Major US indices continued their rebound yesterday as US politicians found a midway to raise the debt ceiling to fund the government until the beginning of December. It’s only half-good news, as the deal only kicks the can down the road, without solving the problem. The headache will return in a couple of months, but the latest news help soothing investor nerves, for now.

All eyes are on today’s US jobs data. Released on Wednesday, the US ADP report revealed that the US economy added 568’000 new private jobs versus 430’000 pencilled in by analysts, giving investors hope that we may see a strong NFP figure today, as well. The consensus of analyst expectations on Bloomberg points that the US economy may have added 500’000 new nonfarm jobs in September. But there is no meaningful correlation between the monthly ADP and NFP figures, and we can’t rule out the possibility of seeing a negative surprise at today’s release.

Elsewhere, the decline in US crude following the Russian promise to increase gas supply to Europe boosted dip-buying. The price of a barrel rebounded as quickly as it fell, and the persistent rise in oil prices can only continue boosting inflation fears and the central bank hawks, hence limit the upside potential in case of a further recovery in stock markets.

The US 10-year yield approaches 1.60%, a level which could trigger a fresh wave of convexity selling, with Americans rushing to the exit on their bond positions to compensate for the lost interest in refinancing their old mortgages as a result of higher yields.

In cryptocurrencies, the appetite remains strong but many start wondering whether Tether holdings are really backed by US dollar. Here is the Blomberg article: https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether

Natural gas prices tanked more than 10% after Russia offered to increase gas supply for the winter months, but the offer doesn’t come for free: Russia wants permission on the controversial Nord Stream 2.

US crude is down along with lower nat gas prices, but gold remains unreactive to inflation fears.

In equities, US indices rebounded on strong ADP report and progress on US debt ceiling talk. No one expects the US to default in a week, investors rather have their eyes set on Friday’s NFP figures.

Elsewhere, Bitcoin surges past the $55K mark and we start hearing ‘buy the dip’ echoing across the markets; is it time to buy the dip?

US equities rebounded on Tuesday amid heated discussions about the impact of Facebook on public health and the worst oil spill in California.

Major US indices traded in the green, as Nasdaq led gains. Both Nasdaq and the S&P500 rebounded back to their 100-DMA levels, but the US 10-year yield advanced to 1.57%, warning that the selling pressure on equities may not be over just yet.

Due today, the US ADP report will give the first hint on how well the US labour market did in September. Any weakness in the jobs figure could dampen the market mood again, as soft economic data could no longer revive the central bank doves, as the spike in energy prices continue fueling expectations of higher inflation for longer.

The barrel of US crude flirted with the $80 per barrel on Tuesday, backed by news of the worst oil spill in California in almost three decades. But the upside remained limited approaching the $80pb level, as the latest API data showed that the US oil inventories increased by a million barrels last week, versus 300’000 decline penciled in by analysts. The more official EIA data, due today, will clarify the latest move in US crude inventories.

Bitcoin advanced past $50K yesterday as the SEC said the US won’t ban digital coins, and the Bank of America decided to cover the cryptocurrencies as a part of their research, saying the crypto assets are now ‘too large to ignore’. But looking at the global energy crunch and the fight for climate, the huge energy consumption of Bitcoin could, at some point, become a burden for Bitcoin and get investors looking for greener versions of Bitcoin.

Facebook plunged 5% on a broad outage and Nasdaq closed Monday’s session more than 2% lower on the back of the global energy crunch, the rising inflation fears and the prospects of tighter monetary policies worldwide.

Other FAANG stocks fell, though less than Facebook, meanwhile Netflix hit a fresh record before closing the session with losses.

Another Chinese property company failed to repay its maturing bonds, and US-China trade tensions came back to the headlines on US decision to maintain tariffs on its Chinese imports.

Oil stocks extended gains as OPEC surprisingly decides to keep output plans unchanged- The decision sent oil prices to highest levels since 2014.

And Justin Bieber entered the cannabis market, but the news gave little op to investors. Tilray lost 3.68% ahead of earnings due Oct 7.

US equity futures posted a strong rebound on Friday, which particularly sent financials and energy stocks higher. Exxon Mobil gained another 3.60% on Friday, surging near 15% over the past two weeks, as oil consolidated gains above the $75 per barrel.

But the worries of supply chain continue giving cold chills. The worsening global supply chain disruption, combined with rising inflation - which looks much less transitory than what the policymakers first thought, and which results in a narrowing capacity to respond to a slowing economic growth - could continue weighing on investor sentiment this week.

