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Cold Front on Oil Prices?

Tony Nash is back in the Morning Run, hosted by BFM 89.9, as he points out the crude oil price and how long to expect the rally, considering factors like weather, demand, and supply. Tony also mentioned about a potential pullback and snap and how you can better be prepared for it. Should you continue buying tech stocks or move elsewhere? Also, they discussed crops and where the prices are going this year.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/cold-front-on-oil-prices on February 18, 2021.

 

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BFM Description

 

Tony Nash from Complete Intelligence, from freezing Texas, shares with us the current supply constraints in the US impacting oil prices in the short- and medium-term.

 

Produced by: Mike Gong

 

Presented by: Philip See, Wong Shou Ning

 

 

Show Notes

 

WSN: For some color on where global markets are heading, we have in the line with us Tony Nash, CEO of Complete Intelligence. Tony, are you freezing out there in Texas?

 

TN: Yes, we are. We haven’t had it this cold air for decades. So it’s it’s been a really interesting week.

 

WSN: That has had an impact on oil prices. Bloomberg showing Brent crude at $64 per barrel, WTI at $61 per barrel. So how badly impacted our energy markets at the moment? Where do you think oil prices are going?

 

TN: A lot of this is very short term. What you’re not seeing that the traders really pay attention to right now is that a lot of refineries are closed because of weather and they’re starting to close for annual maintenance. There’s this presumption that there’s a demand pull, which we’re not really seeing from anywhere in the world right now, and that the winter storm issues will pull energy prices. But again, the fact is the refineries that would take this stuff are closed. We expect this to be short lived. This is an extension of a crude price rally that we saw that we expected to come in Jan, it’s lasted into February and we really don’t expect this to have a lot of legs to it.

 

PS: What do you think the outlook looks like then for the mid-term like quarter to quarter three?

 

TN: We would see 10 to 20 percent off of this price? We don’t necessarily think that this is a sustainable level short of some sort of supply cuts. But the weather in Texas, for example, we’re going to be kind of in normal weather ranges in two days. What we’ve seen this week and the close down, as we’ve seen this week, it’ll take people a couple of days, maybe a week at most to get things back on line. So this perceived supply shortage will be back on line fairly soon.

 

WSN: How about yields on U.S. 10 year bonds? Because they’ve hit a new high one year high. What what is that trying to tell this? What a market try to tell us?

 

TN: U.S. is trying to raise money and they’re willing to pay more for it. I think that is is really it. I think there is a growing fear that equity markets are as high as they’ll get. We’ve started to see more of that tension come in into chatter over the last few days. People are willing to pay to get out of markets, to park their money in debt.

 

So I’m sure it helps the U.S. as they’re raising more money for stimulus and for operations. But as we creep up to four thousand, that is just unimaginable for a lot of people. And it’s not as if we are doing better as an economy than we were in 2019 or the first quarter of 2020. This is built on stimulus, as we’ve talked about before. It’s built on central bank activity.

 

And you can only stretch that so far before things have to snap. We’ll see some of these things that are at double and triple and quadruple kind of the standard multiples. And P is the only way to measure this stuff. But we’ll see things that are really, really stretched, snap into a more reasonable region. But it’ll happen any time tomorrow, three weeks from now, a month from now, whatever. It’ll just happen. It’ll happen any time. And it’s best to be prepared for it.

 

PS: So are you expecting some pullback eventually? Right. What is the tipping point where investors will essentially do that exodus or flock to U.S. Treasuries then?

 

TN: One of the tipping points is going to be the resolution of stimulus. I’ve been saying for weeks that stimulus will not be what the administration wants it to be. There are such high expectations put on that stimulus right now and they’re not going to get it. They’ll get a lot of it, but they’re not going to get all of it. Expectations are sky high. And when it doesn’t hit, I think that will be one of the catalysts.

 

But there are other things like when the crude price starts to fall because this supply constraint isn’t there anymore. These sorts of things, these things add up and then they snowball and and then you start to see markets really, really take a dove. We’re not necessarily calling for a 2008 generational type of decline in markets. It’s just a bit of a pullback so that people can just say, “OK, wait a minute, let’s check, take stock how businesses are doing. Take a look at our investments and our allocation and then reallocate.” That’s really what it’s about.

 

WSN: Where would you relocate to and what are the safe haven assets? Because almost every asset class on a year to date basis is up. Right. And maybe except for Google, which is down six percent on the year today.

