Sep 14 2018

What is going on in Global Markets?

Trade war:

The United States of America, until Trump, wanted healthy trade linkages, mutual economic growth between itself and China.  However the current President, in his Protectionist (over globalization) approach, has literally put a gun to China’s head and negotiating on issue of bilateral trade deficit instead of a straight forward – market access. China’s closed economy riles the US President and he has no qualms in letting go of diplomacy and mudsling. While China is most affected, there are other countries too that are directly affected; emerging markets are getting spooked in the crossfire.

Crude oil price:

Why is oil price going through the roof?

Iran is one of the largest oil exporters to the world. US (Trump, again) has threatened Iran that it would pull out of 2015 agreement and will re-impose sanctions as early as November, alleging that Iran isn’t fulfilling its part of the agreement. If the sanctions were to become reality, availability of crude will be scarce and that certainly is scaring the daylights out of consumers and traders both.


A bad decision to begin with, followed by botched up negotiations and if an agreement is achieved, execution will be nothing less than a nightmarish. Why is Britain not out of EU though, Brexit was decided 2 years ago by public referendum? While the B-remain camp was sure that they would win, Brexit camp didn’t think it through – then or now. With weak leadership (from Britain) to see Brexit to closure, this could be a no-deal Brexit, crippling and leaving the country neither-here-nor-there.

Interest rates:

FED is likely to continue to increase rates despite President Trump’s opinion. Treasury yield curve is flattening and threatening to get inverted indicating an impending recession. While this may or may not be the case and even if it is, it could be long way off, one can’t afford to lose sight of this.

In a nutshell, there is a lot going on geopolitically and in financial markets and this is likely to keep the markets choppy.  Risk management gets even more critical. Wake up and smell the coffee!