The Long Term Investor

The EU is just screwed over the medium term.

Euro slides below 99 cents after Russia halts gas supplies to Europe

https://www.cnbc.com/2022/09/05/euro-slides-below-0point99-after-russia-halts-gas-supplies.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• The EU’s common currency was trading around 0.9911 versus the dollar by 10:00 a.m. London time (5:00 a.m. ET), having climbed off lows of $0.9881 hit earlier in the day.
• On Friday, Russian energy supplier Gazprom announced it would not resume its supply of natural gas to Europe through the key Nord Stream 1 pipeline because of a malfunctioning turbine.

"LONDON — The euro fell below 99 cents for the first time in 20 years Monday, after Russia said it would shut off its main gas supply pipeline to Europe indefinitely.

The EU’s common currency was trading around 0.9915 versus the dollar by 1:00 p.m. London time (8:00 a.m. ET), having climbed off lows of $0.9881 hit earlier in the day.

The dollar index, which measures the greenback against six major currencies, also breached a fresh two-decade high as the British pound slid on fears over energy supply and European economic growth.

On Friday, Russian energy supplier Gazprom said it would not resume its supply of natural gas to Germany through the key Nord Stream 1 pipeline, blaming a malfunctioning turbine. The announcement was made hours after the Group of Seven economic powers agreed on a plan to implement a price cap on Russian oil.

The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was nearly 30% higher Monday morning, hitting 282.5 euros per megawatt hour.

It comes ahead of a meeting of the European Central Bank Thursday, when economists expect it to raise its benchmark deposit rate by 0.5 or 0.75 percentage points against a backdrop of concern over Europe’s ability to meet its energy needs this winter and the potential for a hit to growth.

“We expect that Russia is respecting the contracts that they have, but even if the weaponization of energy will continue or will increase in response to our decisions, I think that the European Union is ready to react,” Paolo Gentiloni, the EU’s economics commissioner, told CNBC over the weekend.

“Of course, we have to save energy, we have to share energy, we have [a] high level of storage and we are not afraid of Putin’s decisions.”

Janet Mui, head of market analysis at U.K. wealth management firm Brewin Dolphin, told “Squawk Box Europe” prospects for European markets are looking “very grim indeed” as the reality sinks in that Russia is likely to continue restricting its gas supply to the region.

“Investors will be very cautious going forward now,” she said. “The very clear implication is that euro assets will be under pressure.”

The flip side, she said, was that the dollar would be much stronger against both the euro and sterling.

The British pound was down around 0.2% on the previous session at 1.1488 against the dollar at 1:20 p.m. London time, after it was announced Liz Truss would be the new U.K. prime minister.

Truss must now reckon with a growing cost-of-living crisis fueled by soaring energy bills.

Sterling fell 4.5% against the dollar in August, its worst month since Brexit, and one analyst forecast that it would “plumb new depths” due to political and economic uncertainty, potentially hitting $1.05 by the middle of next year.

Mui said a stronger dollar could prove disinflationary for the U.S. economy, meaning the Federal Reserve does not need to be so aggressive in rate hikes going forward.

“A lot of bad news is already being priced in in the U.S. market, whereas in Europe it is probably not there yet,” she said.

Viraj Patel, global macro strategist at investment advisory Vanda Research, said many investors were seeking to short the euro and European government bonds, which have seen a spike in yields over the last month on the expectation of interest rate rises.

“These markets are selling off on any bad news related to the Russia gas flows narrative, whilst reluctant to rally on any marginal improvement in the energy crisis,” Patel told CNBC by email.

However, Patel added that bad news could start to become good news for under-owned European assets.

“The market is under-appreciating the chance for policy intervention from government officials helping to reduce stagflation risks on the continent,” he said, meaning the case for a euro rise to 1.05 against the dollar now looked equal to, if not greater, than the case for a fall to 0.95.

Yesterday the German government announced a 65 billion euro package to reduce consumer energy bills and support businesses."

MY COMMENT

I hope this is DIS-INFLATIONARY for the USA. Not that the FED will understand this or allow it to impact their plans.