 

TN: What you’re likely going to see is a pretty serious rotation out of technology where people have focused on because of the work from home activities. This may not be immediate, but I think you’ll see a rotation out of a lot of the work from home stuff as people start real life again and you’ll see people move into. This is not really my the basis of our outlook. But you may see more of a regional move into things like tourism.

 

These things have just taken real hits. A lot of them have had speculative rises, some of the cruise lines. But some of them are still way down. All of this depends on gradual normalization. But I can tell you, Americans are really tired of being locked in, really tired of not socializing. And some of these things are going to have to start up again.

 

PS: What about not all out commodities then, like agriculture and precious metals?

 

TN: We had some real pressure. And part of the reason of that pressure was because there was a perception that a lot of the Chinese corn crop didn’t come in last year. But a lot of the drought was outside of that zone. Some of that pressure was alleviated.

 

But still, we’re seeing some pressure on wheat right now in the U.S. It really all depends on how much the current cold snap impacts the output later in the year or the ability to plant. Right now it’s not terrible.

 

Until we start seeing real demand come back in entertaining and in consumption and these sorts of things, we’re not going to see a major demand pull on food because people are already buying their standard cook at home type of things right now as they’ve rebuilt their behaviors over the last year. We’ll see that change. But unless we see a drought or unless we see an issue in a high consumption part of the world, we’re not necessarily going to see a boom in those places.

 

WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, giving us his views on global markets and saying that, hey, oil prices are going to come under pressure probably in the next two to three months, because this is not really driven by real demand, is just probably weather patterns which are going to normalize anyway in Texas in a few days.

 

PS: He also made a point about oil, where this, I think, a slight surge in prices is actually a short term because supply is going to get back on quite soon.

 

WSN: Yeah, but other interesting news is actually the ongoing saga of big tech versus Australia, because it looks like Facebook has defied Australia’s push to make big pay for news by banning the sharing of content on its platform in the country. And this is the most far reaching restriction is ever placed on any publisher in any part of the world.

 

PS: So the extreme step to remove Australian news came as Google separately struck a global deal with Rupert Murdoch’s News Corp diffusing a long running dispute between the two companies. The dramatically different approaches could mark a pivotal moment for the media industry, which had hoped Australia’s tough regulatory approach would help reset its terms of trade with Google and Facebook worldwide.

 

WSN: So the moves by Google and Facebook came on the day Australia begin debating laws that would force big online platforms to license news. Now Facebook’s action will have a global impact. Under the provisions, news from Australian publishers will be blocked on the platform for all Facebook users, regardless of where they are based. The Australian government said it will continue to engage with Facebook. Press ahead with legislating the code, Canberra also warned that withdrawing news from Facebook’s platform in Australia could dent its credibility with users.

While this is quite big stuff. Actually, yes.

 

PS: Yes. I mean, Australia wasn’t the first country to, you know, get into this spat. I think you really was in having discussions. And France and Spain already had deals with a lot of with Google and Facebook with respect to media purchase. But it’s a question about publishers.

 

WSN: Yeah, I mean, at the end of the day, right. We do know media companies are suffering. Right. Álex has come under pressure. Subscriber growth has come down. How a media company is going to generate the revenue. So in the past, all these big tech companies, the argument was that they got to earn super normal above what is the what super normal profits without paying the likes of the media companies because they were using these media companies content to their benefit.

 

So some countries like Australia and even if you try to kind of diffuse the situation and have, I suppose maybe in their mind, a fairer playing field. But the Google deal nonetheless, if you look at it, the Google deal with News Corp announced on Wednesday goes beyond the Australian market, extending to Murdoch’s titles such as The Wall Street Journal and The New York Post in the U.S. and The Times and the Sun in the UK. No other news publisher has reached a single deal with Google across multiple countries.

 

Now, critics say the deal would benefit News Corp. rather than the rest of the news industry.

 

PS: Yes, well, we’ve been talking about the price. And since you looking at Google’s valuation, I suspect Google’s to be the winner because they have just really this unique access to this quality content. So. So why not?

 

WSN: Well, they’ve pledged so far to spend one billion over the years on buying news content and reach agreements with publishers in about a dozen countries.

 

But we’ll be watching this space because we do a media outlet.

