What can you say about the week that was?
A lot, obviously.
The President of the United States threatened to ram a “nice, new” missile (or 59 of them maybe) up the ass of a “gas killing animal” in Damascus, even it meant chancing a direct military confrontation with the Russians. That would be insane enough on its own, but the truly surreal part is that these would be the same Russians who helped get him elected in the first place. And speaking of rigged elections and investigations into Russian meddling, that same President of the United States was forced to sit idly by as the offices, home, and hotel room of his personal lawyer were raided by FBI agents on orders from a Deputy Attorney General who penned the memo that justified the firing of a former FBI Director who has now written an account of his interactions with that same President and that account includes the President explaining to that fired FBI Director that he would never let Russian hookers urinate on each other in his presence because he’s a “germaphobe.” Now that Deputy AG is reportedly preparing himself to be fired too. Oh, and that personal lawyer is under investigation for bank fraud and possible campaign finance violations presumably related to paying off porn stars who spanked the President with magazines featuring his face on the cover. The week came to a fitting end when the President called his former FBI Director a “lying, leaking slime ball” who should be prosecuted.
So you know, just let all that sink in, because that all happened this week. And this is what Trump tweeted on Friday afternoon:
DOJ just issued the McCabe report – which is a total disaster. He LIED! LIED! LIED! McCabe was totally controlled by Comey – McCabe is Comey!! No collusion, all made up by this den of thieves and lowlifes!
— Donald J. Trump (@realDonaldTrump) April 13, 2018
All you can do is laugh.
Trade tensions took a back seat to all of that which is a testament to how batshit crazy this administration truly is – I mean imagine what kind of dumpster fire would have to be raging at 1600 Penn. to relegate “global trade war” to the backburner of the news cycle.
It’s still unclear what form a U.S. strike on Syria will ultimately take but as of this writing some manner of military action seems like a foregone conclusion.
Decent week by the time the dust settled (just in time to kick it back up over the weekend):
The banks plunged on Friday in a kind of “sell the news” reaction to earnings.
This week also saw Russian assets react to punishing U.S. sanctions. The ruble recovered a bit, but was still down some 7%:
Ruble versus CDS:
For his part, John-Paul Smith thinks “investors could become collateral damage from the actions of either side in the new cool war.” As for Russian equities, he says the plunge “should be over for the time being, but the longer-term prognosis remains grim as Russia moves toward a more Autarkic Governance Regime.”
Reuters notes that three Russian tycoons “may have lost a combined $7.5 billion since the list of U.S. sanctions was announced.”
Speaking of plunging currencies, the lira hit an all-time record low early in the week amid concerns about the central bank’s willingness and/or ability (given Erdogan’s iron grip) to cool off an overheating economy and fight inflation. At this point, it sounds like folks are getting nervous about staying short ahead of a closely-watched CBT decision on April 25.
For their part, Wells Fargo thinks the risks are skewed to the downside for the lira. The following is from a new note out on Friday afternoon:
TRY – Markets Go Cold Turkey on the Lira. The Turkish lira is among the weakest emerging currencies this year, declining more than 7% to a new record low against the U.S. dollar. While recent financial market volatility and geopolitical tensions in the Middle East have likely contributed to weakness, in our view, the most important risk for the Turkish lira is persistently high inflation, particularly if interest rates do not rise enough to compensate foreign investors for the inherent risks. Accordingly, we have a negative near-term view on the lira, targeting a USD/TRY exchange rate of TRY4.2500 in 6 months, and see only a modest recovery against the backdrop of a weaker U.S. dollar to TRY4.1000 in 18 months.
Stellar week for crude amid geopolitical tension, Saudi headlines and optimism around demand now that the trade war tensions appear to be easing somewhat (until the next Trump tweet):
You can find much more on this in “For Markets, Geopolitics Grabs Center Stage – Who’s Excited?!”
In other oil-related news, we learned that Saudi Aramco is the most profitable company on the planet today:
Wild shit in aluminum this week after the Rusal debacle. I’m not even going to try and rehash this entire story for you here – just read this, from Bloomberg.
Tesla is still getting “tremendous” press:
"the press we're getting is tremendous."
— Tesla ships flawed parts from suppliers to a local machine shop for fixes, and they're piled up outside
— Walter White (@heisenbergrpt) April 13, 2018
That after Elon said this:
The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money.
— Elon Musk (@elonmusk) April 13, 2018
The yen has fallen for three straight weeks against the dollar as trade risks are perceived to have receded or maybe just because we have to have a narrative to explain everything, so we’re going with that:
Make-believe space tokens had one of their best week’s of the year (more here):
Finally, for your moment of zen, here is Sarah Huckabee Sanders talking about “slime balls”:
JUST IN: Press Sec. Sanders tells @CeciliaVega: James Comey "will be forever known as a disgraced partisan hack."
— ABC News (@ABC) April 13, 2018