Market update: Oil prices plunge, stocks drop as more data points towards global slowdown

by Mihály Tatár

Good Morning!

• Amid all the trade war news, the last thing investors wanted to hear was weak economic data – a still contracting German manufacturing with business confidence falling to four-year low, this time coupled with still growing, but sharply slowing US manufacturing and services sectors (SPX -1.19%, Nasdaq -1.58%, DAX -1.78%, Nikkei -0.43%, with bond yield dropping further, German 10Y yield -0.12%, US 10Y yield 2.32%). Chinese stocks bounced a bit later (Shanghai +0.10%), as Trump allowed Huawei could be part of a trade pact, but just to be sure, it was leaked that Washington is floating the idea that tariffs should be imposed on goods from countries which use artifically undervalued currencies. (The Yuan of course is the main target, but note that there is also a currency union where negative interest rates are working so well that it’s exchange rate touched 1.11 yesterday against the Dollar, despite ’successfully leaving the crisis behind’ several times in the last few years.) With an immediate showdown with Iran off the table  – Trump poured cold water even on the Pentagon proposal to send more troops to the Middle East, and there are rumours of tentative talks going  – there was nothing to shield oil prices from the slowdown theme, and they just plunged (WTI 58.50, Brent 68.50 USD), trading again together with other commodities (Copper -10% since the US-China negotiations crashed). The Great British Peso barely reacted to the news that May ’is set to announce a timetable for her resignation’ (GBP 1.2660 – imagine this blabla from Margaret Thatcher. Why doesn’t she just resign? By now even the New York Times (!) is writing about ’people feeling betrayed, abandoned, even hated and by the political class and the media’ in the UK, as Farage’s Brexit party is crushing its opponents. No surprise here for regular readers – if I had received only 1 Dollar for each time a well-informed visitor here called Farage a clown, I could now buy out Zuckerberg’s stake in Facebook). Once mighty Deutsche Bank crashed to a fresh record low (6.45 euros, if anyone remembers, it used to trade at 80 euros before the crisis), even as Chairman Paul Achleitner assured shareholders that he is ready for tough cutbacks and received 75% vote support. (As the Vietnam war joke goes, ’we had to destroy the village in order to save it.’)

• Note that while the mainstream media is hyperventillating whenever the right talks about radical progressives and hard leftists taking over the Democrat party (compared to these guys, Bill Clinton feels like a Texan Republican with mustache), polls actually show that this is indeed happening, and many of the Democrat voters do follow them: For example, 43% of allAmericans currently think ’some kind of socialism’ would be good for the US, this was 18% in 1942), and 67% of Democrat voters agreed with Ocasio-Cortez’s claim that ’the world only has 12 years to fight climate change’.   (Personally, while I am also a big fan of clean technology, I am ready to buy your house at a 90% discount if you believe this. What can you lose?)

Have a nice day,

Mihály

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