Market update: Stocks rally on imminent trade deal hopes, Trump unleashed at CPAC speech, US gets serious on G5

4 Mar

by Mihály Tatár

 

Good Morning!

 

  • The message that the US – China deal is imminent made traders go for the key topside levels (SPX +0.69% – closing right at 2803 points; Nasdaq +0.83%; DAX +0.75% – Volkswagen jumped another 2%, as discussed before German automakers are seen as cheap proxy China growth trades by hedge funds – ; Nikkei +1.05%; Shanghai +2.83%, it also helped that Beijing plans to widen tax cuts – we are talking about the second largest economy in the world). Interestingly, commodities could not follow (WTI 56, Brent 65.20 USD – underperforming since Trump’s ’oil prices too high’ and ’relax OPEC’  tweet, Copper -0.10%), and currency markets were watching without excitement (EURUSD 1.1360 – traders noted that the pair is in its narrowest range ever, or since its 1999 inception, trading between 1.12 and 1.15 since last October; GBPUSD 1.32 – traders took profit seeing that some panicking Tory Brexiters are suddenly supporting May’s deal, even as former German finance minister Schaeuble said he expects ’the UK to either remain in the EU or to return at some point’; EURHUF reached the key level of 315.60 and bounced; EURPLN 4.300 helped by the Polish government’s large scale election-year spending plan including drastic income tax cuts in the tune of 10 billion USD).

 

  • Anyone interested in US politics should watch Trump’s marathon, two-hours long CPAC speech: While naturally it received icy summaries by the mainstream media, it showed an energetic, hungry-for-the-2020 fight, pedal-to-the-metal US President; to say that if the 2016 election was tense, we haven’t seen anything yet, is an understatement. As no surprise for regular readers, he jokingly told his audience that the Green New Deal is a great idea and Democrats should continue embracing it (cracking several jokes about banning air travel, using television only in windy weather and reaching Hawaii by train), and in a more grave tone, he warned Republicans that only he can protect them from the ‘crazy socialist hard left’. (In the meantime, in his own speech, Democrat Bernie Sanders promised to defeat ‘the most dangerous president in history’.)

 

  • The US intensified its efforts to shape global 5G standards and introduce a ’wholesale 5G network’ within the States whatever the costs – clearly Washinton is anxious of losing to China in this technology race – , and Trump is reportedly only holding off signing anti-Chinese technology executive orders to not to disrupt the trade talks. (EU countries will soon face tough decisions in this regard.) Speaking of disruption, Amazon is planning to open a chain of grocery shops in the US  – this sounds innocent until one realizes that China is now full of under-construction gigantic grocery warehouses focusing on online delivery.

 

 

Have a nice week,

Mihály

 

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