Market update: Retail sales data disappoints to the topside, Greens rise in Germany, oil tanker insurance costs surge

17 Jun

by Mihály Tatár

 

Good Morning!

 

  • Investors were clearly unsure how to proceed, with Washington actually saying very little about Iran other than accusing it for the tanker attacks and as US retail sales for May were surprisingly strong, putting the ’things are so bad, the Fed will intervene NOW’ narrative in danger (SPX -0.16%, Nasdaq -0.52%, DAX -0.60%, Nikkei +0.13%, Shanghai -0.22%, EURUSD dropping to 1.12, Gold sliding from 1358 to 1341 USD, WTI 52.60, Brent 62.20 USD – Saudi energy minister Khalid Al-Falih talked confidently about extending production cuts at the next OPEC meeting, while Middle East oil tanker insurance costs surged non-stop). The attention is turning towards this week’s Fed meeting (will they cut? if they don’t, will they hint a rate cut for the upcoming meetings, or they will paint an upbeat picture of the US economy?) and the G20 meeting at the end of the month (will China come back to the trade talks with concessions, or the trade war continues into the autumn?). (Note President Xi had a pretty rough June – China’s economy is struggling with both exports and imports dropping and the mismanagement of the large-scale Hong Kong protests also turned into a headache). After the large moves, regional currency traders took some profits (EURHUF 322.40, EURPLN 4.257, EURCZK 25.57), but one could see how all ECB tightening hopes were given up on that the yield of the Spanish 10Y bonds plunged to historical record low (0.50% – ups, would you give Madrid, or anyone, for that matter, money at this rate for ten years?).

 

  • In another day of the new normal, while the Netherlands fiercly debated whether model girls shoud be banned at the Formula 1 races (out of political correctness, you know – why not ban boy rock bands, now that we are at it); Berlin watched with disbelief that the Greens extended their lead over Merkel’s party (Greens 27%, CDU 25%, SPD 12% – the new Left is basically pro-climate environmentalism now, which already destroyed the SPD, and remember, contrary to its historic origins, CDU is also a left-leaning party, so watch out for embattled Merkel suddenly coming up with something dramatic regarding the green agenda); Yemeni Houthis targeted Saudi civilian airports with drone attacks and US drones with surface-to-air missiles; and Trump got into heated argument with the New York Times whether the CIA is planting a secret code to the Russian power infrastructure. (Let’s just hope the European cyber defense agencies are in a better shape than the armies.)

 

 

Have a nice week,

Mihály

 

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