Netflix dived more than 25% in the afterhours trading after announcing that the subscriptions fell by 200’000 in the Q1.

The carnage in Netflix’s share price will certainly plummet the good mood in Nasdaq, which rallied more than 2% yesterday. Nasdaq futures are pointing to the downside at the time of writing.

The European markets traded in the red on the back of the escalation in Ukraine, as Russia launched the ‘second phase’ of the war in the Eastern Ukraine. The futures point at a positive start, yet the risks remain tilted to the downside.

Major US indices traded in the green on Tuesday, despite discouraging news that IMF and the World Bank cut growth forecasts and warned of higher inflation, Chinese data showed significant slowdown in economic activity – which could add on the inflationary pressures, and St Louis Fed President James Bullard said he wouldn’t rule out a 75-bp increase in the US rates, though this is not his ‘base case’ for May meeting.

The US yields pushed higher, the dollar gained and the yen fell to the lowest levels in two decades against the greenback hinting that it could soon be time for a downside correction.

Today, Tesla will announce Q1 earnings and Barron’s warns that the results could disappoint.

The Reserve Bank of New Zealand and the Bank of Canada both raised their interest rates by 50bp this week. For both banks, this was the biggest hike in more than two decades, as the policymakers stepped on the gas to fight back the soaring inflation.

The latest policy decisions from the G7 central banks cement the idea that the Federal Reserve (Fed) will announce at least a 50-bp hike in its next meeting, and increase the pressure of a concrete rate action from the European Central Bank (ECB).

The rising inflation will certainly lead to heated discussions at the heart of the European Central Bank’s committee at today’s policy meeting. The ECB plans to end the asset purchases by Q3 and hike the rates soon after.

But the ECB doesn’t have the option to wait until the last quarter to hike rates; it must raise the interest rates by end of summer, the latest, even though inflation is caused by supply side problems that can’t be effectively addressed with restricting demand.

The overall trend is tighter central bank policies and higher rates, but two countries defy the laws of gravity: China and Turkey.

Elsewhere, JP Morgan has been the first big US bank to announce its earnings, and the results didn’t enchant investors. Goldman Sachs, Citigroup, Morgan Stanley and Wells Fargo will go to the earnings confessional today.

US equity investors jumped on an emotional roller-coaster following the release of the inflation data in the US yesterday, yet the core inflation, which filters out the impact of volatile food and energy prices, came in at lowest since September, giving some hope to investors that inflation may soon hit a high and start easing, hence get the Fed to move less hurriedly for raising the interest rates. Perhaps a wishful thinking that helped the US equities gap higher at the open, but couldn’t cement gains as all three major US indices ended the session in the negative.

Crude oil, which made a sharp U-turn and jumped above the $100pb level didn’t help.

US equity futures are in the positive at the time of recording, hinting at a minor rebound at today’s session, but the high energy prices, the pandemic and the war, combined with the Fed’s tied hands can’t do much to boost the investor mood. Only hope is earnings, but…

JP Morgan will announce its Q1 earnings today, and the CEO Dimon warned that the bank could lose about $1 billion on its Russia exposure. JP Morgan has been trading lower since last October despite the hawkish shift in Fed expectations. Worries that the economic slowdown could result in lower trading activity, and lower loan growth, and jeopardize the gains from higher interest margins weigh on the sector appetite.

US LNG stocks however continue outperform, and Citi analyst say that Apple could buy back $80-$90bn worth of stock & boost dividend by 5-10%.

Investors feel the heat before today’s inflation print in the US. All three major indices extended losses yesterday, as the consumer prices in the US are expected to print an advance to the eye-watering level of 8.5% in March, from 7.9% printed a month earlier. And of course, there is a chance that we see a higher print on the back of higher energy and commodity prices, rising wages and rising rents.

Bitcoin slipped below the $40K mark as the broad risk selloff tainted on the mood in cryptocurrencies, gold advanced to $1970 per ounce as a broad-based risk selloff benefited to the yellow metal on Monday and crude oil rebounded after extending losses below $93pb.

We will dive into the rising correlation between Bitcoin and Nasdaq that places Bitcoin closer to a proxy for Nasdaq than an alternative safe-haven asset like gold.

In the FX, the US dollar index consolidates a touch below the 100 mark. The divergence between the more hawkish Fed and the relatively little responsive ECB continues weighing heavily on the EURUSD, although European consumer prices are rising at a pace which is as scary as the US’. The ZEW index due today will confirm how fast the sentiment deteriorates in Germany. An ugly figure could further weigh on the single currency, but we will probably see a floor into the 1.08 level in the EURUSD before Thursday’s ECB decision, just in case the ECB would sound more hawkish.

On Sunday, the results from the first round of the French presidential election showed that Emmanuel Macron obtained 27% of votes, closely followed by the right-wing Marine Le Pen, who got 24% support.

