Julien Ponthus takes a look at the days ahead.

The old saying is “Don’t fight with the Fed”

Investors who are tempted by the U.S. Federal Reserve’s narrative about transitory inflation may want to review Russell Clark’s last letter to investors and listen to the rock song ‘I fought for the law’.

Clark, who suffered another loss in the monthly hedge fund he named, decided to end his fund. Clark regretted that global markets were increasingly driven by politics and, more specifically, China’s. Clark also admitted that he doesn’t have any particular advantage.

In his October newsletter, he stated that “U.S. Markets are basically a bet on Congress unable to raise rates” and added that Congress was unable regulate large tech companies or increase corporate taxes.

Hedge funds were wrong to expect the Fed or other central banks to become more hawkish.

It has proved difficult to determine the effect of U.S. inflation’s October rise by 6.2% over the previous year on Fed thinking as President Joe Biden decides whether or not to continue Jerome Powell in the Fed chair for another term.

Gold prices fell this morning after a peak of five months, amid uncertainty about central bank’s next move.

The Yields for the are around 1.55% and the Euro Zone’s benchmark German 10-year yields at -0.26%. These numbers show how far the European Central Bank has fallen in the tightening cycle.

The 95-year-old is nearing new highs, which were not seen since July 2020. However, the euro trades at 16 month lows. It has had a negative impact on oil prices as well due to the strong dollar.

The global equity market is trading just one point below their records highs. Asian shares are up on Monday thanks to the positive economic data from China.

Futures trading in European Equities is slightly ahead of that for cash, but they are still slightly in the black.

These are the key developments which should give more direction to markets Monday.

China’s industrial output and retail sales are increasing, but the outlook for property is cloudy

Japan’s economy shrank more than anticipated due to supply shortages

India’s October WPI inflation rises to a five-month peak of 12.54% y/y

UK Rightmove (OTC 🙂 House Prices