Market update: Walmart drops like a stone, yields rise, Chinese mobile payments skyrocket

21 Feb

By Mihály Tatár


Good Morning!


  • Trading finished in a mixed fashion on Tuesday, with Europe and Asia bouncing (DAX +0.83%, Nikkei +0.13%, Hang Seng +1.12%), but US traders carefully watching this week’s gigantic debt auctions – so far 180 billion USD worth of short term securities were sold, and the 2Y yield  promptly jumped to 2.25%, the highest since 2008. (Here comes the interest rate normalization, SPX -0.58%, Dow -1.01%, EURUSD 1.2320). Of course, Walmart’s collapse didn’t help either (-10%), performing the largest drop since 1988, on lower-than-expected earnings and the market-wide calculation that the company may not survive the rising US wages. (It has 2.3 million employees. It’s not hard to forecast that labor-intensive companies won’t have a happy 2018 on the stock markets).  Underperforming the European optimism was the British FTSE (-0.01%), with May facing another Tory revolt to push her toward a ’real’  Brexit and leader of the Labour party Jeremy Corbyn threating banks that he will make them ’servants of the industry’ if he becomes prime minister, calling them ’destructive’ and having ’undemocratic control over politics’. (It really seems Marxists never change, do they? British traders don’t underestimate these outbursts, however, because if May is forced out after all, there is a real possibility of Corbyn winning the next election. By the way, in my personal opinion, Corbyn is not just populist here, but also very wrong – UK banks did everything in their power to avoid Brexit including the referendum, and failed miserably.)


  • Developments in Syria remained intensive, with Turkey shelling approaching Syrian forces in Afrin (which retreated), Syrian government troops launching a major attack on rebel-held suburbs of Damascus, and Israel ramping up support for the demoralized Syrian rebels. Several geopolitical analysts argue that by throwing the Kurds under the bus in Syria, the US just lost most of its political influence in the region, and greatly strengthened Russia’s position (the new funny line goes as ’Russia in the Middle East, playing on every field’), paralyzed by the fear of Turkey leaving NATO. (’Nobody wants to be the guy who lost Turkey’, as one official in Washington was quoted.) In the meantime, the market was clearly relieved that the Financial Action Task Force in Paris did not put Pakistan on the terror financing watchlist – this is probably the result of a last minute compromise -, proposing a ’three months pause’ until the next decision session in June.


  • In what should be a food for thought for Europe, Chinese mobile payments skyrocketed in 2017, to a whopping USD 13 trillion (!), up almost 30% from 2016. Beyond the numbers lies the amazing and widely underreported phenomenom of large rural areas in China becoming gradually cashless and peasants who used to sell at the local market turning into entrepreneurs with access to the capital markets through Alibaba and Tencent.


Have a nice day,



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