Morning NOTE

GOOD MORNING

The ZAR recovered on the back of a recovery in Risk assets after the global stock sell-off stalled

• USDZAR 16.0000
• EURZAR 16.6300
• GBPZAR 19.5500

SOUTH AFRICA   

• Trevor Manuel, said  his membership with the ANC party has lapsed.
  • Manuel said his Damascus moment was when former ANC secretary-general Gwede Mantashe called him a free agent.
  • The comments after Manuel said former president Jacob Zuma should pay back the money used for his Nkandla homestead upgrades.
  • He also confirmed the changes in the party when Zuma replaced Mbeki in 2007.  EWN
• SAA:  The Takatso Consortium said that it had all the necessary resources to have 51% ownership of South African Airways (SAA) .
  • The group releasing a statement after concerns were raised from national Treasury that it would have to source most of the funding for the partnership.
  • Takatso has in principle agreed to provide R3 billion over the next two years.
  • Its chairperson, Tshepo Mahloele, said that Treasury’s concerns were a misunderstanding.
• ABInbev, the giant beer manufacturer, promised SA  beer drinkers will not have to fork out much more money for the satisfaction of a cold beer.
  • Michel Doukeris, the new global CEO of brewing giant ABInBev, says the company is working hard to manage costs and cushion its customers against price increases. Moneyweb

Stocks:

• Fed Chairman Jerome Powell cautioned Thursday that getting inflation under control won’t be easy.
• Spooking markets and slowing the rebound was comments by chairman Powell.
• He said he can’t guarantee a ‘soft landing’ as the Fed looks to control inflation.
• “Nonetheless, we think there are pathways … for us to get there,” he said in an interview with Marketplace published Thursday.

• Global yields declined after investors remained worried that rising rates would inevitably lead to recessions.
  • In the US the 10YT fell to 2.89% from a peak of 3.2% earlier in the week.
• In the UK , the 10-year yield fell to a 4-week low of 1.78% after hitting a 6-1/2-year high of 2% early in the month.
  • Investors grow increasingly concerned about the weakening of the economy.
  • The UK GDP expanded by a less-than-expected 0.8% in Q1 and in March only it contracted 0.1%.
  • Also, the odds are rising for the UK to enter a recession this year;
    • which would make it difficult for the BoE to continue to raise rates even with inflation remains elevated at levels not seen in 20 years.

• The Dow fell 103 pts to 31,730
• The SP500 fell 51 points to 3,930
• The Nasdaq gained 6.73 to 11,730
• image : Trading economics

• Asian markets all rallying hard on the back of the recovery on wall street.  Stocks rebounding to end near flat, after steep opening sell-offs.
  • In Japan, the Nikkei 225 rallied 2.64% to close at 26,428, rising from near 2-month lows, as investors bought up beaten-down shares, with technology stocks leading the market rebound.
    • SoftBank Group provided the biggest boost to the Nikkei, surging 12.2% even after posting a record loss at its Vision Fund investment arm and an annual net loss of 1.7 trillion yen for the group.
  • ASX 200 Index rebounded 1.93% to close at 7,068 on Friday, as high inflation, rising interest rates and a weakening global economic outlook continued to weigh on the markets.
    • Uncertainties surrounding the war in Ukraine and China’s Covid-19 woes also kept investors on edge.
    • The benchmark index fell 1.81% this week for its fourth consecutive weekly decline. TE
• Crude oil rallied to reach $107/bl  and in turn rising for the 3rd straight session.
  • Traders citing concerns of further supply disruptions from Russia.
  • The prospect of an EU ban on Russian oil continued to buoy prices, with tensions escalating further this week after Moscow imposed sanctions on European units of state-owned Gazprom.
  • Keeping the rally in check were demand concerns as China remains in lock down and rising global interest rates, with the potential to curb demand.
  • The IEA report released Thursday highlighted the duelling factors at play in the market. I.E.  DEMAND ( CHINA & INTERES RATES ) VS SUPPLY ( RUSSIA ). Energy news
• Gold declined to trade near three-month lows around $1,825/oz.
  • Traders remain concerned about a rampant US Dollar and rising US interest rates.
  • The dollar steadied near a fresh 20-year high scaled on Thursday as a strong US inflation print reinforced bets for aggressive Federal Reserve rate hikes.
  • With bullion offering ZERO interest rates, expect US Dollar to benefit when rates rise. Kitco metals
• The US Dollar gained above the 104 and remained near 20-year highs after US inflation came in higher-than-expected.
  • The data keeping the market on its toes for a fed hike keeping the Federal Reserve on course to tighten monetary policy aggressively.
  • Earlier in the week, US CPI held close to a 40-year high at 8.3% in April, while the core CPI also came in above expectations at 6.2%,
  • The dollar has also been buoyed recently by haven demand due to economic uncertainties surrounding Europe and China, and Russia-Ukraine.
  • The US central bank raised its benchmark overnight rate by 50 basis points last week and markets are pricing in equivalent hikes at each of the next two Fed meetings in June and July.

Crypto

• More than $200 billion erased from entire crypto market in a day as sell-off intensifies.
  • The price of bitcoin plunged below $26,000 on Thursday, hitting its lowest level in 16 months.
    • Ether, the second-biggest digital currency, tanked below $2,000 per coin.
  • The collapse of stablecoin, TerraUSD has led to fears of a broader market contagion. CNBC
  • Bitcoin recovered to trade above $30,000 after falling to $27,000 on the back of the global risk asset sell-off.
• What is clear is the Liquidity paradigm and if central banks continue to remove monetary support , then Cryptos will under perform.

• WORLD 519,865,036 / 6,284,7113 / 474,595,557
• USA 84,066,379 / 1,026,109 / 81,163,689
• SA 3,871,085 / 100,630 / 3,696,731