Good Faith – Bad Faith, Risk on – Risk Off
Major events of last week:
- USA-EU-Turkey-Russia: US troops left the north part of Syria and effectively allowed Turkish forces to invade in the region that was controlled by the Kurds. Trump published medieval stylish tweets. Republicans are hypocritically seeking to impose sanctions on Turkey. TRY was getting crashed since Monday.
- India-China: Xi met Mondi, despite the Chinese disapproval of the Indian stance on Kashmir.
- US-China: President Trump reached a “phase one deal” with Liu He to be put on paper within the first half of November (Possibly before the APEC Chile summit). The extra tariffs that were supposed to start being imposed on October 15, were postponed. No decision has been made about the extra tariffs hitting in December. Agricultural purchases will increase from $8bn to $40bn (China used to import $16bn of US agriculture, before the trade war started). Technology transfers will be included on “phase two”. The deal does not include a provision for Huawei, Hikvision and SenceTime. The enforcement part of the deal, is close to be agreed. The deal will either have two or three phases.
Meanwhile the list of US companies that decide to step back to the will of China, is getting longer. Following Google, Facebook and Apple, the NBA apologized for the Houston Rockets tweet in support of Hong Kong protests.
- UK: Boris Johnson meeting with Leo Varadkar, the Prime Minister of Ireland, signaled that there could be a breakthrough in Brexit negotiations. The proposal asks for an ongoing consent from the North Ireland’s politicians. The prospect of Brexit arrangements being discussed to infinity, at the same way that the US debt ceiling is being discussed, is getting higher. (This has been stated in issue 58 and 78 ). GBP is strengthening.
- EU: The size of the Budgetary Instrument for Convergence and Competitiveness that was envisioned by Emmanuel Macron, could be as low as €17bn project over 7 years.
- USA-EU tariffs: No development in the tariffs front.
- US-North Korea: The negotiations broke down.
- Protests in Hong Kong continue. The UN called for an independent research on Hong Kong violence. The death toll of the protests in Bagdad,surpassed 100 people, and the Prime Minister of Iraq reshuffled his cabinet.
- Impeachment drama: Following the $500milion debt capital to Trump’s son in law, the Kavanaugh case over sexual accusations, the Mueller report on the Russian interference at the Presidential elections, this time the case of Trump using diplomacy for his personal gain has resulted in impeachment inquiry. The White House announced that it would not cooperate.
It has nothing to do with the actual impeachment case, but Trump has gone way to far. “China wants to make a deal, but do I?”… “that I, in my great and unmatched wisdom” are this week’s embarrassing tweets.
- Cryptos: Total market cap finds support at $224bn (+3% w/w, -42% from the 2019 high, -73% from the all time high of January 2018).
Major events of next week:
- Boris Johnson believes that he could break a deal within the EU summit on Thursday and Friday. Given that he fails, he is obliged to ask for an extension by Saturday. The Queen delivers her speech on Monday and the UK Parliament re-opens.
- First corporate bond issuance in Greece, after the recent government bills with negative yields
- Canadian General Elections on next Monday, October 21.