Lower crude doesn’t mean lower energy costs

00:00:00: Oil prices may be falling, but the relief is just partial because diesel prices continue to climb around the world as supply disruptions, expensive shipping and geopolitical tensions keep refined products under pressure.

00:00:13: Meanwhile The US President Donald Trump has back yesterday the idea of restricting U.S.

00:00:18: diesel exports to ease domestic price pressures inside the United States.

00:00:23: But if only it were that simple right?

00:00:26: So welcome to Swiss coats daily Market Talk is Wednesday, the twenty-third of September.

00:00:32: I'm Yipega Skardishkreia.

00:00:34: In today's episode we will discuss plenty of topics including why bringing energy costs lower isn't that simple Why Swiss will likely keep their rates at zero percent and whether the recent spike you saw in Bitcoin's price could mean end of crypto winter.

00:00:50: But before we do as always please keep in mind that opinions are my own And this not financial advice.

00:01:02: This show is brought to you by SwissQuote.

00:01:05: So further pullback in oil prices yesterday, pulled global yields lower along with them and gave support.

00:01:12: Among them, technology complex was also fueled by Moose AI led euphoria.

00:01:18: So now as I counted hit a fresh record high yesterday.

00:01:21: meanwhile banks insurance and travel agencies felt the pinch scared that Moose Ai unlocks with disrupt businesses to have so far been benefiting from consumer inertia.

00:01:33: Consumer inertia meaning habits that keep consumers stuck to service whereas there are better deals out.

00:01:39: Interestingly, however in the FX cheaper oil hasn't translated into a cheaper US dollar so far this week perhaps because refined product prices simply keep surging.

00:01:49: Diesel prices for example in the U S hit a fresh record high yesterday despite to pull back that we saw in crude oil prices warning that the cracks spread.

00:01:59: So difference between crude oil and refined products prices will be hard to compress as long supply is not restored.

00:02:06: Note that soaring shipping costs are and could continue to weigh on refined demand for crude too.

00:02:12: The headline crude price doesn't capture the full cost of getting a barrel to refinery, you have additional freight costs at how rising sharply recently making defective cost of crude significantly higher than benchmark prices suggest.

00:02:24: That can further weaken refiner demand and way on crude prices even as the cost pressures further down supply chain remain intense helping explain why refined product prices keep surging, even though crit prices eased international markets and why inflation expectations won't necessarily ease in tandem with crude prices.

00:03:11: making the United States, the world's largest single source of diesel exports.

00:03:16: If they decide to restrict these diesel exports global diesel prices will further spike and because US refiners would lose part of their export market.

00:03:25: they could simply produce less eventually tightening supply of other fuels at home as well.

00:03:32: Thai chickens would simply come home to roast.

00:03:34: it is a terrible horrible idea that would only lead to a short-term relief in the US, but consequences for the world and the US itself will be bigger than this.

00:03:44: In this context, the U.S.

00:03:45: dollar remains well-bid ladies & gentlemen!

00:03:48: The euro dollars slept below the one fourteen fifty level which was acting as support last week.

00:03:54: The pair retreated to lowest levels of five weeks as European gas futures fell another three percent yesterday before however recovering these losses at the end.

00:04:05: But here too, the decline in the benchmark price may overstate the relief for European energy buyers as elevated LNG shipping insurance and rewrote costs mean that effective cost of getting gas into Europe remains higher than TTF alone suggests.

00:04:22: Now later today The euro area PMI numbers will certainly confirm a challenging first half of September.

00:04:28: before the Euro Area economies could further soften the European Central Bank hogs hands mind you could pay it away for further euro softness against a broadly firm US dollar.

00:04:39: And nested in the middle of the Euro area, small Switzerland is also preparing to welcome Swiss National Bank's latest monetary policy decision.

00:04:47: This Thursday, Swiss policymakers will likely keep the interest rate unchanged at zero percent as inflation in Switzerland also picked up.

00:04:55: momentum due to higher energy prices and cheaper Swiss francs since the beginning of the Iranian war did not help this time.

00:05:03: Yet price pressures in Switzerland remain well within the Swiss national bank's price stability range.

