Financial markets are getting over-politicized
Some people conduct serious fundamental researches, others apply technical analysis, but some people just follow Donald Trump’s tweets and get quite a profit from it. It turned out that the 45th president of the USA made the financial markets too politicized. Trade wars are clouding the central banks’ monetary policies, oil price is going where the White House’s host tells, and news trading is given a fresh coat of paint. So, Trump’s followers can just give a guilty smile, “sorry, boy, for taking your money. It looked just like mine.”
Investors remembered the story of a month ago, when the report on the US labour market in June was released. At that time, one hour before the release, the president, who had access to the official statistics, said that the Americans will be happy with the employment data. And there it was, the unemployment rate hit its lowest level since 2000. Who would have thought! Dollar and Treasury yield surged exactly on the US president’s comments. Why wait, if everything is already clear? And Trump can well do the same trick as an encore. He must be annoyed with China’s willingness to revenge for the import tariffs worth $34 bn. We all know that only three groups of people can tell the truth: children, drunk and angry ones.
The trade war began casually. China started a play of chicken calling Washington a bully that has started the most unprecedented trade carnage in the history. It looks like it has to equally retaliate but hasn’t yet determined the exact measures. China is challenged by new tariffs on almost all its export into the USA and has to do something. Finally, if you don’t get use, you will be used by someone else. In fact, all this story looks like not only a game of poker with its rising bets, but like a family quarrel as well: a beating man is falling in love; a killing man fell out of love.
It is remarkable that each of the opposing parties says different dates of the war start. China claims that the USA launched the most violent war on record on July 6. Washington is convinced that China has been making the war for already two decades, and only now there is someone, who dares to protest. Well, each is right in their own way… In my way, they aren’t.
No less exciting is the situation in the oil market. Donald Trump is going to meet two completely divergent objectives: to deprive Iran of its oil export and to make Brent value go down. Doesn’t it matter that the reduction of the OPEC largest producer’s oil output will result in the deficit and the price increase? But he needs to settle down the matter somehow, doesn’t he?! And rub his hands smugly as well. The way is clear - to assign all responsibility to Saudi Arabia; as, to enjoy your work, you need… to delegate it to someone else. So, Ar Riyadh has to do a Sisyphean task, to persuade other OPEC members to increase the production that will still be reduced soon. People say, everybody knows Sisyphus, but those, who fetched the stone to the mountain top, remained unknown. We could guess who’s behind this.
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