The other potential impact here is the strong dollar making the cost of exported goods higher and impacting USA companies bottom line. In the end this could have a bit of impact on employment here.....due to reduction of exports.....and a hit to American companies earnings.

ALL in all.....with this sort of "stuff" going on and the games being played.......we are in a dangerous market time span. There is great potential now for a very nasty BLACK SWAN. About the last thing we need right now for our markets and investors.

 

Looks about right to me.....since I own ALL of them.

MATANA is the new FAANG, analyst says

https://finance.yahoo.com/news/tech-stocks-matana-is-the-new-faang-analyst-says-145511543.html

(BOLD is my opinion OR what I consider important content)

"It's time to rethink who's at the top of the Big Tech food-chain, Constellation Research Principal Analyst & Founder Ray Wang told Yahoo Finance Live (video above).

Wang argued that MATANA — Microsoft (MSFT), Apple (AAPL), Tesla (TSLA), Alphabet (GOOG, GOOGL), Nvidia (NVDA), and Amazon (AMZN) – is an upgrade to FAANG by dropping Meta (META) and Netflix (NFLX) while adding Microsoft, Tesla, and Nvidia.

In 2013, when Jim Cramer of CNBC's "Mad Money" coined the term FAANG, many of those companies were thought of as upstarts who'd taken their respective markets by storm. This was especially true of Meta — then Facebook — and Netflix. But now, Wang said, both should be re-assessed. Meta, in particular, needs a new plan.

"Facebook has got to do something besides ads," he told Yahoo Finance. "Once again, they're taking a beating for it. So, is it going to be the glasses? Is it going to be the metaverse? We're not there yet and that's really kind of what the challenge is."

For Netflix, it's a question of growth, and what is and isn't on the table. And because the company's operating on a subscription model, Wang has questions about how much further they could go.

"The reason they're out is because, how many more subscribers? How many more subscriptions are you going to handle?" he said. "Product placement should be where they are, plus the ability to do IP licensing. Look at how Disney makes its money."

Wang stressed that Microsoft, which is often viewed as one of tech's leading legacy names, should be included in the group of tech's most elite leaders (and sometimes has been with the bulky FAAMNG acronym).

"Microsoft has more than just business-to-business and consumer – they've been able to manage both," he said. "They're positioned well for the metaverse. They're positioned well for the cloud and, of course, they've got their gaming business."

Rounding out the new grouping would be Tesla — a well-known success story at this point — and Nvidia.

"Nvidia is a lot more than just the chips that we look at and more than the data center or gaming," Wang said. "They're sitting at the edge between AI, the metaverse, the future of computing, and the way they do their partnerships, they're set up in a way that's going to be dominant for quite some time.""

MY COMMENT

TOTALLY agree. The greatest companies in the BIG CAP world.

 

Things just got REAL SERIOUS for the EU.

Russia Cuts Off Gas to Europe Until Sanctions Lifted

https://yournews.com/2022/09/05/2408101/russia-cuts-off-gas-to-europe-until-sanctions-lifted/

(BOLD is my opinion OR what I consider important content)

"Russia will keep gas supplies to Europe via the Nord Stream 1 pipeline shut down completely until the west lifts sanctions against Moscow over its invasion of Ukraine, the Kremlin says.

Kremlin spokesman Dmitry Peskov on Monday laid blame for the shutdown squarely on sanctions introduced against our country by western countries including Germany and the UK for Russia’s gas shutdown.

“Other reasons that would cause problems with the pumping don’t exist,” Peskov was cited by the Interfax news agency as saying.

Peskov said full resumption of gas supplies via Nord Stream 1 was dependent on whether the west would lift its sanctions on Moscow.

“We see incessant attempts to shift responsibility and blame onto us. We categorically reject this and insist that the collective West – in this case, the EU, Canada, the UK – is to blame for the fact that the situation has reached the point where it is now.”

When asked if Nord Stream would resume pumping if sanctions were eased, Peskov said: “Definitely.”

Since he ordered the Feb. 24 invasion of Ukraine, President Vladimir Putin says the United States and its allies have embarked on economic war on Russia with the most severe sanctions in modern history, warning that they will face a energy crisis as a result.

