Market update: Surprising Trump comments ignite a bounce in oversold assets, OPEC shifts strategy

13 Apr

by Mihály Tatár

 

Good Morning!

 

  • Trump made some fun of the overheated media on Thursday, and made a barrage of dovish comments (the attack on Syria may come ’very soon or not soon at all’, ’there is good progress with China, they are going to treat us fairly’, ’the US could re-join the American-Pacific Trade Pact (TPP)’. The completely frustrated journalists and surprised politicians – for example the Japanese Finance Minister – talked about an ’unpredictable’ and ’temperamental’ US President, but if you remember – as discussed here during the US election campaign – Trump always worked with expansion / pullback cycles to unbalance his opponents, so personally I don’t think much of yesterday. Oversold markets jumped, however (SPX +0.83% – in technical terms, not much happened this week and we are still testing the key January levels, Nasdaq +1%, DAX +0.98%, Nikkei +0.67%, Hang Seng +0.12%, Rubel +2% at 62 per Dollar, Turkish Lira +0.5% to 4.11 per Dollar, WTI 67, Brent 72 USD, EURUSD 1.2320, US 10Y yield 2.82%, China sensitive Caterpillar +2.7%, Boeing +3%), as traders were afraid of larger a relief rally. The underperformers were the tech stocks, as the newsflow switched to horror show again (it came out that Mark – now dubbed Mr.Spock  after the strange way he reacted to the questions at the Congress -, forgot to mention that Facebook is building massive databases even about non-Facebook users who interact with people who are on Facebook, and sells them immediately. As predicted here, Trump ordered the creation of a task force against Amazon which just got hit by a scandal about selling underage girl sex dolls, and Tesla went into an open political battle with the US National Transportation Safety Board accusing it of ’caring more about press headlines than actual safety’).

 

  • Not unrelated to the July elections, the Pakistani government and China boosted the building spree of airports and ports in the country in the last few months: Islamabad’s new international airport, mostly financed by Beijing and built by the China State Construction Corporation, is now set for operation and airport-sea port constructions in Gwadar are also progressing rapidly. (Showing the hostile US-Pakistan relationship and Islamabad’s unprecedent dependence on China, there were even – as it turned out fake – news circulating that the new airport would be named after Chinese President Xi Jinping. There are also rumours that Gwadar will also serve as a Chinese naval and submarine base, giving the People’s Liberation Army access to the Middle East.)

 

  • Veteran oil analyst John Kemp notes that OPEC appears to be reformulating its target in terms of upstream investment rather than oil investories, a change that implies even higher desired oil prices. (Up unti now the argument behind production cuts was that oil inventories in the OECD industrialized countries has to be reduced to the five-year average.) In the meantime, Libya’s strongman Khalifa Haftar – and the potential winner of presidential elections this year – has reportedly suffered a severe stroke, threatening with another power vacuum in the country.

 

Have a nice day,

Mihály

 

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