukraine. Their main office is located in Athens, Greece, with 9 in-house and led by CEO Jamie Thomson.

Seedify.fund(SFUND)

Seedify is a blockchain gaming-focused incubator and launchpad that empowers innovators and project developers through access to funding, community and partnership building, and a full support system to help drive the future of gaming and blockchain.

Interested game industry innovators submit their project proposals to Seedify.

The gaming industry is gradually entering a new era — previously gamers may spend large sums of money on in-game items with no direct monetary benefits.

However, they are now able to make money by earning in-game items non-fungible tokens (NFTs), and tokens, which are facilitated by the play-to-earn revolution.

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

DISCLAIMER.
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