Market update: Tariff man freaks out traders, Macron retreats, infighting heats up in Berlin

5 Dec

by Mihály Tatár


Good Morning!


  • Looking wary at the Fed retreat and the falling yields, and minding profits before the closed US markets on Wednesday to honor former President George H.W. Bush, the last thing investors wanted to hear was Trump threatening China again (’I am a Tariff Man’ (..), ’we are either going to have a real deal with China or no deal at all – at which point we will be charging major Tariffs’), and Kudlow walking back on China’s car tariff reduction (’hasn’t been signed and sealed’).  The result was a classic freak-out selling, with everything falling again (SPX -3.24%, Nasdaq -3.80%, DAX -1.14%, MIB -1.37%, Nikkei -0.61%, Shanghai -0.57%, WTI 52.40, Brent 61 USD – just 48 hours before the OPEC meeting the Saudi Energy Minister cautioned no output deal was done yet, Copper -3.5%, EURUSD 1.1320, EURHUF 324, EURPLN 4.283, US 10Y yield 2.91%). It certainly didn’t help either that May lost three key votes in Parliament on a single day – the Bank of England was quick to reiterate that a no-deal Brexit would crush house prices by 30% and the Pound by 25%, sending the GBPUSD  to as low as 1.2670, or Macron’s public humiliation in France. (Even tough he backtracked and announced a six month suspension on fuel, gas and electricity tax hikes, the genie is now out of the bottle: A large part of the French society has really enough of rising taxes, decreasing services, higher middle class costs and on top of that, an arrogant elite – starting with Macron, who started the crisis management by repeatedly insulting the protesters – not to mention the immigration tensions. One has to wonder how the 2019 EU elections will play out – note that the mainstream media is bashing Trump for its 40% ish approval rating 24/7, while it never tells Macron to resign at less than half of that popularity.)


  • In more positive news, German automakers courted President Trump in Washington (for which they received harsh criticism from Brussels), promising more plants in the US and an increased cooperation with Ford. (The German economy really needed some good luck – in November, German car registrations dropped by 10% Y/Y, manufacturing slowed down, growth was negative in the third quarter Q/Q and international newspapers are full with the dark deeds of Deutsche Bank and diesel carmakers.) In the meantime, the political infighting to succeed Merkel as head of CDU heated up, with former Finance Minister Schauble turning against the Chancellor and supporting pro-business, less-pro-migration Friedrich Merz, instead of Merkel’s favorite Annagret Kramp-Karrenbauer, who is busy making gestures to progressives, for example by threatening ’to review’ the Nord Stream 2 agreement with Russia in the wake of the Azov Sea incident. (She also wants to have a stricter immigration policy, wink, wink).



Have a nice day,



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