Market update: Oil prices crash lower, the Trump-Putin meeting turns into a hatefest

17 Jul

by Mihály Tatár

 

Good Morning!

 

  • Western markets remained in earnings-waiting mode on Monday (SPX -0.10%, Nasdaq -0.26% on disappointing growth at Netflix, DAX +0.16%), with Chinese markets sinking lower on slowdown fears (Shanghai -1.08%, Hang Seng -1%). (By the way, the ’US has shot itself in the foot’ so much that Chinese savers are reportedly panicking and pulling out money from peer-to-peer lending platforms, a 195 billion USD industry in China. To be fair, an ill-timed regulatory crackdown starting last year was also needed for this development – anyhow, it will be interesting to see what happens with the utopistic vision of the bankless Internet banking after the vision of the ’unstealable’ virtual money broke and crypto currency turned out to be very stealable.) The main movers have been the ’great buying oppurtinity’ oil prices, with WTI crashing to 67.90 and Brent to 71.80 USD, extending their slide to 10% within one week. (I guess the hurray-bullish bank analysts won’t even blink after this latest fiasco, some of them are already talking about ’negative supply stories coming out of the blue which are very bearish’. Out of the blue, you know.) Otherwise, the ’friendly’ USD (EURUSD 1.1715) and the positive sentiment kept supporting emerging currencies (EURHUF 322, EURPLN 4.30, EURCZK 25.86, USDMXN 18.82, USDTRY 4.834), with the Pakistani Rupee being less lucky as the central bank was forced to devalue its currency for the fourth time since December and restrict the import of 131 non-essential items. (The Rupee dropped as much as 5%, to 128 per Dollar, with traders seeing the move nothing more than a win-time strategy so that Pakistan’s reserves at least last until the July 25 elections are over and the IMF can be approached. Investors are not optimistic and the stock market dropped 21% since January in USD terms, or 40% since mid-2017.)

 

  • While nobody is yet sure what Trump and Putin agreed on in Helsinki, the mainstream media and anti-Trump politicians – including Republicans – went into a total rage rampage (’this was treason’, ’most disgraceful performance by an American President ever’, ’shameful’, ’elevating a Russian leader who presides over a country struggling to maintain its relevancy’ – the last one is my favorite, a classical case of projection). Part of the rage is that Trump went even further and in a single tweet humiliated the entire US political establishment (’our relationship with Russia has  NEVER been worse thanks to many years of US foolishness and stupidity’). What you think of Putin is a world view question of course – and I am sure Putin doesn’t care too much – , but this tweet made clear that the Trump Administration is not interested in a Cold War II and has got enough of the long-standing US policy that every country is a natural democracy if only its leaders were somehow overthrown. (For reference, remember the high hopes for the 2014 Ukraine revolution or the notion that Russia would just swallow that it loses its control over its Black Sea naval base in Crimea – both Washington and the EU were shocked to learn that it was not the case – but what happened in Libya and Iraq also come to mind.) Let’s see how the US voter reacts to all this – in the meantime, the Democratic party is busy defining ’free healthcare’ to campaign with and its satellites are pushing toymakers to produce ’pro-abortion’ Disney princesses.

 

Have a nice day,

Mihály

 

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