Geopolitical April News

Lots of debate in many nations about the correct action to take in Syria following the poison gas attack this weekend in Douma. Still not clear who ordered the attacks and intelligence information is conflicting at present with Western sources blaming Syrian government, while Russia and other Syrian allies want a further investigation into the matter and expressed concerns about destabilizing an already fragile Middle East. Meanwhile, a Syrian airbase was hit with an airstrike on Monday which is being blamed on Israel, who has yet to comment on the situation. Hungarian Prime Minister Orban will easily win re-election with his party garnering a supermajority in Parliament which will give it the power to amend the nation’s constitution and promote a nationalist agenda which has a strong anti-immigration platform with greater regulations on media censorship, banking, courts, and nongovernment organizations has some EU leaders concerned about undermining democracy in the nation.
The build in crude had no impact on market today as focus is almost entirely on the Middle East and the developing issues around Syria. Energy diverged from stocks which retreated today, while energy rallied. Saudi Arabia has intercepted at least three ballistic missiles fired from Yemen’s Houthis some of which targeted Saudi Aramco facilities. Those issues have the market embedding a fear premium again. These issues will not be resolved quickly, so if you plan to hedge, make sure you know where your target levels are and be read to act if market gives you an opportunity.
the Trump Administration’s chief economist – indicated that the latest comments by Chinese President Xi were positive, but that does not mean that proposed US tariffs won’t occur before negotiations. Kudlow seemed to suggest that the US/China are not currently engaged in direct 301 negotiations, and that by the end of May or early June, that the Trump Admin will have to put tariffs on China to push them to the negotiating table. Remember, China does not admit that it has broken any trade lows on US intellectual property.
House Ag Chairman Conaway will release his version of the 2018 Farm Bill toady which contains SNAP food legislation that is strongly opposed by the Democrats. And, House Speaker Ryan’s resignation yesterday raises real doubt that any US Farm Bill will be completed this year. The best bet for new legislation has been pushed back to 2019 or after.
Crude prices surged to five-year highs after President Trump vowed to retaliate against Syria for a Chemical Weapons attack and taunted Russia about their threat to shoot down U.S. missiles if they were used against Syria. More buying came in after Saudi Arabia said they intercepted one missile and shot down 2 drones over Riyadh, allegedly fired by Iranian backed Houthi rebels in what could be a subtle message to Saudi Arabia to Iran from not get involved with a Syrian International collation attack.