Since the war began, European Union customers have pledged to reduce their reliance on Russian energy while Russia has cut or shut down supplies on three of its biggest westward gas pipelines while oil supplies have been redirected eastwards.

Russian gas giant Gazprom on Friday said the Nord Stream 1 pipeline, Europe’s major supply route, was shut because a turbine at a compressor station had an engine oil leak, sending wholesale gas prices soaring.

The Kremlin says sanctions are disrupting the ability of Siemens Energy, which supplies and services equipment for the pipeline, to help repair the engine oil leak.

EU countries have repeatedly rejected Moscow’s line, accusing it of weaponizing energy supplies, and on Monday German government spokesperson said the latest gas price surge was part of Putin’s strategy.

The Kremlin also warned that Russia would retaliate over a G7 proposal to impose a price cap on Russian oil, a step that is unlikely to hurt Russia unless China and India were to follow suit.

“There can only be retaliatory measures,” Peskov said.

By using its vast Siberian reserves of gas and oil to needle the West for its support of Ukraine, Russia has raised the stakes of the Ukraine war by unleashing a wave of inflation that could tip Europe’s biggest economies into recession.Russia is the world’s second largest oil exporter after Saudi Arabia, the world’s top natural gas and wheat exporter. Europe imports about 40% of its gas and 30% of its oil from Russia.

The Kremlin blamed Europe’s political elites for its consumers’ soaring energy bills.

“It is obvious that Europe is getting worse for people, entrepreneurs, companies, to live and work: less money is being earned, the standard of living is falling,” Peskov said.

“And of course, ordinary citizens will have more and more questions about the leadership of their countries.”

An estimated 70,000 people protested in Prague on Saturday, calling on the Czech government to do more to control soaring energy prices and voicing opposition to the European Union and NATO.

But an energy war has costs for an energy superpower too.

Selling oil and gas westwards has been one of Russia’s most profitable trades since the Soviet Union built pipelines to Europe in the 1960s and 1970s, often in the face of fierce opposition from the United States.

Rerouting gas from the Urengoy field in northern Siberia to alternative customers such as China is no simple task: the Chinese border is 3,000 km (1864.11 miles) away and a pipeline would take time and money to build."

MY COMMENT

A DISASTER that has been in the making for a long time........a self inflicted shot to the foot.

 

I dont know why....but I am seeing a good number of stories today....that are perversely funny to me.

Amazon temporarily shuts down solar rooftops at all US facilities due to fires
A fire broke out at an Amazon warehouse in Maryland in June 2021 due to an 'unspecified event involving the solar panel system'

https://www.foxbusiness.com/technology/amazon-temporarily-shuts-down-solar-rooftops-facilities-fires

(BOLD is my opinion OR what I consider important content)

"A string of recent fires at Amazon fulfillment centers and other facilities forced the e-commerce giant to temporarily shut down rooftop solar panels that were blamed for the costly blazes.

"Out of an abundance of caution, following a small number of isolated incidents with onsite solar systems owned and operated by third parties, Amazon proactively powered off our onsite solar installations in North America, and took immediate steps to re-inspect each installation by a leading solar technical expert firm," an Amazon spokesperson told Fox Business on Sunday.

According to internal documents obtained by CNBC, which originally reported the news, Amazon experienced "critical fire or arc flash events" at six sites in North America with solar installations, representing about 12.7% of all applicable facilities.

"The rate of dangerous incidents is unacceptable, and above industry averages," an Amazon employee wrote in an internal report, according to CNBC.

One such fire broke out at an Amazon warehouse in Perryville, Maryland, in June 2021 and caused $500,000 worth of damages. An investigation by the Office of the State Fire Marshall determined that the cause was "accidental" and involved "an unspecified event involving the solar panel system."

Amazon touted itself as the "world’s largest corporate purchaser of renewable energy" in last year's sustainability report that laid out its goal to reach net-zero carbon emissions by 2040."

MY COMMENT

12.7% of all facilities......does not seem like a......"small number of isolated incidents".......to me. That is 1/8 of all facilities.

