Market update: Stocks remain under pressure with Huawei suppliers getting hammered, Forint weakens, shock election result in Australia

20 May

by Mihály Tatár

 

Good Morning!

 

  • The pressure from the trade war uncertainty remained (SPX -0.58%, Nasdaq -1.04%, DAX -0.58%, Shanghai -0.95%), with especially semiconductor producers and other Huawei suppliers getting sold off in the US and Asia (Nvidia -2%, Qualcomm -3%, Sunny Optical -4.5%, Luxshare -10%, Ofilm -7%). (Over the weekend, the US tech giants began to cut off business with Huawei to comply with Washington’s ban, from Google critical software components to chipmaker shipments. Note that analysts are pretty divided about the ban: Some predict this will heavily damage Huawei and its quest for phone-making supremacy, while others point out the giant company has stockpiled enough chips and vital components to survive until it can make its own chips and even surpass Western competitors.) Oil prices advanced further (WTI 63.60, Brent 73.20 USD), helped by Trump threatening Iran after a rocket exploded near the US embassy in Baghdad (’a fight will be the official end of Iran’) but also by Saudi energy minister Khalid Al-Falih urging OPEC members to stay on course with output cuts. In this environment, the USD kept strengthening (no surprise for regular readers, EURUSD 1.1150, Great British Peso 1.2720 – Theresa May said she is poised to make a bold new offer to Parliament to pass her Brexit deal – economists around the world have spent billions of research hours on the ’rational investor’ theme instead of looking into ’the rational politician’ – , EURHUF 326.20 – this is now a game of chicken between traders and the Hungarian central bank as other regional currencies didn’t weaken, EURPLN 4.304, EURCZK 25.772).

 

  • While polar bears were sunbathing happily (despite Al Gore telling us back in 2007 that there will be no ice on the North Pole by 2013), and the EU was busy explaining the US that it can not ban Huawei because ’there is no choice in the matter, the US doesn’t offer a competing product and Ericcson and Nokia don’t nearly have the 5G building capacity of Huawei’, auch this sounds just great; in a shock victory, the Australian conservative party and Prime Minister Scott Morrison crushed the Labor party. This event should be a warning sign for mainstream journalists (altough they probably won’t be able to interpret it): It’s not just that Labor was campaigning with increased spending on climate change, sweeping emission curbs, raising taxes, grilling stock market investors, engaging with China, and flexibility on immigration (sounds familiar?), but also it was comfortably leading opinion polls for 54 polls in a row, resulting in a 2016 Brexit referendum / Hillary Clinton type of systemic surprise. (As discussed here before earlier, in the forcefully politically correct environment, polls have no meaning anymore as voters keep their opinion to themselves. These surprises will keep repeating.)

 

 

Have a nice week,

Mihály

 

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