The EURUSD gapped higher at the open as an early reaction to the French first round results that favoured a final Macron victory, but the pair rapidly paired gains to sink below the 1.09 level.

The US dollar index remains strong at the start of a week which will probably print a further advance in both consumer and producer prices.

European and US equity futures kicked off the week on a bearish note, as the barrel of US traded near $95pb, as Bitcoin fell to $42K on limited risk appetite.

Earnings season kicks off, with big US banks due to announce their first quarter results this week, and the earnings are seen sharply down from a year ago due to lower trading revenues, and negative impact of Ukraine war on activity.

Oil consolidates below the $100pb, but UBS warns that the US releasing reserves is just a quick fix, while JP Morgan sees 40% more upside in commodity prices, and investors shrug off the Fed hawkishness helping European stocks and US futures recover this morning.

And the equity markets appear to be the ‘least bad’ place to be, as bond markets are shaky and rising inflation gives investors no choice to remain non-invested.

Warren Buffett’s Berkshire Hathaway disclose the purchase of $11.6 billion stakein Alleghany Corporation, along with an additional $4.2 billion stake in HP, and near 15% in stake in Occidental Petroleum.

And Peter Thiel called Buffett a ‘sociopathic grandpa’ as he accused him for Bitcoin’s failure to reach the $100K mark. Bitcoin remains under negative pressure – not because of Buffett, but because it failed to clear the 200-DMA resistance, as the hawkish Fed expectations weigh on risk assets.

The FOMC minutes gave the clarity that every investors was looking for: the Federal Reserve (Fed) will be scaling back its near $9 trillion balance sheet by $95 billion per month, more than a trillion dollars per year.

On top, many Fed officials noted that ‘one or more 50-bps increases in the target range could be appropriate at future meetings, particularly if inflation measures remained elevated or intensified’.

Stock and bond markets didn’t react well to the cruel hawkishness of the latest FOMC minutes. Three major US indices fell, but value names lost less than the growth stocks.

Good news is, China announced it will step up monetary and US crude prices are back to the levels before the war.

One of the major drivers of the pullback in oil prices is European reluctance to ban the Russian oil.

In other commodities, gold remains little changed near the $1920 per ounce, and palladium is back to pre-war levels after having spiked by more than 80% in the first quarter. Other commodity prices remain upbeat, but the liquidity in commodity markets remain tight as the latest wild swings pushed investors to the sidelines.

Federal Reserve (Fed) Governor Lael Brainard’s hawkish comments rocked the markets yesterday as she said that the next interest rate hikes should be more aggressive to tame the skyrocketing inflation in the US, and that the Fed could start reducing its near $9 trillion balance sheet as soon as next month, and at ‘a rapid pace’.

Investors will be closely watching the Fed minutes today. There would be no surprise if the Fed hinted a 50-bp hike in the next meeting. Activity in Fed funds futures assess more than 75% chance to a 50-bp hike.

Yet, what will really make the difference is the speed at which the Fed will shrink the balance sheet. And there is a big potential for a hawkish pricing on this front.

In the FX, Brainard’s comments sent the US dollar rallying yesterday. The dollar index is now preparing to flirt with the 100 offers, the EURUSD sank below the 1.09 level as Cable pulled below the 1.31 mark, but if the Fed minutes doesn’t reveal a further hawkish surprise, we shall see the dollar give back the latest gains and the euro and the pound record a minor rebound.

Else, the US and the Europeans are expected to announce a new round of sanctions today. EU is expected to announce a ban on Russian coal imports, but not on Russian oil and gas.

The reduced risk of a European ban on Russian oil keeps the oil bulls contained.

Bitcoin tipped a toe below the $45K mark on hawkish Fed comments, while gold remains undecided near $1920, supported by safe haven demand, and pressured by rising US yields.

Twitter jumped 27% in a single move on the news that Elon Musk took a 9.2% stake in the company. The jump in Twitter shares gave an energy boost to the US equities, especially to the technology stocks. Tesla jumped 5.5% on record deliveries.

But news regarding the war and oil prices were less encouraging.

EU leaders will reportedly meet tomorrow and announce additional. Lithuania became the first European country to announce a total ban on Russian gas imports, and the possibility of other nations joining Lithuania in banning Russian oil and gas gives a boost to oil bulls. US crude quickly bounced above the $100 mark yesterday on escalating tensions in Ukraine.

Elsewhere, US factory orders fell for the first time in ten months on supply constraints, the PMI data will give a hint on the European activity levels amid war in Ukraine, and the Reserve Bank of Australia (RBA) kept its policy rate unchanged at the historical low of 0.10% for the sixteenth consecutive month. The Aussie rebounded more than 9% against the US dollar since the beginning of February, as iron ore prices jumped due to the Ukraine war, and the medium-term outlook remains positive for the Aussie, as long as commodity prices remain supported by geopolitical threat to the supply.