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The future of Europe in question: APAC brief 27 May
in Market News
A group blog by IG in General
Posted
Regarding UK European vote, new prime minister and Halloween. Brexit party is a reworking of UKIP which took 25% of the vote back in 2014 and less than 2% 2019, but without the obvious racist bias. Tory vote disintegrated due to inability to get a deal, which still looks nigh on impossible as cooperation and compromise are profanity and anathema to the 2 principle parties. Brexit party wants a hard Brexit (WTO rules) and has no creditable plan for the future barring bland paper promises and rhetoric. Tory party see the success of Brexit party and want some of that populist vote so will vere toward the cliff that is hard Brexit. So it will come down to a binary choice come Halloween: Brexit without a deal (10% tariffs and all) or Revoke article 50. The May deal negotiated with the EU being dead as a Dodo. There is still time for an election and a referendum (the results of which will be disputed by whomever loses). In short; more chaos, division and uncertainty.
Then we look at the shy and reticent President Trump and witness his weakness for tariffs again. Not content with 25% on China he is now threatening Mexico with escalating tariffs which will please all of those vehicle manufacturers no end, having just completed the new NAFTA, well more NATA without the "free". His penchant for tariffs knows no bounds. Blaming immigration or foreigners for ones ills is classic psychology. He wants America to go back to the 50's of his youth it would seem, even if most the youth of the 21st century have no interest in going back to a time they never knew. Old man thinking.
Combine that with some old fashioned Gun Ship diplomacy in the strait of Hormuz and we have the potential for genuine uncertainty/war in the middle east again. The markets will love that.
What is the correct strategy? Considering the fundamentals of the global economy are in pretty good shape were it not for inconveniences such as trade wars, unnecessary tariffs and potential oil wars in the gulf and the world's most powerful leaders being complete narcissists. Strategy#1: buy low, sell high. How low will the Dow go? That depends on how determined administrations are to appear completely **** minded, atm they are very determined...