6.09 - lira might gets a boost from the outside
American-Chinese situation is far from improving.
We already talked about Pandora sales going down as people rejected buying its products in such big quantities as it is not a necessity number one. People started to drop unnecessary and avoidable purchases with more and more news about another financial crisis possibility. And now it is possible that yet another international retailer is going to suffer from this new unappealing tendency.
International world-wide-known clothes retailer’s Zara shares have dropped to a seven-year-minimum level which is an extremely bad situation for the company as for them everything rolls into one. Quality of their clothes have been a point for discussion for a long time now and now when a lot of people stopped going into the shops because of high prices and low quality investors see that the sales level is not nearly as high as it used to be. And what is worse for the conglomerate than to lose its clients and investors simultaneously.
Right now the company is trying to cut some of the monetary losses by focusing on internet-shops rather than real one. But it is doubtful that in this time this measure is going to help Zara get back to the high positions it used to be on. All over the world people are quiet, it seems they prefer to be still until the turbulence in the markets displays some kind if stability and reassures traders that investing and supporting various businesses is a good idea once again. Only in that case will it be possible to talk about some kind of recovery for companies like Zara and Pandora.
But what are we to do right now? Waiting for recovery can take a long time and there is no guarantee that those companies which are now occupying the pedestal like Apple, Amazon and Google are not going to be knocked down with the same reasoning. After all, we can’t say for sure that Apple next iPhone, presentation of which is going to take place on September 12 [next Wednesday] is going to be a success. iPhone X after all wasn’t.
In economy like this it is not out of the box to think that every step of even the biggest and most successful companies is going to lead to crush of their shares. Boy, is it hard to be a trader these days.
We put a lot of hope on Trump doing what is right for once and at least considering returning the situation with China to the way it used to be just a year ago, when there were no trade tariffs and trading was a pleasurable business with stable patterns. But it seems that this time is only yet to come. Although there is no guarantee that it is going to happen while Trump is in the office.
Right now Trump doesn’t think that the time has come in order to really think about lifting restrictions from Chinese wares. Although Mr. President doesn’t negate that the talks are going to go on there is a lot if doubt whether we are going to see and feel real results of these negotiations.
Battle of the giants – that is the perfect metaphor for describing the situation between the United States and China right now. Two largest and most developed economies in the world have been exchanging tariffs for months now and the total number of tariffing is now adding up to nearly $50 billion. And there is even more to come as Donald Trump wants to impose $200 billion more worth of tariffs on China. What does that mean for us traders?
Well, for us that means a whole load of unpleasant news. With more tariffs Chinese economy is going to sink lower and prices on various goods are going to rise for the consumers as the production of these products is going to become more expensive. Chinese companies, although will try and look for the new partners are probably not going to be successful in it as we can see right now. Not a lot of investors are ready to invest into something that almost surely is going to fail pretty soon. Trust if traders is also fading. Moreover, traders’ trust in dollar is only getting stronger and that harms all of the economies in the world. Especially emerging economies, as we see today.
Of course neither United States nor China are going to step back and let their opponent make a deal on their terms. Every country is going to protect their interests until the end and that is why we think that there is no hope for released trade tensions in the nearest future.
After American sanctions and very quiet and uninfluential ways of Turkish President of dealing with the inner crisis it seems that Turkey might get help from the outside of the country. Germany announced that they are prepared to help Turkey in dealing with current financial crisis but how much is it really going to help lira?
Financial help, although always appreciated, isn’t bringing as much help to the country in the long run as one would hope. With one boost to failing Turkish economy, German help may be the thing that Turkey needs right now, but in the long run it will only relax the economy that will start relying on financial help from the partners rather than on self-fixing of the problem.
With some time passing the situation may even become worse than it is right now. Instead of focusing on fixing the problem with the United States by themselves it is possible that Turks are going to search for international help. But seeing how a lot of other countries are under American sanctions it is doubtful that Turkey is going to find a lot of help among them.
Right now lira is continuing to sink. Contagion from it seemingly turned on other emerging economies which is a point for worrying for traders. After all those, who never touched lira trading are now exposed to the world of problems connected with the currency. Looking for answers of the outside is really not a good decision in current situation that we face in Turkey today.
So, something tells us that lira trading is not going to become a stable endeavor in the nearest future. just like trading in emerging economies. That is, of course, if Turkey is not able to stabilize their own economy in the nearest future without international help. If that is the case, that would just be the perfect scenario for the country and emerging economies in general.
- by Anna K.