“Oligarch risk” versus “Heartland risk” versus “Silicon Valley risk”
It looks like investors in Russia are finally catching on to the idea that it might not be a good idea to keep all their eggs in the oligarch basket. For a long time, investing in companies operated by oligarchs has made perfect sense because companies operated by oligarchs enjoy a certain, shall we say … “latitude” when it comes to regulations, news media or other threats to their business.
But the struggles of Oleg Deripaska’s Rusal aluminum company have shined a spotlight on “oligarch risk.” Some investors are starting to diversify while others are simply trying to predict which other oligarchs might be vulnerable to pesky sanctions from the likes of the US or other foreign countries. This development means such sanctions are working exactly as they were intended. Targeted sanctions are delivering targeted results.
But flip the script a bit and shine that kind of investor thinking back to the Heartland of the United States. China and other foreign countries have already proven they too know how to play the sanctions/tariffs game by announcing they would target certain sectors like agriculture and certain products like bourbon with tariffs. Those sectors and products are targeted because they are either in Trump Country or Mitch McConnell Country or Paul Ryan Country (not that it is really Paul Ryan Country anymore).
Doesn’t that mean US investors should be looking at which sectors and/or companies are most at-risk if any kind of trade war were to ignite? And remember, should the mid-term elections in the US see the Democrats rise to power in Congress, those sectors and products being targeted by foreign countries can flip from Red targets to Blue targets in the blink of an eye.
Uh oh … Treasury Secretary Mnuchin talked about the strength of the dollar again
One of the more entertaining communications breakdowns of this year’s Davos was the mud Treasury Secretary Steven Mnuchin stepped in when he talked about the strength of the dollar. While Mnuchin wasn’t completely to blame because his words were twisted to fit the narrative of whoever was reporting them, you still think he would have learned his lesson about strong dollar. Most importantly, one would think the entire Trump administration would have learned its lesson about the currency tough talk.
Just three days after the Treasury Department issued a report saying that no major trading partner was manipulating their currency, Trump tweeted that Russia and China — with whom geopolitical tensions are high — are “playing the currency devaluation game as the U.S. keeps raising interest rates.” He called the move “Not acceptable!”
In his time at Treasury, Mnuchin has had to start so many sentences with the phrase, “What President Trump means is…” that his new title should be Secretary of Trumpsplaining.
#MeToo on Wall Street
It doesn’t look like Sen. Elizabeth Warren is gonna have much luck trying to help the #MeToo movement sweep through Wall Street.
I’ve noted before how I don’t think the C-suites of Wall Street are as much of a bastion for sexual misconduct as the C-suites in other industries have proven to be. There is simply too much vetting. As for the lower ranks on Wall Street, that is another story. And I am going to guess there have been more than four people fired from brokerage firms since 2010 for transgressions that “appear” to be related to sexual misconduct.
Speaking of sexual misconduct…
According to Senate Majority Leader Mitch McConnell, sexual misconduct is a bad thing. But good ol’ fashioned discrimination? Well, now … the distinguished gentlemen from Kentucky thinks that is another matter.