 

But up next, we’ll be discussing the recently announced national unity blueprint. Stay tuned for that. BFM eighty nine point nine.

 

Thank you for listening to this podcast. To find full great interviews, go to PFM Goodbye or find us on iTunes, BFM eighty nine point nine. That is the station.

 

Categories
Podcasts

Work-from-home stocks a defensive play in 2021?

In this BFM episode, Tony Nash explains the defensive play of the WFH company Keane and how it compares to other tech stocks like Tesla? Also, will the good days for the financial and energy stocks continue? And how about the outlook for Sterling as the Brexit deal is being ironed out? Will the Pound appreciate or decline? And why there seems to be a never-ending trade war against China — now recently with Vietnam and Malaysia imposing tariffs on the Chinese steel?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/work-from-home-stocks-a-defensive-play-in-2021 on December 24, 2020.

 

❗️ Check out more of our insights in featured in the CI Newsletter and QuickHit interviews with experts.

❗️ Discover how Complete Intelligence can help your company be more profitable with AI and ML technologies. Book a demo here.

 

BFM Description

 

As we head into 2021, will we see more work-from-home stocks being used as a defensive play? The Morning Run speaks to Tony Nash for his perspective on this, as well as his views on financials and energy stocks, the Sterling, and tit-for-tat trade wars.

Produced by: Mike Gong

 

Presented by: Roshan Kanesan, Wong Shou Ning

 

 

Show Notes

 

WSN: With volumes on U.S. equities drying up ahead of the holiday season, are you expecting investors to hit the sell button or to keep this whole positions over the period? Because the market’s somewhat a little bit more happy today, a little bit more green?

 

TN: I’m not sure, but I’m sure there is not a conviction either way right now. Investors aren’t really sure that they’re ready to pull the plug on things. People are waiting to see what’s going to happen with the stimulus funds. They’re waiting to see how smoothly the transition goes with the US government. They’re waiting to see how companies Q4 earnings come in. So in the next few weeks, aside from some commodities play, I’m not entirely convinced that we’ll see dramatic movements in one way or another.

 

WSN: And I’m just curious following up on that. So for the moment, it still seems that even though the Nasdaq corrected a little bit today, the work-from-home, Keane is here to stay as a defensive play?

 

TN: Sure, that is an effective play, but the benefits or the upside to that play is really questionable. The Nasdaq has over 40% this year. When you look at the valuation multiples on some of these tech companies like Tesla, you’re looking at over a thousand percentage. For some of the tech companies, you’re looking at fifty to 200 to revenue.

 

Some of these tech companies are being played out. That’s not to say they’re going to see necessarily downside. But the upside? I don’t believe it’s necessarily as high as it has been in 2020. We have these moments in markets where you see serious upside in different sectors and then it comes down for a bit. We’ve seen that in 2020. Are we going to see that in 2021? We’re not convinced. That maybe  possible. But we’ve seen some pretty hard closed down for people who’ve had their quickly transition to work from home. A lot of that valuation are largely played out.

 

WSN: If we look at the performance of the S&P 500, it was really the day for financials and also the energy stocks. Do you think these themes will continue into 2021?

 

TN: Certainly, that kind of stock are partly a result of the expectation of stimulus — whether that’s $600 to $2000 per person. There should be more transactional activity in terms of services with energy. There’s an expectation that people will start flying a bit more.

 

What’s positive is the expectation on a  margin within oil and gas firms as they refine their products. I think that’s a bit higher as the margins of the percentage go up as the normal values go up. We’ve been saying for several months that the oil prices will rise in the end of December and early Jan, and that’s playing out. We’ve expecting that for about six months. But we do expect crude prices to fall going into February. So while those margin plays are there now, we don’t expect that to be there at the end of Q1.

 

WSN: Moving to the UK, the Sterling appreciated this morning on the back of the news that Brexit deal might be ironed out. But where do you see the currency heading?

 

TN: We’ve expected the Sterling to weaken a bit by the immediacy of the news. But over time, we expect the Pound to re-appreciate because we really value the U.K. There’s a lot of wishful thinking within the EU that Britain would suffer as they exit the EU. We’ve done a lot of analysis on this over the last three years and there’s really just a lot of upsides for the U.K. to separate. That’s not a political view. That’s purely an economic view. We have expected the Pound to take a bit of a pounding in the short term. But we do expect it to re-appreciate as that separation gets in pace.

