Morning, a long break saw no commentary for a few days due to the Eid Holidays. So what’s been happening out there?
Pitching the tent…
A busy week on the world stage and a host of central bank decisions to keep both politicians and market watchers occupied. The UN’s annual gathering of leaders kicks off today, with a number of key speeches to be made by Obama, Gaddafi, Medvedev and Ahmadinejad (in that order) – boy-oh-boy, sounds like a roster-call of the good, the bad, the ugly and the bad-that-became-good-for-a-while-but-became-bad-again – you can mix and match descriptions to speakers as you please. Wow, imagine the headache that must have gone into selecting the speech line-up and other logistical issues – it’s bad enough that sensitivities are running very high between the US and Libya, but imagine the disappointment Gaddafi must have felt at failing to find a decent plot in New York to pitch his traditional Bedouin tent – if it contained the traditional harem too, you can bet Clinton would have found a place for it.
Another attempt being made at catalysing the Middle East peace process, UN Leaders Conference, G20 in Pittsburgh, National Energy Summit, Germany’s elections and the revelation that China is selling oil to Iran - is that really a surprise? Since when has business gotten in the way of good-old-cold-war-era-like adversary? US sanctions are looking likely on Iran, but the Chinese are keen to continue their aggressive expansion across the Middle East and secure long-term access to the most political-head-spinning of natural resources, Crude. What exactly is China doing selling petrol to oil-producing-Iran then you might ask? Well, the thing is that although Iran has plenty of industrial-grade crude, the higher quality variety that is used in petrol engines (typically known as gasoline) is in short-supply, hence the trade-off is industrial type crude for use in machinery that China desperately needs to maintain break-neck levels of growth, and the ability to keep Iran’s motors humming.
Fed rate decision due today (rate change very unlikely, more an indication on policy changes being looked at), and the Bank of England announcement signalling a continuous desire to expand money-supply and increase liquidity. Markets this week have traded sideways in general so far (futures in US slightly off today on S&P and DJIA, Asia mixed with Japan closed but HK weakening a little -0.50%), commodities are holding on to recent gains (Oil remaining above $71/brl despite lots of hot-air during the energy summit) and the USD is edging stronger once again as almost all last week’s losses erased. Most fund managers are sounding a little more cautious after being caught out by a very strong September, and there is a sense that a growing majority out there really don’t think we’ll have anything major happening for the rest of the year (could those be famous last words?) with most concern now going forwards to the next calendar year. Those efforts made by governments and central banks (aren’t they the same thing now?) over the last 12 months will most likely last until possibly the burden of non-conforming macro fundamentals (read: unemployment) simply becomes too large to ignore.
Cheer-world-leaders…
In an episode of a popular sci-fi series in recent years, a young Japanese man teleports into New York’s Times Square and shouts the words “save the cheerleader, save the world.” At first, you don’t really have a clue what the rather humorous character is going on about, but in due course it becomes clear that in a convoluted and gripping plot the cheerleader really is the key to preventing a catastrophic event taking place and ultimately relegating humanity to a rather unsavoury fate. In these troubled times, and with so much seemingly at stake, Obama and other western leaders meeting across both New York and (slightly less inspiring) Pittsburgh, must be wishing there was as simple a solution to the seemingly insurmountable obstacles facing them as saving the life of just one attractive cheerleader – no such luck for our real-life superheroes I’m afraid, they’re going to have to find some other way to save the day.
Hence a week filled with endless meetings at important sounding events (as detailed above) not to mention well-selected sound-bites and portions of wisdom to chew on, but will anyone come up with something as amusing and controversy-deflating as “I used to be black before the elections, you know” that Obama (again) smoothly came up with to puncture a rift over objections to his Healthcare reforms being associated with racial issues.
Pizza Please…
How about the copious amounts of alcohol that will no doubt be consumed and the usual stories that follow a night of revelry more associated with frat parties than gatherings of oh-so-important-dignitaries and their aides – I wonder if Boris Yeltsin is sometimes invited back just for a laugh if the revelation through Clinton’s memoirs are to be believed. Apparently he was found stumbling around Washington DC in the early hours of one particularly cold morning in 1995 – after a state banquet at the White House nonetheless - dressed in nothing but his underwear. Having eluded his secret service detail (nothing can stop a drunk man needing more drink it seems!) he was found trying to hail a cab – when confronted by his security staff he told them he was just trying to go down the road to get a slice of pizza – fair enough.
The chance of creating a serious international incident for a drunken hunger pang notwithstanding, many will emotively support you Boris, through personal memory and experience no doubt. This year, any global leader worth his salt is going to have to come up with a much better excuse than an insatiable intoxicated-appetite for pizza, what with being in New York where pizza parlours are a (darn good) dime-a-dozen.
Maybe a slightly more convincing line, unless you are Ahmadinejad that is, would be to use the excuse that you were trying to solve the world’s most pertinent and worrying issues, by scouting out the nearest cheerleader practice.
Hani Kobrossi
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