 

Well....we continue today where we left off last week. I heard someone earlier today say that one of the FED GDP trackers was showing +2% for the third quarter. I dont know if this is true.....but I would not doubt it. We are pumping money into the economy like MANIACS.

If this is true it is stock investors that will take it in the shorts.......actually.....the shorts will do pretty well too. This will simply prolong and wash out what the FED is trying to do. The pain will be focused on stock investors since they are the actual portion of the economy that gets hammered by the actions of the FED.

More fun for baby boomers looking to retire soon....that are not government workers.....and...therefore have no pension.

 

So as a result....this is what we get.

Stock market news live updates: Stocks fall after three-week selloff

https://finance.yahoo.com/news/stock-market-news-live-updates-september-6-2022-112216119.html

(BOLD is my opinion OR what I consider important content)

"U.S. stocks sank lower Tuesday as traders return to Wall Street for a holiday-shortened week after Labor Day.

The benchmark S&P 500 fell 0.3%, while the Dow Jones Industrial Average declined by the same margin, or about 100 points. The tech-heavy Nasdaq Composite was off by 0.5%. The moves come after three straight weeks of losses for the major averages.

"The market will enter the first full week of September looking to snap a three-week losing streak as investors continued to digest the Fed’s 'we will not be sidetracked' inflation-fighting message," Chris Larkin, managing director of trading at Morgan Stanley's E*TRADE said in a note Tuesday.

"Bulls hoping for a rebound will be doing so during a shortened Labor Day week that historically has paralleled September and its track record of underperformance: Losses have been slightly less frequent over the past three decades, but volatility has been higher."

Treasuries ticked higher as investors await the Federal Reserve’s next policy move later this month. The benchmark 10-year note climbed to 3.269%, while the 2-year Treasury note rose to yield 3.449%.

Oil prices edged lower after a temporary rally on the heels of the first supply cut by OPEC+ in more than a year as the group works to manage global crude markets. West Texas Intermediate crude oil fell 0.5% to $86.44 per barrel while Brent futures ticked down 0.2% to $92.81.

In cryptocurrency markets, Bitcoin (BTC-USD) again slipped below the $20,000 level.

Shares of Bed Bath & Beyond (BBBY) plunged nearly 13% at the start of the session Tuesday morning. Last week, the home-goods retailer announced in a strategic update that it would lay off staff and shutter approximately 150 stores as part of a turnaround effort for its struggling business.

Reports surfaced this weekend that the company’s chief financial officer Gustavo Arnal died by suicide Friday afternoon after falling from a skyscraper in New York's Tribeca area known as the "Jenga" tower. Prior to his death, Arnal was named in a $1.2 billion shareholder lawsuit alleging involvement in a “pump and dump” scheme.

"The company is in the early stages of evaluating the complaint but based on current knowledge the company believes the claims are without merit," a spokesperson for Bed Bath & Beyond told Yahoo Finance.

Digital World Acquisition (DWAC) shares nosedived more than 17% after the special purpose acquisition company that was set to merge with former President Donald Trump’s social media platform failed to garner enough shareholder support to extend the deadline to complete the deal.

Tuesday’s moves come after the Labor Department released its latest monthly jobs report for August on Friday. The U.S. economy added 315,000 jobs last as the unemployment rate rose to 3.7%, according to government data.

“The modest slowdown in employment growth in August may be welcome by the Fed, but it won't prevent further sizable rate hikes in the months ahead,” Nancy Vanden Houten and Kathy Bostjancic of Oxford Economics said in a note Friday. “Fed Chair Powell made clear last week that the FOMC plans to push rates well into restrictive territory to bring down inflation and prevent an unmooring of inflation expectations.”

Bank of America strategists led by Michael Hartnett warned on Friday of a “fast inflation shock” and “slow recession shock,” with investors anticipating continued monetary tightening by the Federal Reserve."

MY COMMENT

With the current stance of the FED and the contrary actions coming from government......we are likely to see the current economic and business conditions last for a good long time. The two entities are in the process of creating a long term stalemate and prolonging the pain. The coming FED increases will continue to pressure the housing markets and housing prices as buyers leave the market due to inability to purchase as mortgage rates go up.

