Market update: Fresh record highs in the US, Chinese data deteriorates further, Trump divides

by Mihály Tatár

Good Morning!

• The ’Fed-is-easing’ rally continued (SPX +0.46%, Nasdaq +0.59% – both fresh record highs of course, but remember, ’the US has shot itself in the foot’ with the trade war, DAX -0.07%, Nikkei +0.20%, Shanghai +0.87%), and the Dollar remained under pressure (EURUSD 1.1270 – hey, breaking news, Merkel didn’t tremor while walking 500 meters on Bastille Day!, USDCAD 1.30, USDHUF 289, USDHRK 6.5580). Note that the world-peace sentiment was called off again, however, with the Chinese data, which showed the weakest growth since quarterly data began in 1992 (6.2% Y/Y – this couples with the falling exports data from the last week. Don’t forget that China needs to create 20,000,000 million jobs each year – this is a gospel for the party and a barometer for the well-being of the country. That’s why some analysts noted that this is actually good news: A strong incentive for a trade deal. The other good news is that data will be better next quarter. It just will be, because it will be.) Oil traders seemed to be wary about following the stock market (WTI 60, Brent 66.60 USD), especially with such boring Iran news as France, UK and Germany calling on Iran ’to act responsibly’,  and investors were instead watching in bewilderment Bitcoin dropping like a stone after the Powell-Trump anti-digital money comments (9900 USD, that’s -15%, hopefully not that many savings were in it this time), and Turkish President Erdogan announcing significantly lower interest rates to reduce inflation to one digit.

• While the fresh wave of sexual attacks in Germany forced the European media to display all the symptoms of Dalrock’s Law (Dalrock’s Law: ’The more obvious the fact one is in denial of, the more ridiculous the counterargument will be’), the US media freaked out after Trump critized a group of progressive Democrat congresswomen via Twitter, essentially telling them that if they hate the US so much, they should travel back to the catastrophic and corrupt countries they came from. (He didn’t mention them them by name, but evidently he meant Alexandria Ocasio-Cortez, Rashida Tlaib of Michigan and Ilhan Omar. Because they are all women of colour, the left-leaning media and Democrats reflexively raged that the President just confirmed he was a racist white supremacist. I let you decide about this, note however, that this attack was a very calculated political move aimed at grabbing the center:  First of all, rhetorically it forces Democrats to prove that they do not hate the US and its history (this will be hard in itself, given that progressives have to sound revolutionary by definition, and given the voice of discontent they are using), secondly, both in the US and Canada this hits a nerve: Many people are fed up with the image of the ungrateful and complaining immigrant, who in the television blames racism for his or her low-paying job, usually using extremely poor English or French. It will be interesting to see where the Democrat voters themselves will be leaning towards after this (more to the minority progressives? More to the old Clintonian left?), and of course you can give the narrative, that the migration theme is not that important anymore, a goodbye.

Have a nice week,

Mihály

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