00:05:08: giving the swiss policy makers time to adopt it does give a time to adapt.

00:05:12: but rumor still has that some expect more hawkish at this week's monetary policy meeting, somehow reflecting the hawkey shift that we saw in the policy outlook of major central banks as well and some how preparing market for an eventual rate hike into first quarter next year.

00:05:32: And given the geopolitical and macroeconomic backdrop while balance offers is increasingly tilted towards the next Swiss national bank move being a rate hike rather than a rate cut.

00:05:45: But the Swiss National Bank is dancing to a fine-to-now-a-day still, sound too hawkish and the Swiss francs strengthens.

00:05:52: Note that the swiss don't necessarily want even though it's stronger.

00:05:56: frank helps swiss tame inflationary pressures but doesn't sound hawkisch enough and the Frank softens potentially sending inflation up into elevators.

00:06:04: so in short The Swiss national bank will have months and quarters.

00:06:11: Now, one important thing to note is that Swiss yields have been quite immune today notable rise that we saw in global developed market deals elsewhere.

00:06:20: That's because Switzerland has stricter budget discipline than much of the develop world especially surrounding European countries And lower inflation as well helping keep government yields lower In Switzerland.

00:06:32: Such a widening rate differential Is One Of The Reasons Why We Have Seen The Frank Soften Against The US Dollar And The Euro Over The Past Few Months And this trend could continue if the Swiss National Bank delivers a balanced message.

00:06:45: This week, and it's no one's interest to rocked about at this stage there for I expect The Swiss national bank to sound just cautiously hawkish If they sound hawk-ish at all.

00:06:56: Speaking of trends, everybody is talking about the curiously high correlation between gold and bitcoin over the past ninety days.

00:07:03: Indeed Gold and Bitcoin prices moved very closely to each other since the beginning of July.

00:07:09: This was simply an outcome for the debasement trade where lower appetite for U.S.

00:07:14: dollar and rising inflation expectations give support to hard commodities.

00:07:19: And some investors consider that bitcoin as a hot commodity.

00:07:22: but not this week.

00:07:23: we see that positive quarterly weakened and even reversed, because gold remains under pressure especially as US dollar is rising these days whereas Bitcoin strongly bid in tandem with technology stocks.

00:07:37: And the latter divergence suggests that weight of dominant macroeconomic drivers could be weakening.

00:07:43: indeed oil prices and central bank decisions over past weeks have been major drivers across many asset classes.

00:07:51: globally hikes from major central banks is behind us.

00:07:56: We could see fresh trends emerge as markets refocus on asset specific fundamentals.

00:08:02: This is how I read the sudden divergence between the gold and Bitcoin's behavior this week.

00:08:07: For Bitcoins specifically, The latest price rebound brings up a question of whether we are nearing the end of the crypto winter?

00:08:14: From technical perspective, Bitcoin's price cleared an important Fibonacci resistance level on Monday.

00:08:21: that was the major.

00:08:22: The level was eighty three thousand eight hundred dollar per coin.

00:08:31: Level suggesting that the price now step into the medium term bullish consolidation zone and the latter is supporting the idea of a further recovery in Bitcoin's price.

00:08:41: from a macroeconomic perspective improved risk appetite, an elevated inflation expectations globally could continue to support the digital coin.

00:08:50: yet I think it's important to note that bitcoin still searching for its identity It Is Still Not Gold Even Though Sometimes This Price Moves very closely to gold price and it is not yet the go-to asset of global central banks, and broader investors.

00:09:04: On the contrary Bitcoin stands on the opposite side of the risk spectrum.

00:09:08: in a portfolio It has an additional risk added into a balanced portfolio rather than replacement for Gold.

00:09:15: So its interesting have exposure or increase exposure to bitcoin but make sure that you add the coin right pocket in your portfolio.

00:09:24: So this is all for today, I'm Ipeko Skardishkaya and thank you for joining me!

00:09:29: And Thank You For All Your Beautiful And Supportive

00:09:31: Comments!!

00:09:32: I hope This episode of Market Talk has been helpful & it's been insightful to you so please do not hesitate to leave your comments, reactions & questions below.

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