August 9, 2020
AliExpress WW
Rabobank: "Suddenly, Lots Of Things Might Just Matter All At Once"

Rabobank: “Suddenly, Lots Of Things Might Just Matter All At Once”

AliExpress WW

Submitted by Michael Every of Rabobank

AliExpress WW

Nothing matters. We (basically) know all this. Events are coming and events are leaving, but markets are growing independently. But suddenly, many things can make a difference right away. And the markets actually went down!

US presidential candidate Biden, who is far ahead in the polls, overtook President Trump on populist bets with a Build Back Better plan and $ 700 billion Buy American promise to create 5 million new jobs in the industry; that Peter Navarro’s suggestion of the same is gathering dust on the White House table. Biden also says that he supports the unification and collective bargaining.

If Trump does not come up with a new plan, he will lose the #MAGA position for someone who has dedicated his career to building the neoliberal consensus that Trump won. I said Trump will win in 2016 because he said the economy stank: now the economy is bigger than it stinks – yesterday the number of applications for unemployment benefits was still about 1.3 million – his message is that everything great again. As such polls and news show that he seems to be losing both billionaires and working-class supporters at the same time, which is justified.

Biden also condemned that “Throughout this crisis, Donald Trump almost single-handedly focused on the stock market, Dow, NASDAQ, not you, not your families.“How dare you, sir! More cheeky Biden proposed raising corporate tax rate and that for the richest AmericansHow very very dare you sir! Forget the overthrow of George Washington: this is a real revolution for the markets. Do you need to lower taxes in the stock market? Who would leave this to raise markets higher? How else can the economy work? Of course, to emphasize again, this is a man who has dedicated his career to the formation of neoliberal consensus. Someone wonders how Biden foresees that the Fed will act under his control: will he still allow them to pay special attention to Dow and NASDAQ, or does he need their support on the fiscal front for real investments? It is not clear.

Back to things that suddenly matter. The White House has imposed sanctions on four Chinese citizens for Uighur human rights violations, including the head of Xinjiang province, which is a member of the 25-member National PolitburoThis is more like archery, because first of all it means that sanctions mean that they and their families cannot enter the United States. However, this shows that sanctions may be.

Indeed, on this front –and has great potential– Reuters reports that Chinese banks in Hong Konggetting ready to lose access to the dollar“If the United States imposes the most stringent sanctions on them and limits access to the dollar. What has been foolishly rejected as a nuclear option that no one has ever used, now sees the same people rush to build bomb shelters. Several large foreign banks are also so deeply entangled in a special autonomous region that they are sweating. The FT also reports that foreign banks are examining their customer lists to determine if they will be affected if such measures take effect. Indeed, all banks are torn between the American sanctions law, which requires global compliance, and the new Hong Kong national security law, which requires the same thing – but in opposite directions.

Certainly split atmosphere. Australia had just offered asylum to 10,000 Hong Kongs in the country and followed Canada to break off its extradition treaty, the Australian Prime Minister even said that he would assist firms wishing to relocate operations and their Down Under staff. At the same time, Italy followed France to leave Huawei for 5G – leaving only mercantilist Germany, sweating profusely. Even Bloomberg says:New World Order for Coronavirus Ear“, Speaking of Potsdam and Yalta and the redrawn geopolitical map of the world.

Linking these topics is key news, still so abstract to most people as the US sanctions were a year ago that Iran signed 25-year cooperation agreement with China coordination of trade, infrastructure, energy and defense. This means that China will buy huge volumes of Iranian oil – in what currency, given that Iran cannot use the US dollar? And if the UN arms embargo collapses, China will sell huge volumes of arms to Iran – in what currency? (Russia, of course, too.) Last year, it was even assumed that Chinese troops could be deployed in Iran.

Are the US going to watch its collapse around Iran (and Russia, … and China)? Or is it going to push away? I don’t have that answer, and Trump or Biden probably don’t have one either, but he’s going to really important for markets, as this can lead to all in. And this is a decision that should be made pretty soon.

Meanwhile, there are more ordinary stories that also matter, but which are also associated with this large picture. China may expect the US to open sensor paper in Hong Kong, and the US can expect China to open sensor paper over Iran, but China seems to already want to stop the demonstration of fireworks stocksOn Monday, stocks rose nearly 6% as authorities blessed the last iteration of the bubble. Five days later, with a capitalization of 1 trillion US dollars, as well as investor headlines “I can’t lose,” Chinese media advise people to calm down, and state pension funds make a profit. Is that all? Did the bubble end even before the grandmothers jumped to help millennial merchants? Or is it a pause to refresh? Let’s ask the eternal Chinese bull Shuli Ren of Bloomberg, who argues “While the 2015 rally was designed by the central bank, which began a cycle of cutting rates in November last year, this round of shopping frenzy is a game of ambitious technical infrastructure expansion in Beijing in the amount of $ 1.4 trillion.

In fact, this time she claims that not stimulating the NBK stimulates the market, but easing the fiscal policy … into another Chinese mega-project, which means an inevitable clash with the United States … … and where the NBK still support budget spending . In other words, this is not a low-rate artificial bull market; it is not an artificial bull market QE; This is the artificial bull market MMT, based on Beijing’s latest “build and they will come” mantra. Joe Biden could approve if it were his plan; it is strange that trump doesn’t seem.

So again, nothing matters – yuck! (?) MMT to the rescue? Hardly.

Do not forget about the geopolitical plans for crossing the ambitions of the United States and China regarding the MMT – and all those who are in the middle.


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