Non Sequiturs From A Crazy World

It’s a crazy world, in case you haven’t noticed.

Wednesday offered an eclectic hodgepodge of headlines, some of which had absolutely nothing to do with one another, making the juxtaposition between them all the more amusing — or at least to me.

Most obviously, a giant ship got stuck in the Suez after running aground due to a lack of visibility linked to wind from a sandstorm. The video (below, from Bloomberg) gives you a sense of the situation.

It’s rare that I have little to offer in the way of editorial color, but I’ll confess that emancipating Eiffel Tower-sized container vessels lodged in key shipping arteries simply isn’t my area of expertise.

I don’t feel too bad for being analytically bereft, though — it was clear by Wednesday that this is nobody’s area of expertise.

“By Wednesday morning, more than 100 ships were stuck at each end of the canal,” The New York Times wrote, adding that,

Dozens of tugboats had raced to try to wrench the ship free as crews on land brought heavy equipment to dig it out from the canal’s eastern embankment, where its bow sat wedged. High winds continued to sweep the area on Wednesday. And the sheer size of the ship — which is almost a quarter of a mile long, dwarfing the tugboats and bulldozers deployed to save it — complicated the task.

At least some traffic through the canal was expected to resume Wednesday or Thursday. This gets a mention in these pages because… well, because it’s unavoidable. But also because, as Bloomberg recounted, “about 12% of global trade and 8% of liquefied natural gas pass through the canal, as do around 1 million barrels of oil each day.”

Moving quickly down the list of non sequiturs, the Hang Seng fell into a correction Wednesday. Hong Kong stocks have been episodically beset of late, with sentiment suffering from Beijing’s tech crackdown, vaccine uncertainty and political tensions, as Xi tightens his grip on the city.

City shares fell a fourth day amid selling from mainland investors and a temporary suspension of BioNTech vaccinations. Mainland shares dropped to the lowest since early December.

Meanwhile, in Turkey, the lira and local equities are still reeling from Recep Tayyip Erdogan’s decision to fire CBT Governor Naci Agbal last week. Swap rates hit 1,400% on Tuesday. On Wednesday, amid a tedious rebound in some domestic assets, Erdogan regaled citizens with some of his trademark balderdash.

“I want citizens to invest the gold and foreign currency they keep at home – our national wealth – into various financial instruments,” he declared. Anyone “keeping their foreign currency and gold at home in order to feel safe” should deposit it in the financial system. And post-haste, Erdogan suggested. Any takers?

Local bank shares were down 15% for the week. That included a better than 3% gain midway through Wednesday.

In Europe, the virus situation is deteriorating markedly, with Angela Merkel’s abrupt about-face on an Easter lockdown underscoring the confusion and frustration. Britons are now “extremely unlikely” to take holidays abroad due to the risk of importing COVID mutations back to the UK. That’s ironic, considering the UK variant is now the country’s most famous export.

“Naturally, markets or algos will soon remember that vaccines in pill form are being floated; HK is just HK; Cornwall and Devon are lovely; Turkey is Turkey; and there is always a cheap plumber [for the Suez] in a globalized economy,” Rabobank’s Michael Every wrote Wednesday, in a sweeping (and characteristically entertaining) piece that I can’t possibly do justice to here.

Every, riffing on a boilerplate warning China pulled from its Rolodex of diplomatic bombast this week, went on to say that,

One can worry about central banks tightening, and that would certainly see markets correct their ‘false path.’ And one can worry about central banks not tightening, and that would see markets on an even ‘falser’ path. Yet one should worry most about the geopolitics of ‘correct their false path’ – and that central banks are not able to do a thing about the path of history, wherever it is leading us.

That latter bit is true. But it won’t be for lack of trying.

The BOJ bought 71.3 billion yen worth of ETFs on Wednesday, as Japanese stocks fell. It was the largest purchase this year, and came less than a week after the bank “tweaked” its array of stimulus programs to make them more “sustainable”. You know, in case “the path of history” turns out to be littered with land mines.