24.09 - a wave of American tariffs kicked in today
New wave of American tariffs is going to be a big one even though United States are going to be the ones suffering from the decisions.
The situation overall was very different in the beginning of 2018. There were a lot of hopes that the situation in the world political and financial arena was not going to stay the same, but was going to change for better. And right now we see that all of those hopes went down the drain as we are now looking at a bunch of failed international economies and relations. Right now it seems that the situation could not have gone worse than it is going right now.
But in all of the chaos where some of the countries are still trying to navigate there is a clear and obvious region the suffers the most – Asia. Simply because since the beginning of the year Asia became the region that Trump concentrates his angst on. China and its neighbors became the aim for fearful claims and unfair trade tariffs of the American president. And there is so much damage that traders couldn’t help but feel disappointed and angered with the economy of the region.
Even though last week seemed to be extremely good and kind towards Asian and Chinese (in particular) shares there is 7.7 percent loss since the beginning of the year. Valuation of the shares sank to the lowest point in 11 years. All and all the situation in the region is at its worse than most of the traders can remember at this point. And the worst news for the region – there aren’t going to be any boosts to support at least some kind of growth for the future.
Investors are not feeling extremely sure that it is worth to invest and trade with Asian stocks right now. And it is going to be tendency for the future – why would someone invest now and lose if there is a possibility to simply wait and invest when or if the situation gets more stable. Only when traders’ trust comes back to the region there is going to be a possibility to say that Asian economy is out of the woods. Until that time is nor worth talking about a possible recovery. Especially given recent claims of Chinese side of the deal.
With only 10 percent of the full package of American tariffs being imposed on China it is only explainable and understandable why the Chinese would refuse to talk to Americans about the situation. But for us that means only one thing – the situation is not going to be resolved by either of the sides. Which means that trading in the region is going to go on sinking until it goes to absolute lows. How many traders are willing to wait until that ship goes down? Our guess is not that much.
Potential of emerging economies evaporates right before our eyes. In the last months Turkey and China have erased all of the potential of the emerging markets as a whole. And for traders to stay with them is extremely risky as it would surely end in losses.
When a certain politician is in the public eye for decades it is somewhat difficult to imagine that he might be gone pretty soon without even reaching the end of his or her term. Could you imagine Angela Merkel simply resigning form the post? We couldn’t. So it is weird to see Russian president Vladimir Putin under the scrutiny as thousands of people all over Russia are protesting against the reforms, suggested and implemented by the president.
For us, of course these protests, help by the young of the country against pensions reforms [Russian government increased retirement age for men and women even though it was promised that it wouldn’t happen]do not really mean anything, the country isn’t embraced in uncontrollable riots that block trading and banking system. But these protest bring a lot of interesting thoughts to us.
For example, even though with Russian regime it is impossible, what if Putin agrees to leave the post after all? A lot of people support him, but a lot of young people disagree with his Soviet policies and do not want to take part in the wars that Putin dragged Russia into. What is the young succeed for a change? In case Putin goes away from the spotlight the country of Russia is going to be submerged in total chaos. Corruption levels are going to reach catastrophic scale and ruble, manly supported by oil and gas sales is going to fall even lower.
We talk about such confidence because we know – the country is not ready to function without Putin. The economy is going to fail and send Russia into a massive financial crisis. And that is the last thing the world needs right now. We are standing in the verge of world’s financial crisis as it is. And if one of the big counties that happens to be a popular trading hub plunges into the dark times, there is going to be a lot of problems for the world.
So, unfortunately for a lot of people inside and outside of Russia making away with Putin is not the best decision for the economy of the world at the moment. Especially given that Russian economy is a support for other economies around the region – Belarus, Kazakhstan, Uzbekistan, Armenia – these are only some of the countries that depend entirely on Russia. All of them failing is going to be a catastrophe.
Political regimes are always bad. Most of them are tied with wars and economic failures. But as Russia proves right now there are a lot of things that need to be considered before dealing with the dictators as all of them are usually the backbone for the situations in their countries.
Those who trade with Volkswagen shares might have noticed a turbulent summer that the company has had this past few months. All because the company forged the numbers of harmful emissions, produced by their latest cars with diesel engines. And, as we all know emissions is a bug deal in Germany where Volkswagen is located. As a result, a company had to recall some of the vehicles as well as pay $1 billion worth of penalties.
But now the company has to find another filed of development as the trust of the clients of the company is undermined. As a result of the whole scandal, Porsche, which is a part of Volkswagen conglomerate announced that they are going to be moving away from the cars with diesel engines and will fully concentrate on the engines for petroleum as well as electro cars. Which is a bad news for one of the biggest electorcar producer in the world – Tesla.
However bad the scandal of Porsche might have been, Tesla is still deemed to be more unreliable that that. Porsche has made a name for itself over decades of successful business. Tesla is primarily known for the bad behavior of its CEO Elon Musk and hic controversial statements as well as failures in the production line as delivery segment of the company.
Tesla has enough problems. But one of the biggest and most famous car producers, trying to take their spot is hardly something Mush expected. Although it is true, that Tesla and Porsche are the two companies that will work in totally different price segments. But still. Porsche has all the chances on the world to surpass Teals in the field.
Porsche uprising in the field might be the end of Tesla as it is. Musk really needs to clean up his act as well as the reputation of his company in case he wants to keep on doing what is doing and not fail hundreds of people who hold Tesla’s assets.
All and all, instability displayed by Tesla may just be the steps, taken by the young company on the way to success. At least we hope that that is the case here.
- by Anna K.