 

WSN: Malaysia and Vietnam, they recently placed higher tariffs on Chinese steel. And although unrelated, this comes after China imposed some additional duties on various Australian imports. Do you see this tit for tat tariffs going to continue to be the norm in 2021 and no end to it?

 

TN: We’ve been saying for a couple of years that we expect trade to turn from these fairly invisible activities like subsidy to non tariff barriers, which is really regulatory into direct tariffs. It’s like going back to 1980s pre-WTO where there’s more of a fiscal benefit for the country than the protectionist benefit in a non-tariff barrier regulation.

 

Many countries are a bit tapped out on subsidies, so they’re not necessarily going to be able to pay their industry as much to protect them. So they’re going to have tariffs to generate revenue. Specifically, the Chinese steel, there’s a global glut of Chinese steel, of the Hang Seng, for years. It wasn’t surprising that these tariffs have been levied because they have a little bit of it’s own steel industry. They’re protecting themselves from the glut of Chinese steel.

 

WSN: All right. Thank you for your time. And that was Tony Nash, CEO of Complete Intelligence, giving us his views on global markets.

Categories
Podcasts

Markets Pause As Wells, BOFA Miss And Stimulus Remain Distant

In this discussion with BFM 89.9, Tony Nash shares views on the recent bank earnings, update on Brexit and why it’s stalled, the future of Hong Kong and how vaccine news play for markets.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/markets-pause-as-wells-bofa-miss-and-stimulus-remain-distant on October 15, 2020.

 


BFM Description

 

The diminishing likelihood of stimulus and poor bank earnings have paused stock markets for now, as electioneering ramps up ahead of November polls, according to Tony Nash, CEO of Complete Intelligence, who discusses bank earnings, market expectations as well as Brexit.

 

Produced by: Mike Gong

 

Presented by: Khoo Hsu Chuang, Wong Shou Ning

 

Show Notes

 

KHC: On the line with us now is Tony of Complete Intelligence for some clarity on markets. Tony, thanks for talking to us. Now, obviously, the Wells Fargo, Bank of America, Goldman Sachs have all reported results so far. What is your take on the financial sector earnings thus far?

 

TN: Goldman obviously reported really well, Bank of America is down five percent. There was a huge disappointment there. Could get worse. A lot of that had to do with these penalties that were levied several weeks ago. But it looks like the investment banks are doing much better than the consumer banks. And until we get a next round of stimulus and we start to see money moving into the accounts of those guys who are unemployed, which is not a small number in the US, I think consumer banks will continue to suffer.

 

KHC: On that particular issue of the impasse in terms of a stimulus being introduced before elections, what is the biggest deterrent to consensus being reached on that front?

 

TN: One of the biggest issues is that you have a lot of states, all of them that are Democrat states that are heavily indebted. So what the House majority leader is pushing is a bailout program for those Democrat states like California, New York, Illinois, that have have billions of dollars in debt that have been racked up over the last 10 or 20 years. What are typically Republican states typically have balanced budgets. It would effectively be the Republican states bailing out the Democrat states. It’s a problem here in the US.

 

The other item is the House majority leader, Nancy Pelosi, wants to give stimulus checks to illegal immigrants in the US. She wants to give a few thousand dollars to people who are in the US illegally. And the Republicans are saying, no, why would we do that? So those are two of the things that are really holding things up in terms of the stimulus plan. And it’s electioneering. Democrats want to give money to the party faithful in their heavily indebted blue states. And they also want to try to get some votes from the illegal aliens who aren’t legally allowed to vote. But they want to get some loyalty from those illegal immigrants who are in the US.

 

WSN: Another thing that seems to be having an impact on markets is vaccine news. So every time we hear of a vaccine trial feeding, markets correct. Is it possible at all to quantify how much of this is in the markets really in terms of optimism?

 

TN: Remember, in 2019, every day, whenever we needed a bump in markets, Trump would tweet, a trade deal is near. And then we finally had the phase one deal in December. It seems like whenever there’s a tweet or some news about a vaccine, it’s because a bump in markets is needed. There’s a lot of cynicism among traders about vaccine. Until we see something actually proven and actually in a market, you’re not going to see a real firm belief in the difference it can make. So it’s going to be at least Q1 or so before we see things deployed.

