The great game
I don’t think we’re quite back to the days of the cold war but it doesn’t feel far off. President Putin seems to feel pretty secure, even with an upcoming election, and it matters not a jot it seems to the Russian population. Ukraine, Syria, The Crimea and Olympic doping scandals don’t seem to shift Putin’s popularity.
The term “The Great Game.” Was a I Believe termed by a British officer to describe the Russian Empire’s maneuvering in Central Asia and Europe from 1813. There is sabre rattling over Ukraine again. Turkey’s President Erdogan is now reported to be getting on pretty well with President Putin, which I don’t think bodes well for the west especially as Turkey is playing a major role in the migrant crisis. And, surprise, surprise North Korea is launching missiles from a submarine into the Sea of Japan.
Of course a lot of this activity could be taking advantage of the lame duck U.S. presidential status. That will change after November’s election. I notice that Donald Trump is catching up in the polls. I expect his spin doctors to strive to keep their boss on message and if he can do that and Hilary Clinton is further damaged by email investigations and maybe other skeletons in the cupboard then Trump may prevail.
The thought of Trump and Putin having the authority over their respective nation’s nuclear arsenals fill me with dread. I also note that Germany is considering reintroducing conscription for civil defence purposes. Signs and portents? I hope not.
Now it’s back to oil. We’re back at a little under US$50 a barrel. Much has been made of an OPEC agreement to cut production but I can’t see it. Moreover, for production cuts I think we need to be looking more to US shale. The price war goes on and on and I don’t think the fundamentals that caused the oil price crash have changed.
In fact, a piece of news I heard just before I wrote this may signal a significant impact on oil demand. Tesla says its new electric Model S is the fastest production car. In Ludicrous mode (note the name folks) Tesla says this beast can go from 0-60mph in 2.5 seconds and its range can be over 300 miles. With most of the big vehicle producers looking at, if not producing electric vehicles, then we have what I believe may be a paradigm shift in motoring that we haven’t seen since the replacement of the horse and cart.
I would argue that taking an ever increasing amount of refined product out of the demand cycle as alternative vehicles come into play that this going to put a serious dent in oil prices once markets figure out what’s happening.
The pundits that I have heard discussing the Canadian economy said that the Canadian economy is ready to improve. The trouble is they don’t seem to know when. Maybe someday.
Finally Brexit. Well, so far the UK economy has not fallen off a cliff, a bit the other way if early data is to be believed. It also looks like the process is going to be so darn complicated that the actual event is some way off yet. Playing Devil’s Advocate there is plenty of time for other countries such as France and the Netherlands and maybe others to play their part in their own exits from the EU.