Market update: US formally charges Huawei, stocks slide after China-related bad news, Trump hits Venezuela

29 Jan

by Mihály Tatár

 

Good Morning!

 

  • The unconditional optimism met a few speed bumps on Monday (SPX -0.78%, Nasdaq -1.11%, DAX -0.63%, Hang Seng -0.20%): Graphics chip maker Nvidia plunged 18% after revenue warning and citing China weakness – it seems the demand for crypto mining is not infinite after all -, Caterpillar reported the profit miss of the decade, also blaming weak China sales – in a classic butterfly effect, Trump’s tough trade talk collapsed the need for excavators in Chinese provinces – , resulting in a 9% slide, but, above all, the US formally charged Huawei with bank fraud, wire fraud, Iran sanctions violations and industrial espionage on T-mobile. (The latter was especially hurting for the narrative that everything will be fine after the soon-to-come US-China trade deal.  The clearly angry Beijing called the accusations ’fabricated’ and which are ’an excuse to deprive Chinese firms to lead in technology’, while Western newspapers suddenly argued that the case shows how China uses its companies as an extension of its intelligence network, and allowing China to dominate the 5G is a grave danger for democracies. Hey, what happened to the ’world trade is not a zero sum game mantra’? As Ramsay Bolton puts it in Game of Thrones: ‘If you think this will have a happy ending, you haven’t been listening.’). Nor had tech companies a field day, Apple had to apologize after its Facetime users could hear the voice of the called person before they picked up the call (that tells you how serious they are with your privacy), and more and more strategists note that Amazon’s valuation – 30% revenue growth per year, meaning in 10 years it will be 15% of the entire US GDP – might be ’a little overdone’.  The Dollar quietly weakened further (EURUSD 1.1440), while the Forint waited today’s Hungarian Central Bank (MNB) rate decision at 317.40, right at the key level, with the majority now expecting another hawkish message – and hoping to stop out another layer of lazy longs towards 315.50). Oil prices kept following stocks (WTI 51.80, Brent 59.80 USD) – ignoring the Trump administration’s first serious hit against the Maduro-regime in Venezuela. (The new sanctions effectively block crude exports to the US, this was never done before on humanitarian grounds and strips away a lot of badly needed cash. Freaking out the media, National Security Advisor ’Bomber’ Bolton was seen walking around with a ’5.000 troops to Columbia’ note, just as the first batch of Russian mercenaries arrived in Caracas.)

 

Have a nice day,

Mihály

 

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