By Michael Every of Rabobank
Rumble in the Jungle; Thrilla near Manilla
First and foremost today, markets will be focusing on the first (and, some Twitter wisdom would have it, potentially the last) presidential election debate between Donald Trump and Joe Biden.
This has all the makings of a classic to rival The Rumble in the Jungle between Foreman and Ali. Except in this case, almost everyone will be watching what they believe might be The Bungle in the (media) Jungle. Indeed, supporters of *both* candidates will be transformed into nervous parents at an expensive Ivy League prep school on the evening of their very young child’s first-ever school play: rictus smiles and silent prayers as the curtain rises that their special one makes them proud rather than having a tantrum, forgetting their lines, falling asleep, or generally humiliating themselves. After all, neither man has a reputation for eloquence, remaining calm at all times, clearly getting their point across to neutrals, or remaining gaffe free.
The expectations for Biden have been set extremely low – but he has been doing debates for 50 years, so there is bound to be some deep muscle memory there along with the “I am the guy who…” and “C’mon man!” and “Malarkey” shtick. Trump has only had a few rounds of real debate in his life: against Clinton in 2016 and against his Republican rivals prior to that, and the shock jock routine is hardly new at this point.
We already know what the debate topics will be (and let’s assume neither candidate knows what the actual questions are, unlike in 2016). Yet that does not mean we won’t be hearing about whatever each candidate feels will floor his opponent best, for example: Ukraine; Russia; China; problematic children; things said to or about soldiers; things said or done about the coronavirus; the Supreme Court; tax - and who wrote the tax code; a failure to provide decent healthcare options to millions of Americans; election fraud. Who said the country was divided, eh? Anyway world, sit yourself down, get your popcorn in, and let the spectacle unfold.
Meanwhile, most of the press has decided on the potential showdown(s) they don’t want to talk about much.
First is the risk of an escalation in fighting between Armenia and Azerbaijan. The former is considering triggering its defence treaty with Russia, where President Putin has called for an immediate ceasefire; the latter is supported by Turkey’s President Erdogan,…who has called for the liberation of all disputed territory held by Armenians (meaning Nagorno-Karabakh). TRY remains close to record lows at time of writing, and just for good measure Turkey is today undertaking naval drills close to Greek waters again to “encourage cooperation” in proposed talks on gas exploration. RUB is also under pressure on fears of further sanctions due to Belarus, the poisoning of Navalny, and the fact that if the word ‘Russia’ comes up tonight in US presidential debate buzzword bingo, everyone in the Kremlin drinks. They know that Iran, according to Bloomberg, is on the cusp of another set of biting US sanctions to effectively seal it off from the rest of the world financially.
Second is what one would think might be the front-page headline. As China conducts naval drills in four seas simultaneously --because how else does one focus on a post-virus consumer-led, green-friendly economic recovery?-- the editor of The Global Times (who I think would have made a great outside choice as a host for a US presidential debate) has tweeted the following:
“Based on information I learned, Trump govt could take the risk to attack China’s islands in the South China Sea with MQ-9 Reaper drones to aid his reelection campaign. If it happens, the PLA will definitely fight back fiercely and let those who start the war pay a heavy price.”
I can perhaps understand why this is not getting much coverage. The Global Times is excitable. It has said similar things about both Taiwan and India very recently, for example, and even about Australia earlier this year too. Yet without any wish to go all guns and gold and duct tape, this is either a smoking gun (or MQ-9) pointing at the risk of WW3 starting from the US side, and perhaps imminently if Trump bungles in the media jungle tonight; or it is China talking up such risks when no US threat is on the table, which unnecessarily escalates geopolitical risk too.
At the very least, it has to be dismissed as ‘just’ North Korea style media, which does not sit well with all the other financial market China stories about designer this and disruption that, and dynamic growth the other. Then again, the US is hardly short of wing-nut media, I suppose, who are all about to have a field day.
Anyway, less than 20 hours now as I type until the big show begins. The Trump-Biden one, I mean.
But you won’t be able to watch it in a group in public in the Netherlands now that a UK-style 10pm restaurant and bar closure has just been introduced for three weeks, along with a stop to all spectators at sports matches, as Europe shows that it is still in synch with the UK on more than just a potential Brexit trade deal.
Perhaps next the Dutch will be sealing newly-arrived students into their halls of residence, telling them they may not be able to go home for Christmas, and throwing in the odd packet of crisps and candy bar through the window while charging them GBP9,000 a year fees for the experience, and rent on top.