The Italian job.
Brexit has been rolling on for so long now that I suspect that the movers and shakers, the market and a good deal of the people have it figured in their minds and just want it over with. I expect the UK and EU negotiator’s feel the same way. Italy has been in political turmoil for some time. Yet, the way the markets reacted at the possibility of an anti EU government taking the helm would seem to indicate that the market had no idea that the slow curve ball was coming out of left field.
The latest is that Italian populists (not EU friendly) may form a coalition. The political crisis in Italy has been described by The Washington Post as “a gut punch to Europe.” Italy is a founder member of the EU and the thought even of the nation wanting to leave will send chills down the spine of EU heads.
On the other hand. Elections and political turmoil are not uncommon in Italy, but the fact remains the populist feeling has stuck. Surprising change can happen, we’ve seen that before.
Aside from fears of a witch hunt, U.S. President Donald Trump seems to be tweeting about spies in his campaign team or close to it and jumped on the Roseanne apology from ABC theme and savaging his own Attorney General, Jeff Sessions again. Eyes are on the mid-term elections now where traditionally incumbent parties don’t do so well. The Republicans may just hold their ground, or they could get a bad mauling. I’m not going to call that one, yet anyway. Trump is smart enough to know that a holding/slight gain pattern is a win for him a mauling would, I think, lead to the party turning on him big time. There is nothing uglier or angrier in politics than a party blaming a leader for an electoral defeat. I’m not getting into tariffs just yet there’s plenty of time for a flip flop before next week.
And now for something completely different, oil. I’m not going to weigh in on Trans Mountain until the dust has settled a bit. However, oil prices have been rising. Partially due to the Iran and Venezuela situations and mostly, I suspect, due to speculators with an eye of the glory days of $100 plus a barrel. I and I think a great many companies in the business would like to see a stable price around the $70-$80 mark. Good for industry, not bad for consumers and nice for governments to rake in tax and royalties. The McLeod River Post, Wednesday, June 6, 2018 Page 14
My gut feeling is though that the fundamentals have not changed. OPEC and Russia likely will be in the market to maybe pump a little more. I also still think that the Asian market prize, China especially, is an elusive one. China has plenty of shale resources but is way behind the U.S. in getting it out, less than 10 per cent annually of the U.S. I believe. The nation has energy interests in Brazil, Africa and more and will, I think take western oil only for as long as it needs it. Short term gain for importers that may lead to long term pain. But, hey, since when did most western corporations think further ahead than the next quarter’s numbers?