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- Market Munch 🍕 | 5 September 2022
Market Munch 🍕 | 5 September 2022
Europe points fingers at Russia, India zooms past the UK, and Turkey raises it's inflation targets.
Aryaansh Rathore
September 04, 2022
Happy Monday, Munchers! 🙏
Back at it again - hope you had a relaxing weekend and are feeling good.
As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 5 minutes and 7 seconds.
Let’s dive in.
What’s hot, what’s not?
Story Roundup
Europe is under pressure.
Russia halted all gas flows to the continent, and policymakers are not liking it.
The European Commission's chief spokesman said that gas pipelines were being shut "under fallacious pretenses" and that this was yet "another confirmation of Russia's unreliability as a supplier".
He also called Europe “wise” for stocking up on gas right before winter in case something like this happened.
So just to recap,
- 10x elevated gas prices - 10x elevated electricity prices- Double digit inflation in most economies
Recipe for disaster. 🤷
India’s just overtaken the UK in terms of economy.
The former’s had a good spell of late – dealing with inflation well and managing to keep economic growth stable amidst COVID.
Foreign institutions also show increasing confidence in the region, as equity inflows doubled despite looming recession for most global economies.
The UK on the other hand, is looking at a sharp contraction in economic growth on the cards as inflation looks to top 22% according to Wall Street.
A tale of two cities. ❤️🔥
Governments want to shake the power markets up.
Nordic countries just announced $23bn of emergency liquidity for their energy generators.
Most of these firms are heavily saddled with debt and are facing more collateral calls as a result of elevated volatility in energy markets.
Markets have been closed over the weekend, but both electricity and gas prices seem poised to surge once the opening bell rings.
Energy markets are not designed to deal with such volatility – and this means that reforms might be coming soon. ⚒️
A drop in mortgage demand is hitting banks.
Citi just cut it’s US mortgage team by 7% - and it all points to a housing slowdown.
Interest rates have pushed up borrowing costs for buyers, and purchase applications are down 25% year-on-year.
Refinancing business is also a staggering 83% lower compared to a year ago.
Chinks in the armour? 🤔
Turkey's government is playing a risky game.
They see inflation slowing to 25% next year - when it's at 80% currently.
Their central bank has been taking a very unorthodox approach to fighting inflation - deciding to cut interest rates while the rest of the world goes hiking.
It's paid off with lower economic growth, and killer inflation.
People are looking like they're increasingly unhappy with Erdogan's ruling party. There isn't a single government that can't be overthrown by an empty dinner plate. 🔥
Hope you enjoyed this issue of the Market Munch. If you have any feedback, positive or negative, hit my line at [email protected] or +971 50 708 8469.
Cheers.
- A