I hate to be the bearer of bad news......but I just have to call it as I see it. The good news is this is ALL mostly short term stuff and it "can" change.....the bad news......"can" does not mean "will".

 

I DO notice that today there is a TOTAL absence of news or anything new in the financial world. We are just coasting along on the same old STUFF that we have been dealing with for the past six months.

 

Looking for some positive news today.....here is a bit for Apple owners. I will take it.


Apple’s big iPhone 14 event kicks off Wednesday. Here’s what to expect
https://www.cnbc.com/2022/08/29/apple-iphone-14-event-preview-september-2022.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Apple is holding a launch event at its headquarters in Cupertino, California, on Sept. 7.
• The company is expected to announce new iPhone models, as it has every September since 2012.

is holding a launch event at its headquarters in Cupertino, California, on Wednesday where it will unveil its latest hardware products, including the new iPhone 14.

Apple has used prerecorded videos for its launch events since early 2020 thanks partly to Covid restrictions, and this will be the first iPhone launch with an in-person component since 2019. Apple is streaming the launch event online on its website and YouTube in addition to inviting some media to its campus.

Apple’s hype-filled fall launches are a signature event for Apple. They typically draw millions of simultaneous viewers on YouTube. They garner attention from around the world and set the stage for a holiday marketing blitz during the last three months of the year, which is when Apple’s sales are the highest.

This year’s event has the tagline “far out,” which could refer to features such as night-sky photography.

Last year, Apple released new iPhones and Apple Watches at an event in September, and then followed it up with an October launch featuring iPads and Macs.

Here’s what Apple is likely to launch Wednesday, based on reports.

Apple is expected to release four new iPhone models. If Apple’s current naming convention holds up, they will be called the iPhone 14.

This year Apple will likely discontinue the “mini” model with a 4.7-inch screen, according to reports. Instead, Apple could offer two sizes, one with a 6.1-inch screen and one with a 6.7-inch screen, each coming in a standard model and a pricier “Pro” model.

The Pro models are expected to get more upgrades, according to reports from Bloomberg News, TFI Securities analyst Ming-Chi Kuo, and other analysts and Apple watchers.

Since 2017, iPhones have included a space at the top of the phone’s display with space for Apple’s FaceID system, which includes several sensors and a camera. The Pro models could ditch Apple’s “notch” where it houses the FaceID camera for a slimmer, more streamlined “pill” or “cutout” approach with a smaller space that has to remain blank, leaving room for an even larger display.

The Pro models are also expected to get upgraded A16 processors and cameras. The camera bump is expected to get larger.

Apple could release an always-on screen display for showing notifications, like some Android phones have sported for years. Beta iPhone software released over the summer suggested that Apple may be planning a similar feature because of new widgets that show weather and battery life.

One of the biggest questions is how Apple will price its iPhones in a period of inflation around the world and macroeconomic uncertainty in some regions. Other consumer electronics, such as Sony’s Playstation 5, have seen price cuts.

Apple’s least-expensive iPhone 13 model is the $699 iPhone 13 Mini, which is expected to be discontinued. That would make Apple’s mainline device, which is currently the iPhone 13, the least-expensive new model at $829, if its price doesn’t change. Some analysts also expect Apple to increase the price of its Pro models.

Apple usually drops the price of older models when it releases new ones, giving more price-sensitive consumers an option.

Apple is likely to show the eighth major new version of its watch on Wednesday. Last year, the Apple Watch Series 7 got a slightly larger screen, but the redesign did not significantly change the look and feel of the device, which has remained mostly the same since 2014.

Expect more evolution this year, too. Apple is considering a body temperature sensor in the new devices, according to the Wall Street Journal, which could help with fertility and sleep tracking. Other sleep tracking features could include the ability to detect advanced sleep patterns or apnea.

But the biggest Apple Watch Series 8 announcement could be a new “Pro” model with a bigger screen and more durable finish. Apple has previously released Apple Watches with pricey case materials such as gold, ceramic and titanium, and the new “Pro” model described by Bloomberg and Kuo could be one of the first high-end Apple Watches to gain additional features over its less-expensive siblings.

