Market update: Tech selling leads stocks lower, new ideas on Brexit, diesel trucks in crosshairs

6 Sep

by Mihály Tatár


Good Morning!


  • The selling themes remained the favorites on Wednesday: SPX -0.28%, still overperforming, Nasdaq -1.19% on the hostile Senate grilling of tech giants, Facebook -2%, Google -1%, Twitter -5% – as forecasted here by now all the goodwill towards them evaporated and several senators called for regulation and ’ending the Wild West in social media’; DAX -1.39%, Nikkei -0.32%, Shanghai -0.60% on the trade war theme; Warsaw -1.2% and MSCI emerging stocks -1.5% on the emerging market contagion theme. (Regarding the latter, JPMorgan and Blackrock suddenly realized that there could be a confidence crisis on emerging markets, and warned of possible contagion. Hilarious.)  There were some good news, too, according to unconfirmed news reports Germany was ready to accept ’a less detailed Brexit agreement’, making the GBP jump to 1.30 and the EURUSD to 1.1630 – if true, this means a key development as it means that it is enough to agree on the Bexit process and the trade talks can wait until after Brexit. (In a way, this would be an extension of the Brexit deadline, and another EU intervention to help May survive.) The Euro and Italian markets also received some support from the Italian government, which switched to good cop talk again (’no challenge to the EU’, ’budget will reassure markets’, yields dropped immediately, the 10Y from 3.2% to 2.87%), but not even this helped in Fitch lowering six Italian banks’ rating otlook to negative (including Unicredit and Intesa, this followed the same step on Italy on Friday). The bouncing Euro relieved the pressure on emerging currencies as well (EURHUF 327.80, USDTRY 6.60, EURPLN 4.33, the South African Rand and the Indian Rupee hasn’t made a fresh record low for hours now wow), and crypto currencies had that kind of day again (Bitcoin -13% in 24 hours to 6400 USD), attributed to the trivial news that Goldman Sachs is delaying setting up its crypto currency desk. (One has to wonder how deep these markets are and who ordered the news.) The more careful oil traders took some profits at the highs (WTI 68.50, Brent 77.10 USD – but not much has actually happened, we are testing the key 71 zone in WTI and the 79 USD zone in Brent for the third time this year, with hedge funds wondering if higher levels are tolerated before the November mid-term elections.)


  • Bloomberg notes the Cambridge Econmetrics – Siemens – Volvo – Tesla report, which argues that transforming the EU’s truck fleet to electric and hydrogen vehicles from diesel-powered engines could cut oil use by as much as 11 billion barrels through 2050, saving two years’ worth of oil imports (of which 89% is from outside the EU), pushing higher growth and drastically reducing emissions. The only disadvantage is – at least according to the report – that this exercise would need a 140 billion euros investment on energy infrastructure, excluding of course the purchase of the new trucks. (In my personal opinion, while the idea of course sounds great, I find it suspicious that the largest militaries around the world don’t excitedly spend billions on cool electric vehicles these days. Think about it: If their performance would be truly comparable, in no time armies would shop around for electric armored personal carriers and rechargable tanks.)


  • In the latest confirmation of the US political trends discussed here in detail, very-left-leaning Bernie Sanders introduced a ’Stop Bezos act’ against Amazon (this would acquire large companies like Amazon and Wallmart to pay back all government perks received by their workers like Medicaid, food stamps and public housing, so that ’the US taxpayers stop subsidize the wealthiest people on Earth’, who are ’paying superlow wages’). At the same time, another black progressive female politician knocked out her ’old guard’ Democratic rival. (It was not even close, she won by double digits, supported by Bernie Sanders and Ocasio-Cortez.) While on the one hand its a good feeling to know that in the US, charismatic politicians from minority background can win so easily, for the long term perspective it doesn’t good look at all that US politics become binary (a South-American style quasi socialist racial identity party, opposed by a white party in existential fear). What voters have to say about this moving to left remains to be seen in November.



Have a nice day,


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