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Soros Says Markets to Slump With Trump, EU Faces Disintegration

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Brexit
  • Soros Says Markets to Slump With Trump, EU Faces Disintegration

It’s tough to be gloomier than billionaire George Soros right now.

America has elected a would-be dictator as president, the European Union is disintegrating, U.K. Prime Minister Theresa May won’t last long as her nation prepares to secede from the EU, and China is poised to become an even more repressive society, the investor told Bloomberg Television’s Francine Lacqua from the World Economic Forum in Davos.

“It is unlikely that Prime Minister May is actually going to remain in power,” Soros said. She has a divided cabinet and base and Britons are in denial about the economic impact of Brexit, he said.

On Tuesday May, who took office in July after the U.K. voted to leave the EU, set out her strategy for a clean break from the 28-nation trade bloc and pitched the nation as open to making free trade deals globally.

Soros had particularly harsh words for U.S. President-elect Donald Trump, who will be inaugurated on Friday. Calling Trump a “con man,” Soros said the billionaire will fail because his ideas are contradictory and his White House advisers and cabinet members will fight with each other, an apparent reference to the conflicting views expressed during Senate confirmation hearings. The stock market rally since the November election, spurred by Trump’s promises to slash regulations and boost spending, will come to a halt, Soros said.

“Uncertainty is at a peak, and actually uncertainty is the enemy of long-term investment,” said Soros, the chairman of Soros Fund Management. “I don’t think the markets are going to do very well. Right now they’re still celebrating. But when reality comes, it will prevail.”

Soros’s Bad Bet

Soros’s pessimism has been costly to him. He lost nearly $1 billion as a result of the rally spurred by Trump’s surprise win, the Wall Street Journal reported earlier this month. The octogenarian’s wagers became more bearish immediately after Trump’s victory, but the S&P 500 Index has jumped 5.8 percent since Election Day.

The EU, Soros added, is disintegrating following last year’s Brexit vote and Italian referendum — a course that must be reversed. The trading bloc has become dysfunctional because it is governed by laws that are “not appropriate to the current circumstances” and not easily changed, he said.

“If Europe breaks down, the consequences will be very dire,” the investor said. “But I do see a way it could be saved, and this is also recognized by many of the people in Brussels. They can’t say so publicly, but they know that Europe is not functioning.”

China Pessimism

Soros continued to take a dim view on China, saying the nation is at a decision point and must choose whether to become a more open or closed society as it transitions to a consumer-led economy.

“China has not actually succeeded yet in changing its growth model and probably won’t do it in the next two years because Xi Jinping wants to maintain an unsustainable rate of growth,” he said. Xi “is doing that by rekindling the furnaces and producing more goods that are already in supply.”

Soros’s outlook on China has yet to prove accurate. At last year’s Davos gathering, Soros said China’s economy is facing a hard landing, a situation that will contribute to global deflationary pressures and prompted him to wager against U.S. stocks.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

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COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.

This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.

In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.

The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.

Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.

She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.

She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.

Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.

“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.

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Commodities

Crude Oil, Other Commodities Closing Price for Monday

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Crude oil

Crude Oil, Other Commodities Closing Price for Monday

Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.

Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.

The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.

Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.

The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.

According to Michael McCarthy, the Chief Market Strategies, CMC Markets, the surged in gold price is a result of the projected drop in dollar value or uncertainty.

He said, “The key factor appears to be the (U.S.) currency.”

As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.

Also, the effectiveness of the vaccines can not be ascertained until wider rollout.

Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.

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