Also likely: A new updated version of the Apple Watch SE, its $329 entry-level Watch model.

IPhone owners who don’t plan to buy any new gear this fall will still get an annual update to the iPhones software, iOS 16, which was announced in June and has been in testing over the summer.

The software has several new features that users will immediately notice. The biggest banner feature is the ability to customize the iPhone’s lock screen with widgets that can display weather forecasts, calendar appointments and other information at a glance. Users can also change the font for the lock screen clock for the first time, as well.

IOS 16 also lets you unsend or edit iMessage text messages, as long as you catch them within a few minutes of sending.

IOS 16 will also introduce short-term loans from Apple called Apple Pay Later. The feature will allow users to buy stuff online with Apple Pay but pay for the item in four installments without paying interest.

One cool feature in iOS 16 is if a user has both an iPhone and a Mac laptop or desktop, they can use the iPhone as a very high-definition web camera.

Apple is unlikely to release new iPads on Wednesday because their software isn’t ready yet. Earlier this month, Appleold TechCrunch that iPadOS, the iPad software, will ship after iOS this fall, suggesting a staggered release.

Apple’s statement was terse, and the company dislikes talking about unannounced products. But in general, it likes to release new hardware together with new software, so the statement clearly suggested that new iPads would come at a later launch date than iPhones.

IPadOS and iOS are very similar, but this year iPadOS is getting a feature called Stage Manager that could allow users to multitask more efficiently — but also got panned by early testers. Improved iPads could include more powerful processors that are closers to laptop processors, smoother displays and better integration with accessories.

Apple also uncharacteristically teased a new “Mac Pro” in the spring. The Mac Pro is currently a $5,000 tower of power using an Intel processor.

Apple wants to transition its entire Mac lineup away from Intel to its own M-series processors, but a pricey niche product doesn’t fit as well with Apple’s mass-market iPhones and Apple Watches. Instead, new Macs could be announced at a separate event later this year, as happened last year."

MY COMMENT

As a shareholder I hope they get some boost from this event and all the new and updated products.

 

We have a long day ahead in the markets today. So we will see if these losses can hold for the entire day.....or.....if the markets turn and try to make a come-back.

YES......retail investors and long term investors.......equals......."the peasants".

 

OH MY GOD.....quick someone tie a tourniquet around the markets neck and cinch it up tight. We have to STOP the bleeding. OH THE HUMANITY......we are MELTING......MELTING.......MELTING.

Oh well.....ok. Well I was down as usual lately today. Same market, same IDIOCY with nothing new going on, same result. I had NINE stocks down today and ONE up today.....Tesla. I also got beat by the SP500 today by 0.30%.

I am getting tired of being in the market time machine. Unfortunately that time machine only has one setting.....backward.

 

I saw one excuse for the down day today......some economic indicator was a little positive.....so the markets reacted since that increases the chance of the FED raising rates by 0.75% this month.

HELLO.......what planet are these people on.......how can there be anyone alive that is still thinking that the FED is NOT going to raise by 0.75% this month. They have spelled it out as clear as day.

The only good thing about the current markets......and it is actually a VERY GOOD THING......lots of ICONIC stocks are on sale right now if you have the guts and the money to buy them.

 

The ONLY good thing about this lingering down market is that over the first five months of next year I will be throwing about $25,000 into the markets. If this continues I should get some real good prices.

 

HERE is our day in hindsight today.

Stock market news live updates: Stocks extend losses after three-week selloff

https://finance.yahoo.com/news/stock-market-news-live-updates-september-6-2022-112216119.html

(BOLD is my opinion OR what I consider important content)


"U.S. stocks sank lower in a choppy post-Labor Day session Tuesday as traders remained on edge ahead of the Federal Reserve's next policy move later this month.

The benchmark S&P 500 fell 0.4%, while the Dow Jones Industrial Average declined by 0.5%, or about 170 points. The tech-heavy Nasdaq Composite led the declines, tumbling 0.7%. The moves come after three straight weeks of losses for the major averages.

Losses across equities resumed following the release of fresh data that showed U.S. services activity gained momentum in August, a sign to investors that Fed officials may proceed with a heftier rate increase of 75 basis points September 21.

