30 Sep AS THE WORM TURNS
As a student of politics I don’t think I am off base to write all have a confirmation bias, a bias that can easily be validated by today’s media and blogosphere.
I have also held many key leadership positions including serving on several board of directors of both public and private financial companies. At times the private conversations and debates of these meeting could become “spirited.” If these conversations were made public, the response/result could be detrimental to the organization.
I do not know what is worse…ignorance or arrogance. One cannot deny that there is an economic nationalist movement occurring in the world’s industrialized democracies, the genesis of such is wealth inequality and the unchecked power of unelected bureaucrats dictating harsh edicts, stating that if we don’t agree with their views you are boorish and unintelligent.
In many regards there is a gun less revolution occurring between the elitists—defined as government, media and big business–and the commoner.
Private conversations are now made public, conversations that were intended never to see the light of day. Leaders making extreme vitriol laced statements. To date this revolution has not impacted the markets. However are the markets nearing a breaking point where politics will no longer be viewed as an entertaining freak show?
I don’t know. But what I do know, no administration, leadership body is entirely virtuous. At some time the accusers have done the same thing as the accused and vice versa. It is human nature.
Enough of the political commentary, Friday’s market activity was again dictated by trade as unconfirmed reports were suggesting the Administration may adopt part of Senator Rubio’s plan to limit US investors’ portfolio flows into China in a move that would have repercussions for billions of dollars in investment pegged to major indexes.
Among the options considered is delisting Chinese companies from US stock exchanges and limiting Americans exposure to the Chinese market through government pension funds.
In my view such a proposal is huge in so many dynamics. A US crackdown on capital flows would expose a new pressure point in the economic dispute and could cause disruption well beyond the hundreds of billion in tariffs the two sides have levied against each other.
My immediate emotional and irrational reaction is how the Chinese will react with regards to their massive $1.1 trillion Treasury portfolio. Treasuries did not sell off on the headlines thus suggesting that such is not an immediate concern.
Equities led by the technologies, which were already Friday’s laggards because of a profit shortfall, ended lower between 0.25% and 1.25%. Treasuries were essentially unchanged.
This week’s economic calendar is robust. Data released includes several manufacturing indices including the top tier ISM Manufacturing Index, the ISM Non-Manufacturing Index and various employment surveys including the BLS labor report. How will such be interpreted? Will it confirm or deny the emerging expansionary narrative?
Last night the foreign markets were mixed. London was down 0.26%, Paris up 0.02% and Frankfurt down 0.04%. China was down 0.92%, Japan down 0.56% and Hang Sang up 0.53%.
The Dow should open mixed with all struggled to interpret the latest developments in trade as well as the domestic political situation where some on both sides of the aisle are stating possible dangers in rushing the process. The 10-year is off 4/32 to yield 1.70%.