OPEC meets today and could announce an increase in monthly production goals, given the faster-than-expected growth in demand sent oil prices significantly higher over the weeks. But the upside in oil should remains limited, as this fast rise in energy crisis can only stall the economic recovery and lead to a pullback in global demand.

Due tomorrow, the European producer prices are expected to post an increase past the 13% in August, but we can see a number more than that. And, the economic data better be good to keep investor sentiment nice and sweet, as whatever we see on the data front, if inflation keeps rising, the central banks will need to remove support. And this brings me to the US jobs data due in the next couple of sessions.

The US government won’t be shut today, as Joe Biden signed a funding bill that should keep the US government agencies running until December 3rd. So, the short-term solution to the US debt ceiling issue should give a certain relief to US equity markets in the short-run, after the S&P500 finally couldn’t hold on for longer and gave in the 100-dma resistance to close the session a touch above the 4300 mark.

But the picture is not optimistic. US futures are in the red as Asian equity markets kicked off the new month on quite a negative note. We saw Japan’s Nikkei index plunge more than 2.5% overnight, as Australian ASX200 slid close to 2% on rising inflation fears, which would keep the central banks’ hands tied faced with a slower economic recovery due to the skyrocketing energy and commodity prices.

In summary, the high inflation is about to become a worst headache than the pandemic itself, as at least for the pandemic, central banks had tools to use. With this high inflation, they have nothing to do.

And the traditional hedge for inflation and a market rout gold has not shouted present in September decline in equity markets, nor did Bitcoin.

Market sentiment gets a bit better, but all eyes are on US politicians who should find a common ground by tonight to avoid a US government shutdown. The chances are that Republicans would agree on a short-term resolution to avoid a shutdown even there is no agreement on the debt ceiling itself.

A US government shutdown sounds terrible, but it would not be a big deal for the market except from generating some short-term volatility, as the US experienced 14 government shutdowns since 1980 which lasted in average 7 days, and the worst having lasted up to 34 days, in December 2018.

Anyway, if we have any reconciliation on the debt ceiling, we shall see an immediate relief on the equities front.

Technology stocks remain under pressure, but most investors are now chasing the good time to buy the dip and carry the tech rally higher.

On the currencies front, we see a stronger US dollar that is pressuring the EURUSD and Cable to the downside, as oil rally slows above the $75pb.

The market is painted in flashy red on the back of a combination of several factors ranging from the risk of a US government shutdown if the US policymakers can’t agree to raise the debt ceiling before Thursday night, the energy crunch that puts pressure on energy prices, which in return puts pressure on the inflation expectations.

And combined with the US approaching its debt ceiling deadline without having found an agreement to raise the ceiling puts a strong positive pressure on the US yields. But an eventual deal on the US debt ceiling could provide an immediate relief to the stock markets.

UBS joins Credit Suisse in its call for the S&P500 which they think should hit 5000 in 2022. Energy stocks will likely lead gains, but other sectors should do fine as well.

On the individual level, Amazon slips below the 200-dma, Tesla gives back a part of latest gains, meanwhile Ford and Korean SK Innovation announce to invest more than $11 billion to build a new plant to produce the fully electric version of Ford’s F-150 truck.

In this special edition of Market Talk, I answer questions from the audience about my journey in finance, my experiences and a couple stories on the trading floor.

I also give my call on cryptos and equities to the end of the year, and give a quick update on Tesla, GM and Lordstown amid Goldman Sach’s rating changes.

The Evergrande debt crisis, the Chinese energy crackdown on missed targets and the ban on cryptocurrencies have been shaking the markets, along with Federal Reserve’s (Fed) more hawkish policy stance last week, and not only on its QE taper front but also regarding the interest rates.

Natural gas futures rebound fast from last week’s dip and should continue rising as the winter approaches. US crude traded it above the $75 per barrel in Asia for the first time since July.

Despite discouraging news on the wire, US and European futures traded mostly in the positive hinting at some more consolidation in US equities at the start of the week.

In Germany, SPD party is ahead of outgoing Angela Merkel’s Christian Democrats. An SPD-led coalition in Germany is quite bearish for the DAX, but there is no particular sign off stress on DAX which recovers last week’s losses this Monday.

Finally, the impact of the latest Chinese news on Bitcoin’s price was significant but not dramatic as the $40K support held well during the kneejerk drop and during the weekend.