Market update: Money keeps fleeing on the North Korea news, the Turkish rally lasted less than a day

25 May

by Mihály Tatár

 

Good Morning!

 

  • Trump cancelling the meeting with North Korea was not what the market wanted to hear after a stressful week, and trading continued to be risk averse (SPX -0.20%, DAX -0.94%, MIB -0.71%, US 10Y yield falling to 2.97% – under the key 3% level -, Gold jumping 1% to 1305 USD, EURHUF 319.40, EURPLN 4.31, with the EURUSD moving sideways at 1.17 with traders unable to decide whether the somewhat dovish Fed or the Italian development is the more important). Later Asian markets bounced somewhat – North Koreans seem to have panicked that their usual Asian-style diplomacy (everything goes on and off for maximum pressure and face) was not appreciated by the angry US President and came back virtually begging for a meeting (Nikkei +0.19%, Shanghai +0.05%).  The effect of the Turkish central bank’s intervention lasted less than a day, with the market selling again (USDTRY 4.76, the 5Y yield trades at almost 16%) – even as the always smart IMF-head Lagarde talked about Turkey having ’really strong fundamentals’. (I bet. And they can help to fix the issue just like in Argentina, I suppose.) Oil prices continued lower, with traders making a good use of the Russian energy minister’s ’OPEC and its partners will discuss phasing out supply curbs at the June meeting’ semi-fresh newsline (WTI 70.60 USD, Brent 78.60 USD. It’s worth mentioning again that Trump has been hating OPEC even when we was a playboy casino builder. If the down move is only temporary, expect a twitter campaign against the cartel before the November mid-term elections.) The hammering of crypto currencies continued as well (Bitcoin 7600 USD, that is -62% since December, Ethereum 614 USD, about -50%), and in a very typical fashion, analysts who are negative about them get their inbox filled with aggressive hate mail, never a good sign.

 

  • While Europe is just spending another decade discussing issues like the banking union, common army or agricultural subsidies, the economic news coming out of Asia remain unbelievable and hard to fully grasp in significance: The number of telecom subscribers reached 1.2 billion in India (with 413 million broadband Internet users) and Chinese mobile payment turnover is expected to reach 6 trillion USD this year. (The latter is freaking out traditional banks – in China, Alibaba and Tencent don’t need or use banks to transact, prompting JPMorgan’s Jamie Dimon to call it the financial ’battle of all time’.)

 

Have a nice day,

Mihály

 

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