Traders on Wall Street are having a tough time. They’re not jumping out of windows, since that sort of thing went out of style back in the last century. They just physically find it difficult to make their way to their offices. New York is smoky, even more than Kyiv could dream of during peat fires or Beijing, which almost always looks like Kyiv during peat fires. Karma has caught up with the inhabitants of the center of the world, punishing them for greed and jokes about Canadians. After all, it was the fires somewhere in Canada that turned New York into a post-apocalyptic world, probably inspiring several Hollywood producers to begin production immediately once the industry’s strikes end, where everyone, from screenwriters to actors, is demanding more money. Strangely enough, this is having practically no effect on market sentiment itself. Moreover, for the second week in a row, the S&P500 index has added an average of 70 points, and Friday morning will open at the mark of 4293 points. This is the highest since last August.
The main driver of stock index growth remains artificial intelligence.
It seems that a new market is emerging, attracting money from both institutional investors and retail investors. Meanwhile, the world's intellectuals are discussing the topic of "How artificial intelligence will ruin the world" and politicians are trying to figure out how to limit it and not become slaves to the Chinese in a few years. The oil market was fun. Brent opened on Friday at $75 per barrel, after information that the Americans and Iranians had reached an agreement that would allow up to 1 million barrels of Iranian oil per day to be released onto the market, surprising both the Russians and the prince of Er-Riyadh. However, this information was immediately refuted by everyone who should have refuted it, which probably doesn't mean anything because even if such an agreement is being prepared, it will be refuted until it happens. It's like the Ukrainian counteroffensive.
With developing markets, all attention was again focused on Turkey. After winning another electoral victory, Erdogan seems to be ready to temporarily relinquish his wild macroeconomic policy. Keeping the lira exchange rate high is simply impossible. Very respected economist Mehmet Simsek entered the government, causing optimism in the markets. And then a thoughtful candidate, Hafize Gaye Erkan, was named to lead the Central Bank, which is a significant achievement for Erdogan and more than a happy event for the market. She has experience working at Goldman Sachs, one of those infamous Western banks that Erdogan accused of all mortal sins along with Soros. Now the key question is how long this will happen and whether Erkan will be given a carte blanche.
While all the personnel turmoil was going on, the lira broke free from its chain, reaching 23.5 lira per dollar on Friday, and it still has further to go. However, Erdogan's nerves were not strong enough to allow the lira to fall to a new low right away, as his administration the national currency stroll for one day, then they grabbed all their phones and demanded that the Central Bank hold it again. But now that the Central Bank has a new chairwoman, the markets expect her policy to be new and clear. At least there is hope for this. And as for Erdogan's supporters, it's still unclear what to make of this. Perhaps we’re going to hear a conspiracy theory that Tucker Carlson will gladly voice, and which Elon Musk will help spread – that Soros replaced Erdogan while he was in the hospital, and now directly controls Turkey from smoky New York.
In the Ukrainian market, the most interesting events are happening in the corporate debt segment. Naftogaz is continuing to grow rapidly in price after the completion of its restructuring. The cost of a short-term Naftogaz bond has already reached 50% of face value. The longer-term Naftogaz bond is currently trading at around 35% face value. Naftogaz's success is inspiring owners of Ukrzaliznytsia's eurobonds. The sovereign debt segment remains stable. On the black market, the hryvnia continued to strengthen, and the spread between the official exchange rate and the market rate is only 2%. The exchange rate of the hryvnia is around 37.2 hryvnias to the dollar.
On the currency market, the most interesting story is about many Ukrainians now facing reluctance from exchange offices to accept "spoiled" or "old" banknotes. It is all like in the classic of Russian propaganda - your dollars are no longer needed by anyone. What this mysterious conspiracy is all about is not yet clear. And, as always happens, rumors have spread throughout the country that no one is now accepting any dollars and soon they will be completely illegal.
The key event in Ukraine was the latest war crime committed by Russians, who blew up the Kakhovka dam, awakening even Greta Thunberg from her pro-Russian propaganda induced loyalty, now appearing so sweet that you can even include her in a telethon. The economic effect will be minimal in contrast to the impact on the environment and the lives of people and animals, which will likely affect macro levels only in the prices of some vegetables, causing inflation. Despite this, many doomsday prophets shouted that Ukraine’s entire grain export and the country's agriculture were under threat. This was helped by the fact that on the first day after the explosion, when few knew what had actually happened, food prices on the global markets suddenly spiked, allowing urban Ukrainian crazies to appeal to beautiful graphs and incomprehensible words.
Quality is not an act, it is a habit.
Aristotle