I suspect most will remember this 4th week in May of 2018 as GDPR email madness week. Hopefully you will have noticed that The Tatton Weekly did not join the crowd and unless you feel the urge to click the ‘unsubscribe’ button at the bottom of the email you will be allowed to continue receiving this weekly fixture without further action required. Research skills applied differently.
For us and investors the week had far more interesting aspects than businesses turning data protection into a Y2K déjà vu.
Politicians who believe their success lies in ripping up political convention and employing disruptive strategies – suffered setbacks. Turkey’s strongman Erdogan threw his country into a currency crisis when after trying to apply the same bullying tactics he normally uses on his political opponents to international capital markets. I must admit to taking pleasure from him being humbled and forced to ‘apologise’.
Italy’s populists were next, when markets in Italian bonds staged somewhat of a tantrum upon their agreement to actually forming a government. Like Erdogan, they similarly quickly distanced themselves from some of their more extreme plans from the campaign days like cancelling government bonds or leaving the Euro.
They may have taken comfort from their bond yields still not exceeding those paid on US government bonds – except that in Italy they jolted upwards as a result of fear of decline, whereas in the US yields have gradually risen in expectation of future growth.
Trump suffered a personal defeat when he was forced to cancel the planned summit with ‘little rocket man’ Kim Jong-un after North Korea’s leadership reacted very robustly to suggestions of senior members of the Trump administration that the denuclearisation of North Korea might be achieved in the same way as it was with Libya (!). As we had suggested a few weeks ago: it is one thing to force your opponents to the negotiating table, but if you don’t have a good plan what sort of deal to exactly negotiate for then little more than embarrassment has been achieved.
The administration’s trade negotiations with China suffered a similar fate. With Trump’s negotiation team deeply divided in what they aim to achieve they managed to generate so much confusion over the likely path and outcome during the course of the week that one feels inclined to draw similarities to the UK’s uncertainties over post Brexit trade relations. At least it has given the Chinese side a temporary advantage by preserving the status quo for the time being.
