Market update: Trump strikes back, Euro economy is slowing, more bad news on Facebook and cryptos

6 Apr

by Mihály Tatár

 

Good Morning!

 

  • The sentiment remained positive on Thursday (SPX +0.69%, Nasdaq +0.69%, DAX +2.90%) on the ’trade peace’ theme, also helped by a Goldman Sachs analysis calling the tariff packages ’insignificant in the big picture’. China was especially delighted, but just when the government newspapers declared victory (’the US is suffering after the crushing counterstrike’), Trump doubled down and ordered tariffs on an additional 100 billion USD of Chinese imports, freaking out the market again (SPX futures -1.6%, Iron Ore -2.5%). (This turn of events, in my opinion, only surprised people with serious reality deficit, similarly when the media was shocked to learn that after the Stormy Daniels affair scandal, Trump’s popularity increased by 3% among US men). Currently everyone and their grandmother in the analyst business are busy writing reports that ’the resulting accidental trade war’ will hit the US more than China or that China won’t ever back down. (My personal opinion remains unchanged: It won’t come to a trade war – of course there will be there some drama and years of tensions – simply because the US is right. Even Bloomberg admits that China needs to be creative to retaliate for this second 100 billion USD tariff package because it ’simply doesn’t import enough’ from the US to extend its own tariffs. Also, once the genuie is out of the bottle, it is very hard to put it back, and the EU and Japan just joined the US to attack China on technology licensing rules (=stealing technology), a move, which after so much Trump-bashing from Berlin and Brussels feels rather spineless by the way. As one strategist put it, China will eventually has to get used to what it has not done since the revolution: start to compromise.)

 

  • In other news, the economic momentum in the Euro-area slowed to the weakest level in more than a year – according to the PMI figures released yesterday -, which is especially bad news for the ECB which is under enormous pressure to tigthen monetary conditions. (But no, the weak Euro had nothing to with the rapid expansion! Nothing to see here!). The once mighty global bank Barclays got its rating cut to the lowest investment grade (!) by Moody’s, and with European banks from HSBC to Deutsche Bank are also looking like a shadow of their former selfs, many are wondering if Emirifying and Mifidifying of the banks was really worth it. (As forecasted here back in 2014. Asian banks, in contrast,  don’t just taget their own capital ratios and compete roughly, sometimes using twice as much leverage than Western banks). The correction continued in Facebook (+2.7%) but their newsflow remains brutal (by now the question is whose data was not stolen and it came out that for Mark, a ’private message’ means that it is recorded and analysed for potential advertisers.) Speaking of brutal newsflow, crypto currencies had another rough day, with India banning all cryptocurrency services (!) and South Korean police arrested Bitcoin exchange executives who quietly stole customer assets.

 

  • In a groundbreaking experiment, French energy giant Total is deploying autonomous robots to a North Sea oil platform in essence to replace humans in dangerous and time consuming operational inspections. Apart from using their advanced sensors and transmitting the data to the company headquarters, the robots can read various metrics such as dials and level gauges, temperature and gas concentration.

 

Have a nice day,

Mihály

 

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