Market update: Oil prices keep dropping, Eurozone slows down, Poland goes nuclear

26 Nov

by Mihály Tatár

 

Good Morning!

 

  • A tough end of week (SPX -0.66%; Nasdaq -0.48%; another stop-loss collapse in oil with WTI plunging to 50 USD and Brent to 58.60 USD; ’money of the future’ Bitcoin dropping to 3700 USD – that’s -81% from the December high with even crypto firms now talking about a ’test of faith’, good luck; EURUSD pushed to 1.1350 after PMI figures showed a quickly slowing German and Eurozone economy) for markets was followed by an intense ’new normal’ political weekend (anti-Macron protests turning violent in Paris, migrants storming the US border meeting tear gas and rubber bullets, EU leaders approving Brexit after May gave in even on Gibraltar – now she has to convince the House of Commons about the deal instead of firing her -, the Ukraine considering martial law after Russia fired on its navy boats and seized three ships, Moscow and Rosneft looking shocked and angry that Venezuela couldn’t make its debt payments, the US cutting off 1.66 billion USD of security aid (!) to Pakistan for helping Afghan Talibans). That all said, optimistic investors are still hoping that 1. this Friday’s G20 meeting in Argentina will result in some form of Trump-Xi understanding, 2. the Fed will now quickly retreat and communicate in a more dovish fashion (for example, saying that it still doesn’t see much of an inflation), if for nothing else, to counter the painful Dollar appreciation. (Note that the 3M Libor is quietly approaching 2.70%.), 3. Italy and Brussels will decide to avoid a showdown before the critical EU elections next year and the conflict will be toned down; all relieving pressure on markets. (Note, however, that neither is a game-changer, in the best case they can cause a bear market rally.)

 

  • Poland indicated it wants to get more of its energy from nuclear reactors (! – this from the country which sits on Europe’s largest coal reserves), building 6 to 9 gigawatts of nucler power by 2040, investing about 100 billion USD for this goal. (To put it ironically, I am not sure Brussels wanted Poland to achieve green energy goals this way. On the other hand, at least we know how post-Energiewende Germany will get its electricity in windless weather.)

 

 

Have a nice week,

Mihály

 

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