Market update: Consumer demand slows rapidly in China, Forint gains before central bank meeting

16 Oct

by Mihály Tatár

 

Good Morning!

 

  • Markets seemed to be quite unsure how to continue after last week’s ’Shocktober’ (SPX -0.59%, Nasdaq -0.88% – the sentiment not helped by Goldman Sachs’s report of ’multiple signs of rapidly slowing consumer demand in China’ with a ’sharp decline in smartphone demand’, Apple -2.2%, DAX +0.78%, Nikkei +0.59%, Shanghai -0.90%, EURUSD 1.1570, US 10Y yield 3.17%, WTI 71.90, Brent 81.10 USD). The newsflow was also rather bizarre than tradable – Saudi Arabia was said to claim that Khasoggi was killed by rough operatives during an interrogation that went wrong – the question is, of course, at what price Trump lets them out from this ungraceful situation -;  Democrat Senator Elizabeth Warren – one of the top contenders for the 2020 Democrat presidential bid – started a social media storm by claiming that according her DNA, she is 1/64 to 1/1024 Cherokee – to counter Trump’s cruel jokes of her being a ’fake Pocahontas -’,  with commenters making fun of her and demanding she gets a casino; and even Bloomberg questioning Theresa May’s handling of Brexit (’Brexit used to mean Brexit. What does it mean now?’ – its no wonder London house prices are as of now only 3% below their 2017 record high). Otherwise, the quiet Forint strengthening continued (EURHUF 322.70) before today’s MNB rate decision, with many expecting an official reaction to the brutal September inflation data (3.6% Y/Y, remember that during 2016, which is not that long ago, it was negative.)

 

  • Veteran strategist David Goldman notes that contrary to the general media narrative that Khasoggi was a clueless, cruelly murdered journalist, he was in fact a high level double (or triple) agent, with close connections to the Saudi intelligence, shady Arab arms dealers and was the member of the Muslim Brotherhood (which among other things wants to replace the Saudi monarchy with an Islamist state). Looking at it from this angle, the story is much less about the freedom of journalists and much more about a tough power play in the Middle East (Turkey versus Saudi Arabia), giving Trump a minor headache since his entire policy in the region is based on using the Saudi Arabia – Israel axis to crush Iran and its allies. Speaking of Trump, Republicans have strengthened in the polls just four weeks before the mid-term elections, shrinking their disadvantage to 6 percent, causing even CNBC to frustratedly talk about ’a six point differential not being something that causes a big electoral wave’, and that ’high economic confidence creates a buffer for Republicans’.

 

 

Have a nice day,

Mihály

 

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