The Institute for Supply Management reported its non-manufacturing PMI rose to a reading of 56.9 last month from 56.7 in July, the second straight monthly increase ofter a three-month decline.

Immediately following the results, the CME FedWatch Tool reflected a new high in probability — a 74% chance — that the Federal Reserve will raise interest rates by another 0.75%.

Treasury yields nudged higher as investors await the central bank's next move. The benchmark 10-year note climbed to 3.338%, while the 2-year Treasury note rose to yield 3.499%, its highest level since 2007."

MY COMMENT

That is about it. One big NOTHING-BURGER of a day in the markets and the news. The markets just want to go lower....so they will.

 

This cant be good for our companies that operate around the world and are subject to currency fluctiations. fortunately all the BIG companies know how to hedge for currency risk.

As for the EU......they are screwed.

Euro plunges to new 20-year low after Russian gas halt

https://finance.yahoo.com/news/russian-gas-cut-pushes-euro-015121150.html

(BOLD is my opinion OR what I consider important content)

"LONDON (Reuters) -The euro sank below $0.99 to a new 20-year low on Monday after Russia's halt to gas supplies down its main pipeline to Europe heightened fears about a deepening energy crisis across the region.

The euro has been increasingly correlated with natural gas prices in recent months, with the former falling when prices of the energy source rise.

Europe is scrambling to wean itself off Russian supplies and build up reserves before the cold winter months, but investors reckon the hit to its economy will be huge.

Russia scrapped a Saturday deadline for flows down the Nord Stream pipeline to resume, citing an oil leak in a turbine. It coincided with the Group of Seven finance ministers announcing a price cap on Russian oil.

The euro slid to as low as $0.9876 in early European trade, the lowest level since 2002, before recovering to $0.9939, still 0.2% lower on the session.

"Gas flows have been curtailed even more than expected and we have already seen evidence of demand destruction weighing on activity," said Michael Cahill, a strategist at Goldman Sachs.

"We now expect the Euro to fall further below parity ($0.97) and remain around that level for the next six months," he added.

Other currencies vulnerable to spiralling energy prices also fell. In early trading, sterling dropped half a percent to a new 2-1/2 year low of $1.1444, with traders also eyeing the announcement of a new British prime minister due around 1130 GMT.

The dollar index, which measures the greenback against a basket of currencies, briefly hit 110.27, its strongest since June 2002 as the euro tumbled. It later fell back and was last down 0.2% at 109.74.

ECB MEETING

In what is a huge week for the euro, investors are also preparing for Thursday's European Central Bank (ECB) meeting and markets have priced a near 80% chance of a supersized 75 basis point (bp) interest rate hike.

ECB officials will be keen to see the euro, which has lost around 8% of its value in the past three months, stabilise. That will feed into the desire to try to tame inflation through tightening policy.

"Should the ECB push back so prematurely on market pricing, it will likely draw the curtains for the euro's burial," said Simon Harvey, head of FX analysis at Monex Europe.

"While this would come as welcome news to the German manufacturing sector, which has seen new export orders continue to shrink, it would only fan the current energy related inflation pressures, making the ECB's goal of price stability even harder to reach."

Other currencies that tend to perform badly when market confidence is shaken also fell on Monday. The risk-sensitive Australian dollar slid as much as 0.5% towards a seven-week low at $0.6773

The dollar's appeal as the go-to currency this year helped it to rise even against safe-haven currencies. It rose to 140.59 Japanese yen.

The offshore yuan fell to a new two-year low of 6.9543 per dollar, as worries linger over COVID-19 lockdown measures in China.

China's southern tech hub of Shenzhen said it would adopt tiered anti-virus restriction measures beginning on Monday, while Chengdu announced an extension of lockdown curbs, as the country grapples with fresh outbreaks."

MY COMMENT

The EU is looking at a massive recession if not a DEPRESSION. And just for fun.....they are raising interest rates into the face of an economic hurricane.

 

BUMMER......I have ZERO shows this week.

Which means that I will have to attend a rehearsal on Saturday. Actually it is nice to get a week off once in a while.