 

We don’t necessarily expect the benefits to happen until 2021. But the problem, at least here in the US, is that nobody wants to be the guinea pig. At least half of Americans surveyed don’t want to be the first one. They’re going to have to see some high-level politicians go in, roll up their sleeves, get the job and and really face the consequences, if there are any negative consequences, because a lot of Americans just aren’t believers and they’re really worried about the effects of it.

 

KHC: OK, switching to the UK, if the UK fails to negotiate a Brexit deadline deal today, how should investors position themselves? And would you recommend shorting sterling assets?

 

TN: I think it’s a possibility. I don’t know if I’d necessarily recommend it, because I think the status quo is baked in to expectations. We haven’t necessarily had a positive outlook to negotiations for two or three years now. I think the expectation is that things will continue to muddle through and markets will fold that end. So I don’t know. Outside of a very positive agreement for the UK, I don’t necessarily think there’s huge upside anywhere.

 

And outside of a very negative concession given by the UK, I don’t think there’s huge downside anywhere because the EU is just intransigent there. They’ve been embarrassed by this whole process. They don’t want to negotiate and they’re not moving at all. So I think we’re in the range of where things will be outside of a major announcement somewhere.

 

WSN: Looking at China yesterday or a few days ago, his speech has outlined a comprehensive vision of for Shenzhen. What does this mean for Hong Kong’s economic future? Do you see a bright, a bleak one for the city street?

 

TN: Hong Kong’s fate was sealed in 2014 with the demonstrations. And I’ve been saying this since twenty fifteen. At that time, the MDC and the folks in the central government were planning on other options for the activities that were happening in Hong Kong. What we saw with the announcement in Shenzhen yesterday was simply cementing Shenzhen’s place, the central city at the end of the PRD, right at the end of the Pearl River Delta.

 

And so Hong Kong is no longer the central location. It is a place to get hard currency. But it’s no longer an industrial location. I believe we’ll start to see financial services move to other places over the next ten years. Not an overnight activity, but it’s something that certainly the central government wants to happen.

 

KHC: OK, Tony, thanks so much for your time. That was Tony Nash of Complete Intelligence.

 

His comments in terms of of China also resonate because we’ve got certain diplomats, a top ranking government officials coming to the Asian region for a charm offensive, but also his comments on banks, a tale of two halves, really, consumer banks that well said Bank of America really failed to meet expectations. They did beat expectations, but they felt some way of sort of you and your performance numbers. But then the investment banks like Goldman Sachs have done really well because of the trading desks and the stimulus checks that were written in the third quarter.

 

WSN: Yeah, actually, 2020 is the reverse of 2008 during the great financial crisis. If you remember then American banks itself, all the investment banks. Right, because of the derivative losses in the books exposed to the shuffle in equity markets. But this time around, actually, the volatility has really helped them. So for a change, they’ve seen incredible jumps in trading investment income. But it’s the main street banks which are feeling the pinch. So, yes, there’s an increase in deposits for these banks.

 

But for the consumer banks, for the main street banks, nobody or less people are taking out loans, is less credit cut usage as a result. So, you know, no such not such good times for the consumer banks. Better for the. And bad guys out there.

 

KHC: Now, of course, and Morgan Stanley reports tomorrow we saw net interest margin set wells and Bank of America really being crushed as well. And not many, not many companies reporting earnings are giving outlook statements.

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QuickHit Visual (Videos)

QuickHit: “Perceived Recovery” and the Artificial Market

Political economic consultant Albert Marko joins us for this week’s QuickHit episode where he explained about this “perceived recovery” and how this artificial boost in markets help the economy. He also shares his views on the 2020 US Presidential Election and the chance of Trump winning or losing this year. What will happen if his scenario plays out, particularly to the Dollar, Euro, and others?

 

Albert Marko advises congressional members and some financial firms on how the machinations of what D.C. does and how money flows from the Fed, Treasury or Congress out to the real world. He is also the co-founder and COO of Favore Media Group.

 

This QuickHit episode was recorded on August 25, 2020.

 

Last week’s QuickHit was with independent trading expert Tracy Shuchart on the end of “buy everything” market and the unknowns and apprehensions.

 

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: We’ve seen a lot of intervention in markets from the Fed and the Treasury. I’d really love to hear what you’ve seen and what your assessment is of that activity.

