2020-05-06 • Updated
Bloomberg published an article about a recent study that suggests that the 1918-1920 influenza pandemic largely contributed to shaping the Nazi mentality in the young generations in Germany.
The study was done by the New York Federal Reserve. The authors admit there is no place for direct conclusions, but the correlation seems to be there: cities with most influenza deaths in 1918 which saw little social expenditure form the governments witnessed an increase in their proportion of votes for the Nazi party leaders in Germany.
The study suggests that the main reason for that social change was the disappointment of the people with the actions of their governments, which failed to help them through the pandemic fallout. Feeling resentful to their leaders, they started looking for alternative directions in social policies – which were readily offered by the right-wing politicians.
Basically, those who felt most left out shifted into the right spectrum of political direction. Now, the map below shows the level of happiness among people with the actions of their respective governments.
Source: Bloomberg
This map is based on public polls. Obviously, we have to keep in mind that not all countries grant the liberty to their citizens to express their dissatisfaction with the actions of their governments. So a certain political common sense needs to filter the colors coming from this picture. But still, what we see is that, generally, Americans, Brazilians, Russians, and Turks are utterly unhappy with what their governments did in response to the coronavirus and economic damage caused by it. Therefore, these countries, if we were to continue the logic suggested by the study, may be a ground for a social shift towards the right socio-political spectrum. “What does it mean for the currencies though?” one may ask. It will mean instability.
Specifically for the USD, it will mean instability. Although it is the primary global reserve currency, its positions may be undermined by any shift from a center-balanced political-economic direction of the government. Donald Trump’s views and general direction do not appear exactly center-balanced. Rather, they are protectionist-expansionist. In the strategic horizon, that may be the most dangerous direction for economic development in the US. Numerous fundamental factors, such as the labor market, the government debt, external policies, and many others create an unprecedentedly tensed economic background for the US economic system, which, in general, risks getting overheated. In the meantime, the US President’s actions, internally or externally oriented, do not appear to be exactly cautious. Overall, that creates a potentially dangerous world for the US dollar to exist.
That means, strategically, the undisputed global dominance of the USD may come to end pretty unexpectedly.
That is no bad news for a trader though – as long as you get prepared for such a scenario as well. Let’s stay put and watch the dynamics.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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