Market update: Stocks rally while Boeing drops, EU gives concession to UK, US warns Berlin and Baghdad

12 Mar

by Mihály Tatár



Good Morning!


  • Monday saw an unusually strong and eventful start of the trading week: Investors sighed with relief that the US retail sales weren’t dramatically weak for January (0.2% M/M, 1.2% without cars and gasoline, with economists only predicting now a 1.5-1.8% growth for Q1, but remember, lot of governments would kill for this nowodays), and became excited when a Goldman Sachs report forecasted a 4 billion USD shift in Chinese chip demand towards US producers under a likely US-China trade agreement (SPX +1.47%, Nasdaq +2.02%, DAX +0.75%, Nikkei +1.86%, Shanghai +1.06%). The bad news – German data was awful again, industrial production dropped 3.3% in January Y/Y with Exports growing 0.0% M/M, Boeing dropping 5% (at one point trading at -12%. If the tragic accidents were really due to software glitches, driverless cars just became more suspicious, just sayin’), and the Turkish economy entering freefall (-3% GDP in Q4 Y/Y, industrial production -10%, inflation 20%, and with world trade shrinking, this time Ankara can’t export out its way from trouble) – were ignored. Oil prices tested the high of their ranges (WTI 56.90, Brent 66.60 USD) on Saudi Arabia talking about deep supply cuts again – pumping well below 10 million bpd in April, Trump won’t be happy – and as production collapsed in Venezuela, but traders watched the super-volatile GBP the most, which jumped from 1.30 to almost 1.33 on the EU giving a technical concession to May in the form of new legal texts on the Irish border backstop. (Today is the key vote day in the British Parliament on May’s Brexit agreement, if it fails, tomorrow’s vote is about weather to delay Brexit. Note that according to bank polls, the uncertainty has been so high in the last two years that banks and corporates are mostly completely unhedged for a ’no’ and ’no’. And showing a seriously distorted sense of reality, a visibly exhausted Juncker announced that ’it’s this deal or the UK might never leave EU’.)


  • In political developments, an irritated Washington warned the German government that it would cut back on the intelligence it shares with German security agencies if it allows Huawei to build the country’s 5G infrastructure. (Ups. This is not a small news. The real cost of open border policy would become obvious pretty quickly. There are hundreds of terror plots each year we don’t even know about.) The US also threatened Iraq – Iran’s president Hassan Rouhani visited Baghdad with the main purpose of beating the US sanctions on oil sales with the help of Iraqi banks – as usual, Pompeo warned that Iraqi banks would then be blocked from international financial markets. In the meantime, in a news that should have been an earthquake in the mainstream media, Democrat House Speaker Nancy Pelosi told the Washington Post that ’impeaching Trump is just not worth it’, because ’it would divide the country.’ (Try to digest that. Millions and millions of Democrat voters, activists, journalists and a lot of European governments were completely misled and taken for useful idiots for three years. All this political and emotional capital invested, for nothing.)



Have a nice day,


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