Global markets: From trade wars to currency is only one step

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Over the holidays it happened as those events that were easily predictable at the end of April, and those that appeared unexpectedly, it is doubly unusual to see such a jumble of geopolitical sensations in the context of the usually quiet on the incident and the reaction of the markets in the month of may.
In a broad interview with Chinese media after the next round of trade talks in Washington on Friday, Vice-Premier of China Liu-Hye said that to achieve agreement the United States “…have to cancel all of the extra (imported) rates to set targets for the procurement of goods in China in accordance with the actual demand, and to ensure that the text of the deal was “balanced” to ensure “dignity” of both countries”. Agree, this is a strong statement indicating that “honeymoon” period is over.
Trade war trump with China – or rather, a new stage in which, it is clear that the principle goes to the principle, markets do not promise anything good – at least, for the reason that they are inherently inflationary. Rates trump, contrary exuded them on Twitter bravado (“trade war easy to win, and uncooperative China in the form of tariffs in any case “will pay to” U.S. Treasury”), will inevitably increase the price of goods in the United States. Inflation of the price tags, not supported by a parallel inflation of income is the so-called “bad” inflation.
It creates the false premise that the fed allegedly used the improving data as an excuse to continue raising interest rates. Accordingly, more expensive loans. The middle class in the U.S. will once again lose out: on the one hand, valuing the resource the loans, on the other – growing retail inflation with stagnant wages. Event horizon about a year, that is, just before the presidential election in the United States. Drama will be mnogovekovoe.
One of the most evident consequences of the radicalization of trade wars is that China is likely to stop buying soybeans in the United States. However, soybeans in the world, China is it cheaper to buy in the region. With regard to exchange-traded soybeans in Chicago, then she will inevitably experience price collapse – down to $550-600 per bushel before the end of the year.
Another sensational topic from a number of unexpected conversations about the future inclusion of Russia and the Central Bank in the U.S. the list of countries and financial regulators: seen in currency manipulation. Indeed, whenever a Central Bank buys a currency exchange for the Ministry of Finance and thus artificially weakening the rouble – it could be considered as an example of manipulation. However, the Forex markets by themselves are the least controlled markets in the world. And there is a much more serious problem that it is impossible to outline as part of the exchange for the review.
Thus, answering the perennial question of Russian investors – in this context, it will be with the ruble – it is necessary to be ready that the American Themis will cling to it immediately as soon as it is fixed by law, and may be followed by some sanctions, which, it may be presumed, will affect our financial sector. Unachievable quick vote in Congress on any issues of inter – party agenda- relevant, but a completely independent issue.
Rouble interventions of the Central Bank – the thing is known and undisputed. They cannot be denied. At the same time attributing the surplus to the factors pointing in favor of the currency manipulators – an extremely dubious argument that, in theory, can and should be challenged. Negative trade balance the U.S. – to a much greater extent is a property of the US economy and the consequence of excessively strengthened the us dollar.
In a purely practical context of the totality of all these “noisy” factors, the ruble remains closed within the trading range 65-66 rubles per dollar, where it is visually moved from the channel 64 and 65 rubles to the dollar, in which he was a large part of April. As of 12:15 Moscow time, the domestic currency is trading at 65,30, slightly, by 0.3%, strengthened with the opening to “American” and zafiksirovany at the level of 73.33 in tandem with the Euro. A conglomeration of diverse factors news sense confusing speculators and clearly not allow them to impose on the market any clear trend game.
Vladimir Rojankovski,
“International financial center”