Too close to the sun | Calamatta Cuschieri

Sovereign yields in Europe and the US were soaring to multi-month and even yearly highs in some cases during yesterday’s session, fueled by higher growth prospects and significantly higher inflationary expectations. This morning’s price action however suggests that yields, much like Icarus did when escaping from Crete, flew too high. Yields on European and US sovereign benchmark 10-year paper are down anywhere between two and nine basis points, and are now hovering close to levels seen last Friday morning.

Stocks don’t seem to be feeling the heat though, cruising along with only a few mild bumps so far bar the early morning drop just after Trump was seen winning the US Presidential election. The Dow Jones Industrial Average in particular remains close to its recent record highs.

Samsung drops the cash

In its largest ever overseas acquisition, Samsung is throwing $8 billion at Harman International Industries Inc. The US-based company, most notably known for its high-end audio equipment, has carved out a significant space in automotive supplies, getting more than half of its sales from the sector. With the offer – priced at 28% above Harman’s closing price of $87.65 in New York on Friday – Samsung hopes to make a strong foray into the automotive infotainment arena alongside Apple and Google as the global smartphone business seems to be cooling (unlike the Note 7…)

Commodity corner

After investors dumped gold last week the malaise seems to have spread to silver. The grey precious metal, notorious for its wild swings is down more than 10% over the past two days. The metals markets has been a bit of a mayhem after the US Presidential election, with industrial metals such as copper getting the better of the action, anticipating an infrastructure-related stimulus package in the US. Volatility remains high though as some of the main beneficiaries of the rally – read iron ore – have sold off this morning.

And chocolate could be getting cheaper, as cocoa traders have turned short on futures for the first time in four years. A bumper crop in West Africa and European grown stock which did not diminish as much as expected have led to a plunge in future prices, and excess supply could last into 2018.

This article was issued by Andrew Martinelli, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investments Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.