On Friday, the US stock markets ended mixed as tensions on global trade grew. The rising treasury yields also contributed to the mixed reaction on the stock markets.
During the weekend, several major things happened. First, Venezuelans went to an election to elect their new leader. As expected, Nicholas Maduro won the election by a large margin because the opposition parties boycotted the election. Maduro will now continue his reign in one of the richest countries on earth but one whose policies have left most people poor.
The decline of Venezuela is well documented. For decades, its former leader, Hugo Chavez led a country with socialist policies. This was at a time when crude oil prices were rising. As such, he could afford giving out services and products to the people. When he died, Maduro became the president and continued his predecessor’s policies. Unfortunately, this happened during a time when crude prices were falling. To mitigate his policies, he started printing money which led the inflation to rise above 18,000%.
After the election, we will now expect more sanctions against the leaders of the country. These leaders have already been sanctioned meaning the new sanctions will be widespread. This is expected to affect the supply of crude oil, which jumped after the election results were announced.
Another major news during the weekend came from the United States. The justice department is continuing its probe into the election meddling. This is being carried out by the office of the special counsel. On Sunday, the president sent a series of tweets venting about an investigation that threatens his presidency. The most consequential tweet came in the evening when the president announced that he would ask the justice department to start a probe about whether the FBI and the Justice Department under Obama spied on his presidential campaign.
The new angle came as reports indicated that the FBI had an informant talking to members of the Trump campaign. Meanwhile, Rudy Giuliani, one of the president’s lawyer said that Mueller would end his obstruction of justice case by September, months before the mid-term elections.
Another major news came from the Treasury Department which announced that the new tariffs on Chinese goods would be halted. This came after a previous announcement that China would import more goods from the United States in a bid to narrow the trade deficit between the two countries. Earlier reports indicate that China had accepted to boost purchases by more than $200 billion, a figure that most people said was untenable. This is likely to be a good thing for the market. It will also form a basis for trade negotiations between the US and other regions and countries.
Iran continued lobbying the EU after the US abandoned the Iran deal. A report by the Wall Street Journal (WSJ) said that the country was in talks with the European countries asking them to boost trade to offset the impacts of the US exit. This is an important move, but one that is unlikely to succeed. This is because unless the US exempts Europe’s countries from the sanctions, no company will choose Iran over the US. This is because the American economy is larger, more open, and more vibrant than the Iran one.