3rd August 2022: Yesterday closed orders given -2.921%; Taiwan: communism or democracy; Oil production increased – prices fall; Stock price rises – volatility increases
Symbol: USDJPY; Type: BUY; Open Price: 136.193; Close Price: 133.364; Profit: -2.077%.
Symbol: USDCHF; Type: BUY; Open Price: 0.96843; Close Price: 0.9578; Profit: -1.098%.
Symbol: ETHUSD; Type: SELL; Open Price: 1605.44; Close Price: 1601.36; Profit: +0.254%.
Taiwan: communism or democracy
As Beijing attempts to express a coherent reaction to Nancy Pelosi’s historic trip to Taiwan, the Chinese capital has been left pleading for patience after its initial response was lacking. The answer from China shows the difficulty of dealing with Taiwan, the pragmatism of the Communist Party, and Xi’s own personal political condition. The leader, who is 69 years old, has been intent on removing obstacles that may prevent him from extending his power at a party congress later this year. As a result, he has had little taste for provoking a dispute that could quickly become out of hand. Nationalists in Taiwan were dissatisfied with China’s response to House Speaker Nancy Pelosi’s visit to the island, which might yet ruffle some feathers in the area. Beijing has launched a series of military maneuvers and missile tests demonstrating the country’s capabilities of encircling the main island of Taiwan.
These drills have the potential to cause disruptions in Taiwan’s shipping and aircraft lines. Taiwan is one of the world’s most important producers of computer chips. It is unclear if the flight restrictions in place for the past three days will be prolonged, which adds to the growing concerns over the surging prices of commodities and the potential disruptions to supply chains. It is possible that China may use Pelosi’s visit as a pretext to exert pressure on Taiwan by crippling the island’s economy and continuing to obstruct shipping and air travel. The Taiwan Strait is one of the busiest shipping channels in the world, with roughly half of the world’s container fleet expected to transit through it this year alone. Any attempt to gain control of Taiwan would indicate that Beijing has been unsuccessful in persuading the people who live on the island that the communist system that Beijing promotes is superior to the democratic ideals that the United States and its allies support.
Oil production increased – prices fall
September will increase production by OPEC+ of 100,000 barrels per day. According to data from the US, the four-week average demand for gasoline has dropped to its lowest level since February. The delegates have expressed their fear that the demand would decrease due to the possibility of a recession in the United States and the Covid-19 lockdowns in China. At eleven in the morning in New York, the price of a barrel of WTI with a delivery date in September was $92.42, down $2.
The price of a barrel of Brent for October settlement increased by $1.96 to $98.58. The ambassador for the European Union tasked with reviving the nuclear agreement reached between Iran and international powers in 2015 is on his way to Vienna. If the nuclear deal were to be resumed, it would likely result in fewer sanctions being placed on Iran, allowing for increased exports of the country’s oil.
Stock price rises – volatility increases
The rise in stock prices in the United States was driven by better-than-anticipated economic indicators and ongoing robust earnings reports from US corporations. The tech-heavy index reached its best level in the past three months, while the S&P 500 index reached a level that hadn’t been seen since June. As traders reassessed their forecasts for the Federal Reserve’s path of rate hikes, the yield on the 10-year Treasury note inched closer to 2.8 percent. The seasonal pattern indicates that volatility may increase until the end of the summer. Historically, August and September have been the two months in which the S&P 500 Index has performed the poorest.
According to the Cboe VIX Index, price fluctuations are also often more common in summer and the beginning of fall. Following comments made by Fed officials, a tough environment was noted, which included growing costs of borrowing money, pricing pressures, and a slowdown in economic development. President Daly of the Federal Reserve Bank of San Francisco stated that there is “a long way to go” until the Fed achieves price stability around its inflation objective of 2%. Mester, the Cleveland Federal Reserve president, has stated that she is looking for “quite convincing evidence” that monthly price rises are leveling down. In the latest edition of the MLIV Pulse poll, participants were asked about their expectations for the health of US company balance sheets, mergers and acquisitions, and corporate bonds until the end of the year.
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