Market update: Investors focus on Apple, Hezbollah and Russia declare victory in Syria

13 Sep

by Mihály Tatár

 

Good Morning!

 

  • In absence of major developments, the upward momentum continued on the markets (SPX +0.34% – another record high of course, DAX +0.40%, MIB +0.45% – led by banks as they are immune to the strong Euro, Commerz +3%,  Deutsche +3.6%, BNP +2.4%, Unicredit +3.3%, while Asia traded more mixed, Nikkei +0.51%, Hang Seng -0.27%).  Equity traders focused on the new Apple products – it was somewhat funny to hear them all talk about ’the crazy 1000 USD price’ and later mention that its a great Christmas gift – with the majority of investors becoming somewhat suspicious whether these new toys will be enough to compete against Asia (Apple finished -0.45%).  US Treasury Secretary Mnuchin warned that the US will impose additional sanctions on China and Russia if they don’t follow through on the North Korea sanctions – and indeed, it was leaked that the top five Chinese banks were instructed to stop opening new accounts for North Korean entities and individiuals, and ’clean out’ the existing accounts. (While Trump said that the 15-0 UN sanctions vote was ’not a big deal’, and that he ’doesn’t know if there is any impact’, it was a big deal, in my opinion, and shows that things got very serious after the hydrogen bomb test.) The star of the day was the British Pound, which – after already trading stronger on the meltdown of May’s Brexit position – jumped to 1.33, or a one-year-high against the Dollar, on a brutal inflation data (2.9% in August Y/Y, with a core CPI of 2.7% – this number is actually close to Russia’s these days). Finally, showing where the unprecedented central bank stimulus pushed the European financial system, Austria is now issuing a 100 year bond (maturing in 2117!) for a yield of 2.10%. (I highly doubt that I would lend to anyone for 100 years for 2%, and it looks even more perverse when comparing with the US 10 year yield, which is 2.15%).

 

  • As a confirmation of the dramatic developments since the anxious battles to defend Damascus in 2015, Hezbollah announced that the ’Syrian war is over’, with the remaining fighting being only ’scattered resistance’.  Russia also declared victory, stating that 85% of Syria is now controlled by pro-government troops. The Israelis (who now essentially have a border with Iran), the Western European capitals  (who called for Assad’s resignation even last year) and the Sunni side are definitely not in a celebratory mood – there are ongoing rumors that the Saudi Crown Prince made a secret, unprecedented visit to Israel (!) last week.

 

Have a nice day,

Mihály

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