So what? It’s even good – the government has been shut down for almost three weeks, there is no data on the state of the economy, the Fed is entering a “silence period” before its next meeting, as required by law, and in the arena, under the spotlight, in all his unique glory, is Donald Trump, whose tweets and statements move markets with fluctuations amounting to hundreds of billions of dollars. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
Today, the US President says one thing, tomorrow another – it seems that markets should already be accustomed to the new style of American politics, but no – traders are still rushing to sell and buy in response to the president’s statements. He said that Xi is bad and China is an enemy – we sell; he changed his mind, promising that everything will be fine – we buy; he admitted that the countries are in a state of trade war – we are worried again, and even more nervous about what will be said tomorrow, the day after tomorrow, and in the next three-something years of the presidential term.
Unlike the volatile Trump, China is not accustomed to humiliation and retreat: This week, China imposed sanctions on the American subsidiaries of South Korean shipping giant Hanwha Ocean Co, prohibiting people or organizations in China from conducting transactions with the company’s American subsidiaries, and threatened that it would respond accordingly in the future. Earlier it was reported that Beijing and Washington were supposedly keeping the lines of communication open, but the actions of the Chinese indicate that the principle of “an eye for an eye” still prevails.But the changing fortunes and market fluctuations are not a problem for everyone. Wall Street is doing well, as evidenced by strong quarterly results and fairly confident forecasts for the future from the largest US banks that reported this week.
But volatile markets and fluctuating fortunes are not a problem for everyone. Wall Street is doing well, as evidenced by strong quarterly results and fairly confident forecasts for the future from the largest US banks that reported this week.
For regional banks, however, last Thursday proved to be very difficult. Suddenly, after the bankruptcies of Tricolor and First Brands, everyone saw that the banks had problems. And while for JP Morgan, writing off $170 million in unrecovered loans from Tricolor is bad but tolerable, for regional banks such failures are a path to bankruptcy. And there may be many companies that will be unable to repay and service borrowed money in the current environment. As JP Morgan’s CEO figuratively said, “If one cockroach gets in (meaning Tricolor), others will follow.”
Although, what banks are there when there is AI and the “magic circle” that includes OpenAI, Nvidia, AMD, Microsoft, and several smaller companies, where sellers give their customers money to buy their products, inflating the bubble. This week, Broadcom joined the club by signing an agreement with OpenAI to jointly create 10 GW AI accelerators, after which its shares rose in price by almost 10%. Let me remind you that prior to this, OpenAI had signed agreements with Oracle and AMD and received investment from Nvidia. A real trillion-dollar whirlwind to the delight of optimists who believe that markets will grow forever.
And how can we not mention gold, which is shining so brightly that it’s almost blinding—up 63% since the beginning of the year. The result is fantastic, but a little scary, because investors aren’t buying the yellow metal because life is so good. Unless the whole world has decided to switch from metal-ceramic to gold teeth at the same time?
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
