While the Yellow Peril adds to his collection of hypocrisy, European stocks rose on hope, while US and Asian stocks fell on reality.
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Contents Click on the links below to get to the stuff you really really want. USA – More awful economic data; Trump trying to curtail media freedoms; Stocks nudge down (#USA) UK – Stocks up on lockdown release optimism; Bank of England policymaker gives stark warning; No Brexit extension (#UK) Continental Europe – EU announces financial sticking plaster; German economy set to shrink 6.6%; Italian stocks lead gains (#Europe) Elsewhere – US-China spat pulls stocks down (#Elsewhere) WTF – Don’t make ’em like they used to (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
The mood worsened as the day wore on yesterday. This left US stocks heading downwards after European markets had closed. Investors had managed to stay positive despite some more awful economic data relating to jobless numbers, property sales and economic contraction. But the big blonde worry was what tipped sentiment over the edge.
Trump was set to announce more sanctions against his arch enemy, the media (not the Chinese, they refer to him as the “yellow peril”). He’s in the process of trying to manipulate what social media platforms can and can’t say. His primary target is Twitter, but if he takes on one, he takes them all on. Meanwhile, as the ironies pile on top of each other under his supervision, he is setting up more sanctions against China following its latest (and entirely inevitable) moves to silence critics in Hong Kong.
Finally, the piling up of negative data and worrying politics pushed investors to sell stuff as they didn’t like the look of the near future. That left the S&P 500 0.2% lower while the tech-heavy Nasdaq Composite dropped by 0.5%.
There was a mild move by investors into bonds, but nothing spectacular. Bond prices and yields have largely stabilised.
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UK
Investors were in optimistic mood in the UK where the FTSE 100 and FTSE 250 both closed around 1.1% higher. This time it was the turn of healthcare and utilities stocks to lead gains while financial and oil & gas companies posted losses.
Investors’ focus must have been the stimulus package being touted by the European Union and hopes that the lifting of lockdown measures would work without trouble. Had they been looking or listening at anything else, they’d have cause for concern.
Firstly, the Bank of England’s chief policymaker, Michael Saunders, warned that the UK economy would take two- to three-years to recover from the “searing” experience of Covid-19. Secondly, the UK’s chief Brexit negotiator, David Frost, told a House of Lords committee that the government is “not going to ask for an extension and if the EU asks for one, we will not agree to that”. So, after winning a massive majority and affording himself lots of time to negotiate a decent outcome, Bojo and co are banking on getting a fab deal to replace a huge swathe of trade deals in six months. The deal negotiated with Japan and the EU took five years. Hey ho.
Bond investors appeared largely unmoved. The demand for and price of 10-year Gilts (UK government bonds) shuffled about leaving yields around the 0.20% level.
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Continental Europe
The Continent offered some more interesting fare to tuck our financial incisors into. The European Union announced a €750 billion recovery plan. If you divide that by the number of EU member states (27), you end up with an average of €27 billion per country. Let’s assume that you’re only including countries that are both using the euro as their currency and which need the money and you have, say, 10 countries. That’s €75 billion per country. Contrast that with the £330 billion that the UK government pledged fairly early on and the fact that Italy has more than €2 trillion of debt and you can see why everyone adopted the French response to everything by sticking out the lower lip, half-closing the eyes and shrugging.
Meanwhile, the German economy (the place from which the lion’s share of the EU’s recovery plan might end up coming) is set to shrink by around 6.6% according to expectations recorded in the latest Ifo Institute survey.
But who cares? The French have entered phase two of their lockdown easing programme. This involved matching a fish dish with some soave while eyeing up someone else’s spouse.
Investors responded positively to the continued easing of lockdown measures and to the sticking plaster that the EU came up with, so up went stocks. The German and French national stock indices closed 1.1% and 1.8% higher, while Italy’s MIB added 2.5% as folk there eyed up the recovery package in much the same way Berlusconi would an underage nightclub dancer.
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Elsewhere
The US-China situation was dominating the mood across the Asia Pacific markets this morning. Stocks in Australia, Japan, South Korea, Hong Kong and India are all down, albeit by fairly modest levels. Folk are waiting to hear what comes next from Tweedledum and TweedleXi. My guess is that Chinese long-term thinking will ultimately win out, which will mean that Hong Kong will be subsumed into the Beijing tyranny and the US will, sooner or later, focus back on jobs and trade.
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WTF (What’s The Fact?)
Don’t make ’em like they used to
If you’re bored and in need of some visual stimulus, here are some classic TV gems from days of yore that, for some reason, haven’t been remade (at least not for family viewing):
You can start with a nice bowl of “Brains faggots”. (Don’t admit that you’re old enough to remember the advert). If you’re on a diet, you could shun the faggots and opt instead for the slimmers’ food substitute, “Aids”. Once you’ve eaten, you can settle down in from of, “Fanny by Gaslight”, a BBC TV series that aired in 1981.
You might want to open the windows.
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – Click it. I dare you.
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———————————————————— IMPORTANT This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you are too stupid to recognise the devil’s ear wax when you see it, then you’re on your own.
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