Tradingview Weekly Market Wrap Monday 23 May 2022

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Starting from inflation, the IPP in Germany rose to 33.5% (y/y) in April. The situation is, to put it bluntly, unpleasant. The problem is that there is nothing the country’s central bank can do about it, except continue to push for an early rate hike. It is likely that the event will take place in July after the ECB finishes its asset purchase program. The only mystery is how far the regulator is willing to go in the fight against rising consumer prices.

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It is fair to say that not only EU countries suffer from inflation. Inflation in the U.K. rose to 9% in April, a record high since March 1982, when inflation reached 9.1%. Consumer prices in Japan rose 2.5% in April compared with the same month a year earlier, the fastest pace since October 2014. In addition to the jump in energy prices, CPI is also affected because demand continues to outpace supply, partly because of unresolved supply chain issues. Going forward, this means that the hawkish rhetoric will only intensify in the near future.

One very significant concern in this story is whether countries will be able to avoid stagflation. It is worth mentioning that according to the new forecast of the European Commission, by the end of 2022 the economic growth of the member-states could be 2.7% instead of the previously forecast 4%. In addition, the expected average inflation rate in the Eurozone will be 6.1%.

The second topic that needs to be discussed is Monkeypox. According to the latest figures from the WHO, more than 90 cases of monkeypox were reported worldwide from May 13 to 21. The good news is that no deaths have been reported so far. According to some reports, the incubation period for infections is one to three weeks, so it is likely that new infections will be identified. Will we witness a new pandemic? Probably not.

First, vaccinations against natural (black) smallpox are also effective against monkeypox. In addition, monkeypox has a relatively low mortality rate, about 0% to 10%, and is slightly higher among children. Speaking of the likely beneficiaries of the panic gaining momentum, shares of Danish pharmaceutical group Bavarian Nordic A/S (BAVA.CO) rose sharply Thursday after the company received an order for a vaccine to treat monkeypox.

 

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