TITANIC
"I had my whole life before my eyes, as if I had already lived it. An endless procession of parties, company dances, yachts, polo matches ... Always the same pious people, the same stupid chatter. I always felt like I was on the edge of a precipice, and there was no one to hold me back, no one to whom it mattered, or at least to realize it…“A woman's heart is a deep ocean of secrets. But now you know that there was a man named Jack Dawson, and that he saved me, in all the ways a person can be saved. I do not even have a picture of her. I have nothing of him. It lives only in my memories”
(Old Rose)
We wear our best clothes and are ready to sink from lords. But we would like a brandy. (Guggenheim)
“Okay, here we go. It crashes into the starboard iceberg, right? And it proceeds to jolts, causing faults like Morse code along the side, below the waterline. Then the bow compartment begins to flood. Now, as the water level rises, it overflows with the watertight bulkheads, which, unfortunately, do not exceed the bridge.” (Bodin)
Based on "The Titanic" by James Cameron.
America is increasingly distant. The duties imposed by Trump on behalf the world are leading us to the brink of a commercial war. The fresh air of Quebec does not seem to have much influence on the mood of the ministers who are participating in the financial G7 in preparation for the "real" G7 (scheduled for the 8th and 9th of June). Indeed, the climate between partners is increasingly cold. For now, the "Trumpiana" tax consists of rates on the import of steel (25%) and aluminum (15%), to "protect the USA" from competing markets. Trump, in retaliation, has ready the counterattack with an increase of duties on car imports to 25%; today they are at 2.5%. According to some research institutes, the effect would be a reduction in exports of vehicles in the United States of 50% (-29 billion dollars) for the European Union and 54% (-19 billion) for Germany.
Tensions are also rising in Brussels, where European Commission President Jean-Claude Juncker talked about transatlantic relations "clouded" by Trump's "questionable" attitude towards the EU. Juncker added, "as Trump defends his American interests with his nails, we also defend European interests, because "'First America' must not mean 'Europe last'." Junker also made a call for cohesion in the EU, advising against "giving in to the temptation to conclude bilateral agreements with the US". On the warmer front, above (all in terms of exchange size), is China, where we talk about the 100-billion-dollar war. Trump aims to rebalance the 357 billion trade deficit. In turn, Beijing speaks to duties of equal value. Americans are pragmatic; in the absence of concrete steps in the dialogue between the two countries, automatic tariffs are triggered. China on the contrary wants reassurance.
All ministers who will be present at the G7 unanimously expressed fears about measures that "threaten to undermine trust" in global trade— in addition to triggering a series of retaliations against US exports. Also, on the regulatory front, the US is moving in countertendency. In recent days, the US central bank (Fed) has given a pick to the architecture of bank checks - the Dodd-Frank law - designed by President Obama in 2010 in the aftermath of the Great Crisis of 2008. Legislation has watered down; the so-called Volcker Rule aims to reduce risks taken by banks when they operate on derivatives. After the Deutsche Bank case, Europe seems a far-fetched proposal. But this is a Europe that hesitates in search for itself: this is six months for the formation of the German government, in Spain Rajoy is replaced by Sanchez, Italy passes from the Cottarelli hypothesis to the Conte government. The spread is reduced but the tension on the peripherals remains high. This is politics, but economy and markets run in a completely different direction.
The NASDAQ has updated the historical highs. Apple points to 1000 billion capitalization, records for Amazon and Microsoft. In the US the unemployment rate fell to 3.8% compared to the 3.9% expected. The economists expected the creation of about 188 thousand jobs, but the monthly report speaks of 223 thousand newly-occupied people. In the euro area in May, inflation flies to 1.9%. A boulder for the ECB that will meet next week. The official goal has now been reached. The maneuver spaces for Mario Draghi are limited. Crude oil has been heating up prices even though now Saudi Arabia and producing countries are aiming to increase investment in research and therefore production. In the US, in the meantime, the extraction activity is taking place: last week the active drilling rigs were 861, maximum since March 2015. Thinking of a Europe without US and vice versa is like thinking that the Titanic sank, no ship has crossed the Atlantic. The two sides will always remain united is just a moment, we just have to take advantage of it. We have long believed in US tech because, with cloud and software, they are lighter than any commercial barrier, they do not fear tariffs and will never sink into the ocean.