 

AM: First off, we have to understand that politics and economics are tied to the head. You can’t deviate from the two of them. I don’t like when people try to disassociate the two from that. The Fed and the Treasury had to work on financial stability of the markets. That is the ground game right now. The only way to do such a thing would be to congregate all the market makers and select certain equities and pump those equities until the market had a perceived recovery at that point.

 

TN: So perceived recovery, that’s an interesting, interesting word. When you say market makers or strategists got together and plan this, what concentrations have you seen in markets? Is it possible to focus on a specific number of companies and make sure that the rest of the market moves based on their coattails?

 

AM: Of course. This is not a new strategy. We’ve done this in 1907, and done this in nineteen eighty seven with Buffett and Goldman and we’re doing it now. It’s just the way it is.

 

The way the strategy works is you take a couple equities, say a dozen of them, maybe a little bit less. Tesla would be one. Nvidia, Adobe, all of these companies that don’t really have international peers to compare with and valuations that they can pump and the market takes over and comes up with all sorts of fancy ideas of why Tesla is at a $400 billion valuation.

 

But the fact of the matter is, if you look at the pricing and you look at all the call options that have happened over the last four months, it’s pretty clear that this was completely done artificially.

 

TN: It seems the US markets lead global equities. Is there some linking of this? And again, are there international coattails that follow on to US equities coattails or is that what you’ve seen in recent months?

 

AM: That is absolutely correct. There are a couple of markets that would support the US market specifically. That obviously would be the U.K. But the one I like to look at is the Swiss National Bank. They have their minions and their people intertwined within US hedge funds and working with the Fed and the Treasury for years. So if something is going on, they would probably be the next people to hear about it. And you can actually see this by looking at their portfolio buys in Q1 and Q2, as opposed to the 2018. You’ll see that those certain equities like Apple and Tesla had just gotten ridiculous amount of eyes.

 

TN: How successful is that been? As we look at the depths of the pullback in April? Crude oil was at negative $37 in April and it fell $99 from January through April. WTI did at least, right? Equities obviously had a lot of problems. So from your perspective, how has that been executed? How has it been pulled off? Is it okay? Is it good? Are we seeing, at least in equity markets, are we seeing a “V” and do you think that translates into the real economy whatever that is?

 

AM: I use the word “perceived recovery” before as this is artificial. It does support the markets. They’ve done exactly what the Fed was mandated for financial stability. Loretta Mester says that quite often in her speeches. In that respect, yes, they absolutely stabilize the market. Now comes the challenge of rotating out into value stocks and the actual financials or retail or something that’ll actually create jobs later on. They’re going to have to do that. But again, this is basically to stabilize not only the markets, but also the political class that’s supporting it.

 

TN: When you talk about the political class… We’re in the middle of an election cycle. This is my first election to be back in the US since the first Bush election. I was overseas for a long time. So I’m seeing things I haven’t had a front row seat to for a long, long time. How does all the things we’ve been talking about with supporting markets and and really having this kind of quasi recovery, how does that segue into the election? How do you see the election playing out?

 

AM: The people that are in charge now are appointed by the political class in charge at the moment. So those two are going to protect themselves at all costs. Trump appointing Mnuchin. Mnuchin doing what he has to do for financial stability. Now we’re looking at Trump ”losing in the polls” — highly questionable when you look at the methodology about those polls. Right now, I would have Trump winning — about a 60 percent chance at the moment.

 

TN: But the president isn’t the only office, right? So do you have an opinion on the Senate and the House as well? Do you think we’re going to see a flip in either of those places?

 

AM: No, I think the Republicans will actually take back anywhere between eight and 10 seats in the House and they’ll lose possibly two, maybe three seats in the Senate. So they’ll still control the Senate, although that’s when the political calculations come into work where one senator, two senators can block an entire policy of the president. Trump is going to have to do more executive orders going forward, which I personally don’t like, and nobody really should actually advocate for that. But this is the time that we live in.

 

TN: If your scenario plays out, how does that impact US foreign policy for the next four years? What do you see is the major… I would say trade was a big issue in the first four years of Trump, right? And bringing China to the four was one of the big issues. What would you say would be the big foreign policy issues under a second Trump administration if it comes to pass?

 

AM: The big one is China. China is quite intelligent. They hire former congressional members to go and talk politics so they understand how it works. They’re going to start hedging their bets. If they see that Trump is possibly going to win, Phase One Agriculture deals will be flying. They’ll make some concessions on intellectual property rights and whatnot. So you’ll see some of that happening from China.

