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An Update -Gold Spot ,Silver Spot ,Palladium ,Platinum ,Base Metals -Anirudh Sethi
Archives of “May 2020” month
rssRussian President Putin has ordered bail out measures for Russia’s oil industry
Putin wants support for the country’s oil industry against a background of the hefty cuts in output in agreement with other of the the world’s main producers.
- Has given his government until June 15 to come up measures.
Will likely include:
- “special rates” for pipeline operator Transneft PJSC and Russian Railways JSC to charge for crude, petroleum product transport
- large oilfield servicing companies to be included on the government’s list of systemically important companies (ands thus eligible for state support)
On the horizon next week – vote in US Congress to sanction China officials over human rights abuse
The US House (lower house of the Congress) plans to vote next week on moves to impose sanctions on Chinese officials over human rights abuses against Muslim minorities
- the bill was approved by the Senate on May 14
This is in relation to the internment of more than 1 million Uighurs and members of other Muslim minority groups in the Xinjiang region of China
This is another indication of rising US/China strains. As these increase they tend to be a negative input for financial market risk assets (and FX) and supportive of safe haven alternatives. Add it the growing list, recent examples:
- China will not back down from “US quickening technology war mongering” – warn of “ample countermeasures”
- US to add 33 Chinese firms, institutions to an economic blacklist – accusation of helping China spy, links to WMDs
- US accuses China government of blocking US airlines flying to China
- US administration is suspicious of China nuclear weapon tests – may do so too
- coronavirus origin and spread
- trade
- tension over new rules from Beijing to be imposed on Hong Kong
- Taiwan
The PBOC is expected to cut interest rates, RRR in H2 to support the economy
What’s ahead from the People’s Bank of China, China’s Global Times with the heads up:
- highly likely to announce interest rate cuts or reserve requirement ratio (RRR) cuts in the second half of the year
- to help accelerate an economic recovery from the negatives induced by the COVID-19 outbreak and external uncertainties
- cuts are most likely to be made on interest rates for the standing lending facility (SLF) and RRR
- PBOC will use a variety of tools including reserve requirement ratio cuts, interest rate reductions and re-lending
- the Bank wants M2 money supply and aggregate financing to grow at notably higher rates than last year
—
GT citing Chinese experts examining the monetary policy related information in this year’s Government Work Report.
This policy is aimed at more support for liquidity, firms and the consumer. If it lifts China’s economy it should be supportive of China and China-proxy trades.
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‘Frugal 4’ European countries oppose the German/French EUR500 bn fund – propose an emergency fund instead
Last week saw Germany and France agree to support the €500bn Recovery Fund.
However, Austria, Denmark, Sweden and The Netherlands object and have instead jointly called for a temporary fund for emergency loans as an alternative.
The ‘frugal four’ say they cannot support “any instruments or measures leading to debt mutualisation nor significant increases in the EU budget”, thus they:
- oppose joint debt
- oppose direct grants
- oppose an increased EU budget
Instead, want “to provide temporary, dedicated funding through the MFF and to offer favorable loans to those who have been most severely affected by the crisis”.
—
The MFF
- is the Multiannual Financial Framework
- ie. the EU’s 7-year budget
US accuses China government of blocking US airlines flying to China
The US Transportation Department is trying to persuade China to allow the resumption of US passenger flights in.
- Reuters says the department notes that Delta and United want to resume passenger flights to China in June – but said US government talks with China had failed to produce an agreement
- The dept temporarily blocked some China flights inbound the US this week.
More detail at that link above. This does seem to be a minor sort of spat, but as I noted previously, add it to the list if issues between the US and China:
- coronavirus origin and spread
- trade
- tension over new rules from Beijing to be imposed on Hong Kong
- Taiwan
- and maybe nuclear tests soon?
US administration is suspicious of China nuclear weapon tests – may do so too
A US media report that the Trump administration has discussed conducting a US nuclear test.
Citing a senior administration official and two former officials familiar with the deliberations for the info:
- The matter came up at a meeting of senior officials representing the top national security agencies May 15, following accusations from administration officials that Russia and China are conducting low-yield nuclear tests – an assertion that has not been substantiated by publicly available evidence and that both countries have denied.
- US has not decided to conduct a test, but a senior administration official said the proposal is “very much an ongoing conversation”
More at the link here.
Another hint to issues between the US and China. Add this to the list of trade tensions, HK tensions, coronavirus blame game.
Thought For A Day
SPX 500 – Stock Believers Just Won’t Let Go of a Rally for History Books –
EXPLANATIONS OF COMMON TRADING PROBLEMS
Why Traders Naturally Cannot Follow Their Trading Plan
- The brain automatically engages “distinct mechanisms” to handle these two scenarios differently: (i) risky situation where the probabilities are known, and (ii) ambiguous situation with incomplete information where historical probabilities provide only a clue. For the latter, there will be a “uncertainty circuit” that will raise a red flag to say “more information needed”.
- This results in traders trying to do exactly what they planned while their brain fights them to find more information or to scramble in the face of a clear, but maybe only subconsciously perceived, threat.
- Just because you decided on taking a long or short trading position, your “brain on uncertainty” doesn’t change how it goes about making judgment calls in uncertain circumstances. The basic process steps through the context-belief-perception cycle because it can’t help it.
- Uncertainty means — at least to part of your neural and white matter networks — that a black bear, ready to eat all your apples (and you with them) could be just around the corner. The more uncertainty, the more you can realize how much you are relying on contextual clues in order to make sense of the situation.