Sino American Trade talks buoy US markets

Daily Analysis - 16/07/2019

US Treasury Sec Mnuchin and Trade Rep Lighthizer may go to Beijing

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Recent developments on the trade war front have the US delegation considering going to Beijing to perhaps clinch a deal. It is possible; it is however less than likely. US Stock traders were surely encouraged. Europe is mixed and the perennially downbeat Tokyo traders were downbeat. The reason for lack of wall-to-wall euphoria that the cloud of pre WWI beggar thy neighbor policies might end is because they are not likely to end anytime soon. That is because the tariffs are a symptom and not a cause of the frictions between the Peoples Republic and Uncle Sam’s Republic. They are a symptom of a newly ascendant power grappling with the prevailing dominant power for supremacy. Neither of the contenders for domination is behaving constructively and so great uncertainty prevails around the world and economies are starting to slow in the face of the struggle.

Barry recedes, so does crude price


WTI broke below $60 today in what appears to be relief at the end of hurricane Barry’s moisture laden trip through the Gulf of Mexico where 30% of US crude is refined and lord knows how much of its petrochemical industry works. When hurricane Harvey blew through, refining and chemical supplies were severely curtailed for months raising prices across the boards. A word of caution: The Persian Gulf is a tinderbox larded with warships, B52 bombers, enough firepower to drive the price of crude to 70 is no time should a spark ignite any sort of conflagration. The US has set the trap for the Iranians. The Mullahs are too clever to fall into it. They may not however be able to avoid doing so should their calculations met the unexpected.

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Ruble weakens


As crude price falls, so goes the value of the Ruble, as energy is the only other export product that Russia produces with any world demand, besides armaments. Anybody wearing any Russian timepieces on their wrists? Ever seen anybody sport anything from Russia that isn’t a hydrocarbon or an armament? USDRUB rose 6/10 of a percent today. Look for some announcements of new S 400 missile sales by the Kremlin to bolster the apparently cost free sale and integration of this system into the arsenal of a NATO ally.

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USDZAR Down


As light gets shed further into the venal Zuma regime’s wholesale pillaging of the South African economy, President Ramaphosa’s stock rises because it is clear that he is challenging the robber barons of his own party and going to alter the kleptocratic course set by Boss Zuma. USDZAR fell 3.07% since the hearings began. That is a gain in strength of over 3% in a matter of days.

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