Market update: Investors in an unthankful mood, political agreement on Brexit, driverless truck debate

23 Nov

by Mihály Tatár

 

Good Morning!

 

  • While the US was on Thanksgiving holiday, the market in general was not in a thankful mood (DAX -0.94%, MIB -0.69%, Shanghai -2.05%, SPX futures -0.50%, WTI 53.10, Brent 61.80 USD, even Bitcoin dropping another 5% to 4200 USD). The sentiment was definately not helped by the news that the US asked its allies to avoid using Huawei equipment (here comes your trade peace), and Saudi Arabia signalling its output has reached a record (10.7+ million barrels per day, imagine if Obama had complained about high oil prices). Regarding China, its worth noting that the EU, despite the endless opposition to the US and the moral lectures, is actually busily setting up mechanisms to block Chinese high-tech acquisitions and investments – an EU-wide agreement was made on Tuesday – , and that the supposedly minimal Chinese slowdown is already felt widely in Asia (Singapore, South Korea all missing GDP estimates, altough still well growing). Even if there is something of an agreement between Xi and Trump at the G20 summit – a framework deal is widely expected by now after the positive signals from both sides – , the times of the post-Cold War free trade paradigm are over (with or without Trump). Speaking of agreements, Juncker, Tusk and May announced that they agreed on Brexit ’in principle at political level’ (the latter shocked national ambassadors by the way, they thought they have a say – welcome to today’s EU), meaning, that the Sunday summit, in theory, should be a rubber-stamping exercise from the EU’ side (?). Anyhow, the Pound liked the development and jumped from 1.2770 to 1.2880 against the Dollar, even as some, for example Spanish PM Sanchez raged that they would veto the deal if there are no changes on Gibraltar. (In my personal opinion, that the focus is now on such things as fishing rights, Gibraltar and the techology used at the Irish border is downright surreal – May allowed an incredibly disadvantageous agreement, leaving the UK with most of the EU obligations but stripping it of the rights. It won’t end well, nor politically nor economically, it is incompetence at the level of the 2015 Merkel decision to let in the refugees without asking a single German or European voter.)

 

  • While the new normal in US politics was on full display this week (Trump authorizing the military to use lethal force at the Mexican border and threatening to close it down completely if necessary, while rising star Democrat Ocasio-Cortez defended speaker Nancy Pelosi arguing  ’her opponents are not diverse enough’, uh); in a far-reaching development, a fierce debate started in the US media whether driverless trucks should be allowed on the roads. (This is not a far-away issue as in the case of personal cars, as fixed- route transportation is much easier to set up and manage.) Many, both on the Left and the Right, argue that driving for a living is the simple most common job for high school educated men – by the way, many of whom who are from minorities –  in all the 50 states, and the social cost of disbanding them is simply too high. (If this debate if fierce now, what will happen when drone delivery really takes off..?)

 

Have a nice day,

Mihály

 

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