Perhaps not to be outdone by Elizabeth Warren, after a report came out suggesting that China could perhaps have a tougher time dealing with Warren than Trump with respect to the US-China trade negotiation, POTUS administration proceeded with a new provocative (he should perhaps be better known as PIC - provocateur in chief) action against China, blacklisting a slew of Chinese companies due to alleged human rights violations against Muslim minorities in China’s far-western region of Xinjiang. Seriously, since when does the Trump administration as concerned over Muslim minority rights? If somebody wants to pick a fight, he has a range of issues to do so. But you could say this wasn't the best of times to do that on the eve of your trade negotiation. Didnt I say this man has to go? Ás the impeachment enquiry steps up a gear with a second whistleblower appearing, the American people are gradually warming up to the idea that the man has to go - a new NBC/WSJ poll revealed that the share of Americans who say Congress should let POTUS complete his term has now dipped to 39% from 50% in July.
Market choppiness - caused almost by BJ and the Donald on both sides of the Atlantic - is here to stay in October as I highlighted in my recent post on October risk issues. The S&P 500 is now back to being another slide of the same magnitude as yesterday to test its recent low around 2850 or just 43 points away. Break that and we would be in some trouble.
We should not just be focused on end results on these risks - US-China trade war/ Brexit / HK/ impeachment - like when would each end or be resolved. I suggested previously and continue to believe that unfortunately these issues would be protracted. On the US-China trade war, following POTUS blacklisting, China indicated that they would shorten their scheduled trade negotiation visit this Thursday, which indicates that it would be unlikely for a full resolution. On Brexit, following a call to Merkel from BJ, Downing Street declared that "An EU-UK agreement is "essentially impossible not just now but ever" . The EU is not going to bend their backs for BJ when Theresa May got the best she could get, and he can''t be a better negotiator because the EU does not like him. What this means now is that there a strong likelihood the UK will go to the polls in November and get a further Brexit deadline extension and perhaps a second referendum. On HK, I have covered this in my post yesterday which its CEO Carrie Lam warned of possible China intervention as a last resort and which I opined that that warning would not deter the democracy movement, and that this escalation could be a potential shocker for Asian and global markets in late October. On impeachment, this is getting messier by the day for POTUS as the drama unfolds. So what is the common factor in all these risks/issues? UNCERTAINTY and uncertainty invariably negatively impacts capital decisions/investments. trade and consumption - in other words, the global economy that is slowly sinking into recession is basically held hostage by these political clowns. The protracted nature of these risks amplifies the uncertainty and behavioural economics is very powerful , so interest rates and tax cuts would do little to stimulate the economy as they previously did.
