Donald J. Trump will be sworn in as President of the United States for the second time. While most investors are focused on tariffs and tax cuts, I thought it is a waste of time1. The certainty can be guaranteed, the severity and consequence is anyone guess. I would expect tariffs to be higher and tax cut to be lower. As Trump gets this tariff act going, every rise and fall of the stock price for many of the manufacturing-export companies from China has been attributed to the “leaks” of either higher or lower tariffs from Trump’s inner circle.
What I am more impressed with is the cease fire in Gaza. The deal was closed right before Trump got sworn in. Why now and not one week earlier or later?
While everyone would like to claim some form of credit, my belief is that the deal would not been possible if not for Trump’s chief negotiator. The Israelis obviously has Hamas on the run and there is no need to stop bombing when your enemy is losing and has no place to run. Israel stopped because Trump has given a ultimatum and Israel wanted that Trump’s friendship.
Trump instead will seek to expand the Abraham Accord by normalising ties between Israel and the Saudi Arabia. If that happens, Trump’s hope of going down in history through the securing of the Nobel prize will be partially complete. The Saudis are more interested in securing money for business and investment2 than to pick up a fight with the Israelis or the Iranian.
If Trump could get the Israelis and Hamas to talk, my guess is that Russia and Ukraine cannot be far behind? Ukraine is at the mercy of the western powers in terms of arms supply. Zelensky knows that Trump will be crazy enough to engage Putin unilaterally if he chose not to come to the table. Putin will most likely play ball3 with Trump. If Zelensky do not play ball, he will be not at the negotiating table for Ukraine.
Outcome is that Ukraine is going to sacrifice some territories, NATO is going to stay out of Ukraine and there will be some form of “peace” in that part of Europe.
If you are wondering where all these lead to…
This thesis could be one way to think about future oil prices. Commodity prices or any prices that is hard to come to a value to are usually based on sentiment4 and supply. Sentiment looks likely better, higher supply from Middle-east (minus Iran) with Russia also coming back online. That could be the inflation reducing act before the Tariffs tax on all the Americans.
I wonder if that is what the market is pricing in right now, a period of excess supply from all the producing parties. When no one in OPEC + is interested in limiting supply, the only possibility is a steady drop in price.
I am bearish on oil price but pretty neutral on oil and gas services. The reason is that there is minimal supply coming online for the services sector. But if oil prices crashes close to production cost, offshore is gone.
Positive on Malaysia oil and gas services as they seem to rest on Petronas willingness to spend heavily. The rest, I am not so sure.
isn’t that that is a given?
which also meant that they need to sell a ton of oil to fund these spending
Putin is getting a “get out of jail card” in regards to the Russian economy.
like the price of a labubu or the stock price of pop mart