The communist generosity out of desperation amid new tariffs imposed by [U.S. President Joe] Biden to stop cheap Chinese imports [Chinese President] Xi [Jinping] is launching around the world, is born out of doubling down on an export-driven economy. Well, it didn’t work out with domestic demand and the development of the domestic market, because when that domestic market develops, citizens not only consume, but also begin to demand freedoms, while the comrades in Beijing have long been allergic to this notion. The highest level of tariffs is set for Chinese electric cars (100%), which can please both Elon Musk, who is losing competition to the Chinese, and Ukrainian consumers who don’t shy away from buying cheap and high-quality cars from [Russian dictator Vladimir] Putin’s friend. Also, high tariffs [are set] for solar panels, which can also please Ukrainians, for whom the sun’s rays are now a very important source of energy, as Russian air strikes are violently and rapidly decarbonizing our power supply. As fantastical as it seems, up to 30% of daytime Ukrainian electricity is generated by renewable sources, dominated by solar. Which, by the way, should explain to conspiracy theorists why electricity shortages also occur at night, when most decent citizens should be sleeping.
But let’s go back to the U.S. economic statistics. Where the market has concluded that everything is converging, and the U.S. Federal Reserve (the Fed) couldn’t help but start lowering rates this summer. The market is convinced it’s bound to happen. Fresh inflation data just came out, better than expected. Although inflation in the United States still remains higher than in Ukraine, for the second month in a row. But the dynamics are positive, and this suggests that inflation will fall below 3% by the end of the year. At the same time, economic activity, including U.S. consumption, looks increasingly subdued. So, investors and speculators thought, the Fed will simply have no choice and will be forced to lower rates. It’s interesting that very positive financial statements of Walmart, which is the largest retail chain in the world, bucked this trend. It’s also interesting because this chain is considered a store for low-income Americans. And Walmart’s good financial results may indicate both that the American consumer is doing very well, and that more Americans have begun to look for savings when shopping for staple goods. By the way, the rapid development of some retail chains in Ukraine during the war is another example of this phenomenon.
Read also: Ukrainians nationwide face more planned blackouts during the evening on May 17
Anyway, the S&P500 index added about 80 points over the past week and will open Friday morning at 5297 points. Such optimism in the markets also pulls oil along with it, but, fortunately, not very lively. A barrel of Brent [oil] is now traded below $84. Despite all the talk of quick parity, the euro has won back its ground, which, of course, isn’t very pleasing to European exporters, especially the German ones. But little has pleased them in recent years. Natural gas prices in the European Union have returned to 2021 levels, nullifying Russian threats to “freeze Europe.” At the same time, the Ukrainian segment of Eurobonds continues to live with expectations of debt restructuring. And it moves a little up and down together with other markets because something must be done. But there are still no preconditions for restructuring. The Finance Ministry still won’t come up with its proposal. The hryvnia [Ukraine’s national currency] unexpectedly strengthened on the domestic market. Although it would seem that it has no reason to be strong. Especially amid the donors’ persistent wishes to slightly devalue the hryvnia. Nevertheless, the interbank market is currently at UAH 39.35 per dollar, while the black market trades below UAH 40 per dollar, which is a “magical” psychological threshold.
The Finance Ministry continues to push down yields at primary auctions. Using the moment when they don’t really need money yet and can squeeze the market. This is quite rational behavior, especially amid the NBU’s (National bank of Ukraine) steps to keep interest rates and inflation low, which remains obscenely low in Ukraine. Ukraine’s inflation [report] for April was released this week. It decreased again and is below expectations. Food prices continue to fall. Moreover, an Easter miracle took place in Ukraine: egg prices fell even before Easter, decreasing 42% in one year.
Read also: Ukraine may face summer blackouts, Energy Ministry says
Ordinary Ukrainians once again remembered what a blackout is. At least we deal with them in late spring and not in winter. Moreover, many have already prepared and stocked up on generators and batteries. Household consumers faced blackouts because, as it got a little colder, they decided to turn their heaters on, instead of wearing a sweater, like the Brits or Germans. National energy shortage has grown significantly. Not only business, but also the population had to deal with it now. Weather forecasts say that ordinary Ukrainians will stop freezing in the coming days, so country-wide blackouts will go away. Until the summer, when sweltering heat will prompt us all to turn the A/C on, creating another energy crisis. This is the cycle we live in now. The only solution remains to raise energy price caps to at least some acceptable level, which should force ordinary Ukrainians to save, and therefore reduce the shortage.
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Read the original article on The New Voice of Ukraine
Section: Opinion
Author: Eric Malinowski
