Faber News Flow

Coal prices in Europe have soared to a nine-year high due to a combination of increasing demand and supply constraints. Prices for front-year coal futures on ICE Futures Europe breached the $101 per ton mark, hitting levels not seen since 2012, according to Bloomberg.  This summer, demand for coal power generation has surged amid record heat waves across Europe and natural gas prices  surging . Coal has become a much cheaper form of power generation since Russia has tighten gas markets and caused a supply storage crunch.  Fonte: Bloomberg Supplies of coal are dwindling as power companies are building stockpiles ahead of Europe's winter heating season. At the same time, coal supplies from some emerging market countries have been disrupted due to social unrest and logistical issues.  Coal prices worldwide have surged this year. Prices for coal exported from Australia are at decade highs, while costs of coal imported into Europe from China have also risen.  The lat...

In the liquidity void that follows the resumption of futures trading, and which saw US futures trade modestly lower, a sudden burst of selling in the gold futures contract sent Gold pries plunging to as low as $1,677.0 or almost $100 lower from the Friday close of $1,761.50. Together with Friday's post-payroll plunge, this has been the biggest 2-day drop in gold (in dollar terms) since the March 2020 crash. However, unlike Friday when gold moved in response to the spike in the dollar and the surge in yields... ... there was no offsetting move in any securities after the futures reopen (the 10Y traded back over 1.30% but the move was orderly) when  over $4 billion notional, or some 24,000 contracts ... ... were suddenly and furiously dumped in a completely price-indiscriminate manner whose apparent intention was to nuke the entire bid-stack. While there was no news or even pair-trade correlation catalyst behind the move, technicians have noted a "death cross" alongside a t...

Welcome. GoldFix is original content. The goal is to give you, the reader, some basis for looking at markets as you prepare your own trading day. Second, it aims to give you more tools, or at least the basis for developing your own tools to navigate markets. To that end we expect there will be changes based on feedback. Gold is the jumping off point for analysis. As inflation talk escalates in the financial markets even with chances of QE tapering in the wings perhaps this fall, it is worth checking to see if history is repeating itself with regard to the 1970's inflationary debacle. For us; the lyrics are different, the musicians are new, but the melody is the same. We found a twitter thread by  Sid Prabhu   in which he reads through and comments on a 1979 paper entitled  "The Anguish of Central Banking". The Lecture That Scared Volcker Straight* *a reference to the documentary "Scared Straight" in which hardened criminals scare youth offenders off the "cr...

A profound policy shift is under way in China.  To achieve the goals of ensuring social stability and making economic growth more sustainable, policy-makers have initiated a far-reaching and wide-ranging regulatory tightening cycle.  This new course will shape the evolution of China's economy and capital markets in the coming years. The implications? Rebalancing the shares of corporate profits and wages in GDP as well as recalibrating China's equity risk premium. Broadly speaking, we believe that policy-makers' goal of 'common prosperity' focuses on the challenges of rising income inequality. Significantly, this parallels the unfolding policy shift in the US, albeit with different approaches and starting points. While this change in policy should not come as a surprise since income inequality is a global issue, the speed, scale and intensity of the measures we are seeing in China today are unexpected. To take a step back, from a macroeconomic perspective, 'commo...

China's exports rose 19.3% y/y in July, missing the median consensus expectation of 20% (ranging from 15.4% to 30.7%), and declining sequentially -0.3% in July after rising +5.7% in June. Imports also rose less than expected, up 28.1% Y/Y in July, below the 33.3% median expectation, and fell 6.4% sequentially after surging +11.3% M/M in June. As a result this disproportional slowdown in imports vs exports, China's monthly trade surplus actually rose to $56.6bn in July, slightly better than the $53.3BN consensus, and up from $51.5BN in June due to the bigger miss in imports. ASEAN was China's biggest trading partner in July, followed by the Europe Union and the U.S., customs data showed. China's exports to the US grew 13.4% in July from a year ago, while imports from America rose 25.6%, leaving a trade surplus of $35.4 billion in the month. Some more details: By geography:  Export growth slowed across major export destinations, and exports to major DMs continued to be a ...

While the rest of the developed world is scrambling to reverse the most recent spike in covid cases, attention is increasingly turning to China where the current Delta variant-driven outbreak has affected more regions than the winter resurgence, with 144 mid- to high-risk districts scattered over 11 provinces (vs. 72 districts over six provinces during the winter) as the following chart from Morgan Stanley shows. While the case count is still relatively modest... ... the more transmissible nature of the variant and China's Covid-zero approach indicate that economic impact is inevitable. Evident of this, in addition to stringent lockdowns and travel restrictions in higher-risk regions, most low-risk regions have also imposed precautionary social-distancing measures in entertainment venues. Echoing this downbeat take, Bloomberg commentator Ye Xie writes that "the delta variant adds to downside risks for the economy" noting that "the regulatory tightening adds to downsi...