All markets have been given another layer of intrigue as Donald Trump, for the moment, seems to have suffered a defeat as the federal appeals court ruled on Friday that the US President had overstepped his authority when applying tariffs under the guise of their being a ‘national emergency’. The judges in the court ruled the levies were “unbounded in scope, amount and duration” and that such decisions were the remit of Congress. Sadly, there is no clarity with the ruling. Even court decisions seem to be fluid at present because Friday’s judgement will not come into effect until 14th October which gives ample time for a further appeal by the Trump camp to the supreme court, and now, because of its supposed conservative bias, seems likely to come down on the side of ‘Liberation Day’. 

Oil prices will once again be stupefied this week as was the case in the last. Due to expiry, M1 RBOB and Heating Oil being respectively +1.35% and -1.79% offered something of interest, but bulls and bears within our market were offered little footholds as the week’s events failed to inspire. The increased drone and missile exchanges between Russia and Ukraine threatening both a peace deal and product production in Russia has yet to convert into price action. Our market clings to hope, not for any particular state of positioning, but for something that busts the current feeling of a market smothered. Iran’s belligerence around its nuclear capabilities, the US’s record Crude production of 13.58mbpd in June, China’s supposed SPR building and India on the one hand buying US grades but on the other continuing in part to take Russian supplies which triggered a doubling of US trade tariffs, are all in isolation would-be market movers but in combination are confounding. 

Given the history or our market to default to a negative drift when unconvinced, the nearby future does not offer much of a solution to the grind and expectation will continue to be holstered. Indeed, the overall August performance showed a decline in M1 Brent futures of -$4.41/barrel (-6.08%) and on the year -$7.44 (-9.97%), and with OPEC+ due to meet this Sunday, 7th September where the balance of any cuts in production will be ended, oil practitioners will continue to curb their enthusiasm. If one were to cast an eye to the CBOE Crude Oil Volatility Index, it has recently increased, but only slightly and on average, has not moved at all since the middle of July.

Performative Diplomacy

In a world that is fascinated by trends which liken to pandemics, where commonplace social media behaviour migrates and jumps from one ‘I did not know I was being paid’ influencer to another, be it in a choice of car, which breakfast food is eaten or where to have a photograph taken on holiday rather than admiring the beauty of nature; is it any wonder that the selling performance rather than the quality of brand is the more important? The trouble is the ephemeral nonsense on social media is making a decent analogical leap to public figures. But politicians are dealing with wars, trade and lives and can anyone name a one that can be regarded as a statesman or woman. The master of the ‘Art of the Deal’ is not the founder of political salesmanship, but he certainly has honed it, and the rest of the world’s leaders merrily join in. 

Here in the UK, one could spot a career politician in the making by the university degree they were reading at Oxford. This of course refers to PPE or Philosophy, Politics and Economics, the only higher education course that might equip one with the skills in which to play the political game. Scornful and glib as this description might be, at least the resultant power brokers within political parties had a modicum of respect and responsibility for the words they uttered knowing any policy pronouncement or idealogue slip of the tongue would be fact checked from the ‘BBC’, the ‘Financial Times’ to the screaming tabloid ‘Daily Mail’, and application of any promise would be summarily judged. Such behavioural cables have now been loosed, and politicians are allowed to float on a stream of invective that seems to be judged on how loud it is shouted rather than how it might be delivered.

This is now particularly apposite in international negotiations. Welcome then to the world of ‘performative diplomacy’. William Shakepseare’s “the world is a stage” metaphor meaning that life is theatre and that players must act out the roles in which they have been given, is being taken up with gusto. Take the Alaskan, choreographed, meet-cute from two-weeks hence between Presidents Trump and Putin. The outlier American State seemed a strange place for the meeting, but its historical link between the US and Russia gave ample opportunity for enhanced optics. Russia is reminded that it once owned the largest state of America, and it now seems ridiculous that it was sold to President Andrew Johnson’s 1867 administration. The US is reminded just how close Russia is as a neighbour and its nuclear capability means it should always be treated as an equal. They met on a red a carpet as if it were the Oscars, and while the US flew a flight of B-2s and F35s over them in a show of military flex, President Putin hung on to that excruciating handshake and hitched a ride in the Presidential limousine announcing under no circumstances would he be ignored.

Wonderfully described in the ‘Spectator’, “performative diplomacy is about grand gestures, symbolism, raw emotions, and communications cut-through; it’s the antithesis of the long-term outlook, careful negotiations, incremental advances, and niceties and nuances of diplomatic statecraft.” The instances of which are globally seen every day from so many governments. Benjamin Netanyahu publicly sues for peace and a ceasefire but on the ground starves Gazans and bulldozes cities. Obfuscation and lies intertwine, exampled by Iran insisting its uranium is not weapons grade despite so many IAEA inspectors’ contradictions. This draws another gesture from France, Germany and the UK (E3) who as part of the 2015 Joint Comprehensive Plan of Action (JCPOA), have given Iran thirty days to comply with full disclosure or face a triggering, or so called ‘snapback’, of the E3’s process to reimpose sanctions. Does not the world love a thirty-day countdown before the proposed “or else” kicks in?

These are but a few examples of performative diplomacy for its practice is now inexhaustive. Here is the rub for us involved in investment markets. While the goodly citizens of the world can pronounce, and returning to ‘the Bard’, “a pox on both (all) your houses”, switch off their televisions or divert their newsfeeds to cute cats, and vow to vote differently next time, we cannot. The distance between politics and markets does not exist anymore and whatever emerges from the mouths of our (not so) great and (not so) good is immediately felt in price moves. We are held, spellbound and enthralled by what next grand decree emits from the high corridors of power, because one of them, one day, might actually be true and to not have reacted will then be, in hindsight, unforgivable.

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