Once again, those that continue to hold exposure to the bourses of the United States instead of commodity assets such as oil are being rewarded. The S&P and Nasdaq march on to new record highs invigorated by a combination of boorish rhetoric from Donald Trump against BRICS economies that plot against the US Dollar's supremacy and something of a 'Goldilocks' ISM Manufacturing PMI reading. The November reading of 48.4, is better than the expected 47.5, allaying fears of continued manufacturing issues but also revealed that Manufacturing Prices Paid had reduced to 50.3 from October's 54.8. Therefore, activity is healthy enough overall but is not initiating inflation and hence the 'Goldilocks' tag because nothing in the readings is concern enough for the FED to change tactic for a 25-basis point rate cut in December which increased from 66% to 75% in one day using the FedWatch tool. 

Global bourses have reacted in kind to the US lead although in a much more contained manner and even China's markers were offered a boost. The Caixin Manufacturing PMI beat expectations but the news that the outgoing Biden administration's fresh bout of tech restrictions on Chinese companies proved to be much less stringent than first feared. However, China's oil affairs remain surrounded in disappointment. IEA's China analysis, as seen on Reuters, predicts a plateau in oil demand and predicts Crude imports peaking next year exacerbated by the slowdown in the economy and the rise in EVs and alternative fuels. The ridiculously predictable and failing ceasefire between Hezbollah and Israel is not enough to give oil prices a boost and with the rampant US Dollar given extra fuel to burn by the 'no confidence' proposals surrounded the French government, the Euro's weakness gives another leg to the greenback which in turn gives good reason alone for oil prices to have few believers as the likelihood of another OPEC roll of cuts into the first quarter is all but priced in.

The Donald is back, along with his breakfast of over-sharing

We often find ourselves caught up in trying to bring correlative values and those that have been time honoured into the thinking of markets and actual movement. The trouble is, with such a shower of low standing individuals in control of global politics, any assumptive process is holed from the very start of application. In sporting thinking, and with a bat in hand, cricket and baseball players will often let a ball pass them by, either because it is too dangerous, or it is unworthy to address. Not so the modern presidents and prime ministers that sit across the higher echelons of the G20 and wider countries. Whatever is the current hot topic, instead of conservative consideration politicians choose to swing for the boundaries or the bleachers in the case of baseball. Which is why, and with reluctance, we here will be renewing our ‘X’ (formerly Twitter) accounts because if his last tenure is anything to be judged by, Donald Trump is likely to awake in the morning and take to social media with his ‘whim of the day’ and all markets will gobble up another source of uncertainty. No doubt, there will be ‘posting’ tennis as other world leaders join the gold mine of 280-character influence and if markets such as ours are currently impossible to predict, that task is about to become even harder.

In the UK, and before they won the general election, the Labour party barely argued against accusations that it would ‘tweet first’ before any sort of official line was taken in the more accepted bounds of media. In times past a controversial policy was leaked by a favoured hack who stalked the corridors of parliament, and it would enter the opinion pieces of a broad sheet or tabloid, but reaction would take an inordinate amount of time to rebound. Modern Labour’s ‘tweet first, back track later’ lost the ‘back track’ part of its campaign because it was emboldened by the immediacy of response and as its candidates increased the amount of social media traffic, consumers were more interested in what the day’s new announcement might be, rather than challenge yesterday’s. Globally, the guard rails of social media are continually weakened, misinformation (accidental or otherwise) is ephemerally treated as truth, fact checking too time consuming, but narratives are established.

Whatever one feels about the new president-to-be in the United States, his application of social media is nothing short of genius. Even though it was only a four-year tenancy, Trump part 1, was the most powerful presidency in US history. Not for fiscal triumphs, not for military success, not for pushing the US to an even greater status in the world’s hierarchy, it was his influence on market reaction. Donald Trump’s use of social media, and that you and we were able to see into the thoughts of the most powerful man in the world before his generals, chief of staff, Senate, Congress or Federal Reserve had indulged in their first coffee or breakfast of choice was game-changing. The markets are aware of news reading algorithms, there must be some bright sparks within the bond Gods of New York or battalions of coders in the world’s investment banks that are right now setting up Trumporithms.
As for our market, the biggest example of a Trump tweet success came on April 2, 2020. The President at the time posted, “Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!” M1 Brent that day rallied $11/barrel before eroding gains as our community suspected bloviation until 10-days later the historic cut of 9.7mbpd by OPEC underpinned a near two-year rally which was eventually hijacked by Russia’s invasion of Ukraine. Picking out truth from whimsy will be once again a required skill. Whether or not circumstance gives the new President a chance at out-posting such historical language remains to be seen, but Mr Trump along with the quickly catching up leaders of the world, who will answer or argue on similar platforms, are about to bring social media price influence on markets that have frankly more than enough drivers to digest.

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