 

The Europeans are absolutely in denial of what can actually happen if Trump gets elected. The only reason I see the Euro at these levels is because they’re on vacation and the US has just negative news pounding us day in and day out with the Dollar dropping to the low 90s. But I don’t see that sticking around. I think that as soon as Trump gets re-elected, I think the dollar’s back up north of 97.

 

TN: I think you’re right. I think that’s feasible.

 

Well, thank you so much for your time. I really appreciate this. Obviously you have a lot going on and you have a lot of information. This is hugely valuable for us. So I’d like to check in maybe before the election, maybe after the election so that we can do an assessment of how would the changes, whether it’s Biden or Trump, how does it impact markets and how does it impact geopolitics? That would be a fascinating discussion. So thanks for your time. Really appreciate it.

 

AM: Thank you. Thank you, Tony.

Categories
Podcasts

Business and Market Discussion Podcast: Coronavirus and its impact to economy

Tony Nash, founder, CEO and Chief Economist of Complete Intelligence is a guest in RTHK’s Business and Market Discussion podcast. He says that the lockdown of major Chinese cities could make foreign enterprises re-think their supply chain strategy.

 

Some notes below:

 

Do you see this in the US purely as a China problem or is it a global problem?

 

People here are taking precautions. A lot of airlines have stopped direct flights to China. People are concerned about it, but that’s not an overwhelming worry. The preparations that are happening around Asia, but we had this drill before. From a western perspective, it looks like these preparations are being mode and it’s a panic mode. I think Asian governments are doing the right thing by ramping up and preparing for the worst. Best case, it’s not really that bad, but we’ve done all these preparations just in case.

 

How this is hitting tourism, retail sales, trade, commerce because Wuhan is a logistics center. The whole country is virtually shut down. People are not traveling at the moment. You can imagine China will take a big economic hit. One think tank saying economic growth could drop below 5 percent.

 

I would argue that it’s already below 5% for about a year. The magnitude of the response is enough for anyone to get nervous. I think the response is the right response, but it has made people nervous. It’s a difficult balance to strike for the Chinese government. Yes, it will have a hit to the economy. But there may be a sharp rebound.

 

It’s happening over the new year season. But in terms of manufacturing and exports, if these things can be contained before the end of new year, it can be rebound.

 

And that’s because there will be a lot of demands once this is over.

 

How about the impacts on commodities? Copper? Ag products?

 

These are all the typical fear plays when people are worried or when China is in crisis. Traders are shorting because the trade deal may not be implemented. My hope is for the government to turn this around in a couple of weeks.

 

I think that it’s oversold like Gold is overplayed. People are still learning the magnitude of the impact.

 

Do you think this could derail the Phase 1 deal?

 

There are two years for that. This is a relatively short impact like 1 to 2 months. I don’t think the demands will change that much. Because there will be a spike on buying. If this is a medium impact, then this will change.

 

This maybe the event that pushes some manufacturers over the end, and may start moving their production capacity to other areas.

 

And that’s the thing that there’ll be a long impact on the Chinese economy.

 

Absolutely, and that’s where the economy will be stagnant. That’s the main worry.

 

Do you think there will be a big equities sell-off?

 

It’s possible but I don’t think it will happen until we have evidence about the cases or intensity of the impact. We have to wait a little bit of time to see if these are properly reported cases.

 

Listen to the podcast at RTHK.HK’s Money Talk Podcast. 

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Podcasts

Conservatives win big majority in UK election

BBC – Business Matters

 

BBC considers the economic and business implications of the Conservatives’ resounding UK election win. The BBC’s Rob Young is in Derby in the English east Midlands to gauge business reaction there. Also in the programme, after months of negotiations, the US and China announce a preliminary trade agreement. The so-called phase one deal will see billions of dollars in tariffs removed or delayed. Mary Lovely, a trade economist at the Peterson Institute for International Economics in Washington DC, explains the significance of the deal. Plus, Chris Low of FTN Financial in New York sums up how global markets greeted the news. And the BBC’S Deborah Weitzman tells us why Brits are spending more of their hard earned cash on takeaway food, rather than cooking at home.
All this and more discussed with two guests on opposite sides of the Pacific: Tony Nash, chief economist at Complete Intelligence in Houston and Peter Ryan, ABC’s Senior Business Correspondent, in Sydney.

 

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