Market update: Traders sell everything from stocks to metals even as US retail sales overdeliver

16 Aug

by Mihály Tatár

 

Good Morning!

 

  • Not helping the sentiment were a shockingly weak quarterly number from Chinese Internet giant Tencent and an irritatingly strong US retail sales data (0.5% for July instead of 0.1%, not really helping the ’US recession coming – no more rate hikes’ narrative, but hey, the nasty Trump tax cuts only helped the rich as we were told!), and traders sold almost everything they could click on on Wednesday (SPX -0.76%, Nasdaq -1.23%, DAX -1.58%, Nikkei -0.21%, Copper -4.5%, Aluminium -2.2%, Zinc -7%, Platinum -3.5%, WTI 65.10, Brent 70.40 USD). The mood slightly improved later on the news that China is to send vice commerce minister Wang Shouwen to Washington for trade talks, and sellers took some profits (the oversold EURUSD jumped from 1.13 to 1.1390, for example, Asian stocks bounced a tad higher, Nikkei -0.09% and Shanghai +0.15%, together with emerging currencies, EURPLN 4.313, EURHUF 324). Interestingly, the Turkish Lira itself kept strengthening (+15% since Monday!, USDTRY 5.98), thanks to the Turkish central bank making shorting the Lira painfully expensive (it costs about 35% annually now, auch), and Qatar promising a 15 billion USD investment into the Turkish economy. (However, these are tactical actions only: The reality remains that Turkish companies have an FX debt load of 340 billion USD, of which 20 billion USD matures this year and the next, and the Turkish current account deficit already topped 6% before the meltdown began. It’s no wonder Turkey had to raise its diesel and gasoline prices by 9% this morning. Washington, for its part, rewarded the Qatari intervention by promosing more sanctions on Turkey and telling Ankara that the new tariffs won’t be removed even if they released the arrested Pastor. Wow, it seems that the advisors in Washington – who never failed to warn that you don’t want to risk losing Turkey as an ally whatever the issue – decidedly lost their influence.)

 

  • In a very symbolic and politically telling development, Russian military police began to patrol the Golan Heights (the border between Syria and Israel), replacing the routed UN peacekeepers. As this could not have happened without US-Israeli-Russian trust and understanding, one has to wonder what will happen to the US-Russian ’cold war’ after the US midterm elections are out of the way. (Yesterday even the Washington Post, which has by now became a professional 24/7 Trump-trashing newspaper, admitted that anti-Trump Republicans are beaten badly in the primaries, and the transformation from ’a Republican Party into a Trump Party’ is underway.) It’s not that the Democrats are not busy: New York Governor Cuomo gave a speech in which he talked about the US ’that was never that great’. (This of course echoes Hillary’s famous ’Trump voters are deplorable’ gaffe from which she never recovered.)

 

 

Have a nice day,

Mihály

 

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