Market update: Stocks lower but the crypto carnage steals the show

17 Jan

by Mihály Tatár

 

Good Morning!

 

  • Disturbed by the hostile Congressional negotations before the US government shutdown deadline on Friday, traders turned wary (SPX -0.35%, Nasdaq -0.35%, this is only the second negative session year to date by the way, DAX +0.35%, Nikkei -0.31%, Hang Seng -0.31%, EURUSD 1.2250, WTI 63.70, Brent 69 USD), which was of course barely visible compared to the carnage in crypto currencies (Bitcoin -27% to 10,000 USD or -49% since December, Ethereum -20% to 980 USD or -35% since December – this possibility was of course no surprise for regular readers). According to the media, the Romanian Leu weakened drastically on the latest Game-of-thrones style political infighting (the third prime minister is to be appointed in little over a year), but somebody should tell the currency traders, too (EURRON 4.66 – a depreciation of a mere 0.6% since December and a mere 4% from the beginning of 2017 – the market is somewhat annoyed but to put it cynically, the government is not organized enough to stop the dynamic economic expansion). In Germany, the epic campaign within the SPD started to push delegates to vote for a coalition with Merkel on Sunday began, with Martin Schulz crisscrossing to country to sell the idea – not an easy task, given that the SPD emerged weakened after each coalition, and even the basic demands of the party members – from immigration to increased taxes on the wealthy – sound irrealistic after the right-leaning election results. SPD leaders seems to have misread the results, by the way, according to Foreign Minister and ex-SPD leader Sigmar Gabriel, ’the whole world watches Bonn’ – where the SPD decision will be made – and ’voters see that this is the chance to make Europe the place of hope and the sound of freedom’. (In fact, the anti-immigrant Alternative für Deutschland stands at 14% now, while the sole party of hope collapsed to 18%. One has to wonder that even with a new Grand Coalition, how would Merkel be able to undertake structural EU reforms with so little political capital.)

 

  • Foregin direct investment into Pakistan dropped a massive 70% in December, amounting to just 200 mio USD from 700 mio USD in the same month in 2016. It’s not just the freefalling relationship with the US: Investors seem to take a wait-and-see approach before the elections, as macro indicators turn South. Currently, China is the biggest investor by far (128 mio USD), with the US, the UK and Hungary being the only distant followers (20-18-16 mio USD).

 

  • Flying in the face of the mainstream media narrative that Donald Trump’s victory was ’an accident’ or ’an incident’ made only possible by the FBI and the Russians, a poll of Generation Z conducted by the Hispanic Heritage Foundation came out with brutal results: 86% of White boys and 70% of White girls would vote for Trump if elections were held today, with 80% of Black boys, 95% of Black girls, 64% of Hispanic boys and 84% of Hispanic girls preferring Clinton. It is no wonder Democrats are so fanatical in stopping Trump’s immigration plans and in trying to legalize illegal migrants, but regardless of one’s world view, the whole statistic doesn’t send a good message about the future of the political culture in the US.

 

 

Have a nice day,

Mihály

 

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