"So, it’s a f*****g coin toss? That is what we get for 50billion dollars?”
It is possible to cram Cataclysm, Armageddon and Apocalypseinto a single Morning Porridge at the start of a week that promises to be market friendly? Of course it is! There is plenty of stuff to worry about, but when the noise sounds so positive, the herd that is the market will keep on fooling themselves.. The higher they climb, the further there is to fall…
That was an “interesting” weekend. I nearly scared myself todeath, and had some disturbing insights as to what comes next…. And then decided…. Relax… just go with the flow. Went for a swim, a sail, a pint, and a damn fine traditional roast Chicken dinner (winner, winner) with friends – what could possibly go wrong?
First up is this week’s Trump/Xi summit in Seoul. The groundwork is laid, both sides are talking up the “peace in our time” narrative on the trade war. American farmers will sell their soyabean mountain and avoid penury, while Trump and Bessent will hail it as the greatest ever deal in the history of greatest ever deals. Both sides will gloss over the nothingelseness thatwill accompany it – how China will retain the options over critical rare earths and Trump will never again mention punitive tariffs on the Middle Kingdom again – until he inevitably does. However, this week the market will love it.
Trump threatened. China pushed back. USA Lost and retreats 2steps. Xi Wins and China moves forward. That’s basically how history will record it. Trump will spend his time telling everyone what a great deal he did. Xi will continue to expand his power, and China’s position as the dominant trading partner will gain further traction.
Second up is the extraordinary victory of La Libertad Avanza in Argentina. President Javier Miei’s party won 41% of the votes, despite the polls predicting a massive lashback after he was hammered by the Buenos Aires’ Peronistas just last month and a slew of corruption scandals mired his senior team and family. (Par for the course in Argentina.)
Yesterday Milei swung around the 14% deficit in the capitalstate. Extraordinary indeed. Apparently markets and the IMF had nothing to fear from unhappy Argentine voters – who gave Libertarian austerity and free-market reform and increased share of the mid-term vote, despite some 40% of the population in poverty.
Argentinian voters are cleary not daft. Maybe $40 bln of USsupport for the Peso and economy helped? Bloomberg quotes Billionaire Bill Ackman: “an important win for democracy, capitalism, and sanity, and a defeat for socialists.” Of course it is. (Pass me a bucket.) Trump said it clearer: If Milei “doesn’t win, we’re gone”.
See www.morningporridge.com for full article.