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Tuesday, 12 December 2017

On the Nikkei, Erdogan, and a new month

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  • Peters 475px June 2014

Peters on the changing climate(s)

Climate change is supposed to be the main subject in Paris, although the change in the physical climate has so far come a distant second to the change in the political climate.

Welcome to December. Eleven down and one to go. Monday came and went and whatever fireworks might have been expected after the half week which Thanksgiving bestows on America (and by osmosis on us too) didn’t occur. In fact, the session was, to use a term I generally regard as bland, lacklustre (but then what’s wrong with using a bland word to describe a bland day?).

Nothing exciting came out of Black Friday other than the confirmation that domestic shopping continues to depart the high street for cyberspace and it therefore follows that if Black Friday is happening online, then Cyber Monday loses in power too.

By all accounts, overall sales were in line with expectations at around US$12bn and hence nothing to get excited about. US household consumption remains firm but contained, which is supposed to be what the monetary authorities are wishing for.

Here in the UK, Black Friday is a still foreign phenomenon and I heard stories yesterday of disappointed camera teams from news stations scouring the land looking for the same rugger scrums and fisticuffs over cheap TVs which made the headlines last year. Been, gone; move on.

Asian risk markets, other than those in China where the manufacturing PMI for November slipped to a three-year low of 49.6, traded strongly overnight. The post-factum explanation for the rally given by otherwise sane and educated members of the fifth estate is anticipation of the implementation of aggressive stimulus on the part of the ECB on Thursday.

Hello? Why would further quantitative easing and a lower deposit rate in the eurozone with the concomitant weakening of the euro help Asian manufacturers.

The Nikkei hit a low on September 29th at 16,930 pts since when, in just over two months, it has rallied around 18% and is trading a whisker north of 20,000 points today. That rally has absolutely nothing to do with the ECB and if momentum carries it above that 20,000 level for the first time since August 20th, woe betide those who go looking for explanations in and around Frankfurt.

Meanwhile, the great and the good have travelled to Paris, been photographed in front of the Eiffel Tower and have gone again. Climate change is supposed to be the main subject although the change in the physical climate has so far come a distant second to the change in the political climate. Recep Erdogan has raised the diplomatic temperature by a lot more than the two degrees the climatologists are talking about.

He stands there knowing that his NATO partners are contractually obliged to back him and he now has a string of freshly baked promises from the EU to lean on. Russia’s political and military objectives in Syria might not be congruent with those of the West but most of non-neocon Washington is looking to find and to work with the similarities rather than to highlight the differences.

On Wednesday last week I noted: “One way or the other, it is not hard to see a possible repeat of the Crimea conflict of 1853–1856. Though the birthplace of Orthodox Christianity, Turkey is today a Muslim country – and probably more Muslim now under Recep Erdogan than the nation’s founder, Kemal Ataturk, would have envisaged – which places it on the frontline where Islam meets Orthodox Christianity. Historically, the fault lines between Russian Orthodoxy and Islam run much deeper than do those between the latter and Roman Christianity.”

After Erdogan’s refusal yesterday to engage with our Vladimir “put-me-in” Putin in Paris, that observation looks more potent today than it did just six days ago. Methinks that NATO and the EU have not one but two tigers by the tail. Incidentally, try not to miss Gideon Rachman’s political column in the Financial Times today titled “We deride Le Pen and Trump at our peril”.

A propos the FT, the beloved “pink’un” belongs as of yesterday to Nikkei of Japan and no longer to the Pearson Group which had owned the rag since 1957 and therefore for as long as I have been reading it.

Late afternoon, a bit from Paul Murphy of the Alphaville group pitched up titled “FT Alphaville, out from under the Pearson yoke…” followed on the next line by “…is hiring again”.

Whether this says more about the old owner than it does about the new one will have to be seen. My instincts tell me that if Nikkei want to put more money into the real-time end of the paper, that it might be aiming at de-emphasising editorial depth for fast news content. My fear is that we are already swamped with too much surface news but that we already lack deep, informed and unbiased analysis. My canary in the coal-mine will be Gillian Tett. Were she to leave, I’d be worried.

Apart from that, keep an eye on today’s US releases, especially the ADP Employment Change and the Q3 Nonfarm Productivity and Unit Labor Costs in the run-up to Friday’s November Payrolls report, with the ECB assault course to negotiate in between the two on Thursday.

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