Mid-Week Updates, No 13

Protests, Mid-Terms, Markets and Morocco

Protests

Following three months of intense protests following the violent murder of Mahsa Amini, the protests in Iran do not show any sign of abating. On the contrary, despite the rising casualties and relentless repression they continue across the country. A few days ago news started to circulate that Iran’s attorney general had announced the abolishment of its morality police, purportedly to take the pressure off the escalating conflict and giving the protestors a token of goodwill. As of today it remains unclear if this has indeed been implemented, but even if it has there are grounds for deep skepticism as the framework for repression remains in place and nothing so far has indicated any real pullback from the authorities.

There is an interesting parallel with the protests that rocked Hong Kong during 2019 where a controversial extradition law triggered an uprising that rapidly escalated. By the time however that the government decided to withdraw the law in a conciliatory move, too much water had passed under the bridge already. The violence against protestors had given rise to a number of demands and the attempts from the government to placate everyone by trying to remove the thing that had started the protests was far too little and way too late. The regime had shown its true face and nothing but a full capitulation would suffice in the eyes of the protestors. Exactly the same is the case now in Iran. We have now well over 500 deaths, notably young people, multiple arrests and even trials where young protestors are looking at the death penalty. No concession from a regime with so much blood on its hands will ever work to turn things back to normal. So the regime blinked a bit and the resistance is shrugging its shoulders. Expect a continuation of resistance and turbulence in Iran.

In that vein the sudden eruption of protests in China - the first such ones since 1989 - needs to be assessed too. They disappeared as quickly as they started last week, all in response to the harsh zero-Covid policies that Beijing implemented. Although not nearly as violent as what we are seeing in Iran or what took place in Hong Kong, it does point to a simmering sense of resentment that has the potential to boil over in the near future. The seeds of discontent have been sown, so to speak. The irony is that it was Covid that enabled the Hong Kong government to suppress the protests in the end and now it is Covid that is elevating the struggle to the surface in China.

Mid-Term Elections

Are finally done. The Democrats secured their 51-seat majority last night by winning Georgia where Raphael Warnock defeated Trump-backed candidate Herschel Walker. The GOP now controls the House and the Democrats the Senate. Although this tilts the balance of power slightly towards the Republicans, retaining the Senate gives the Democrats room when it comes to appointing new judiciary nominees and manage investigations. It also forces the Republican side to evaluate the slate of senate candidates it put forward this election cycle.

Markets

We came in to this week feeling upbeat as the S&P 500 moved above its 200-day moving average for the first time in six months. The consensus was that the period of aggressive rate hikes was coming to an end. Yet at the same time the market moved in a decidedly negative reaction on Monday and Tuesday, with some bankers warning that we could still see some difficult months ahead given layoffs and cutbacks in consumer spending. All true, and that explains the continued volatility we see in the markets. We will close the books on 2022 in negative territory, but I remain mildly optimistic about 2023 and our ability to work ourselves out of ‘the correction of 2022’.

World Cup

We are down to the last eight and by the end of day Saturday we will know who the last four contenders are. It strikes me that despite all the negativity and political games leading up to the tournament we are seeing one big multinational and multicultural party where the world gets together and shares both excitement and love in a way that is hard to find anywhere else. And if you doubt that, just look at the small human things that make the headlines.

Let me elaborate. I really enjoyed Morocco’s win over Spain yesterday as I always have a soft spot for the underdog and do like some of the players that the North African kingdom has lined up. Many talented football stars however do not get to taste that level of success and incredible monetary rewards that are part of this great sport. Dutch-Moroccan talent Abdelhak Nouri who played for Ajax Amsterdam suffered severe brain damage following a cardiac arrhythmia during a training match a number of years ago. He could and should have been there yesterday and his team paid an amazing tribute to him after the epic win over Spain. Things like this makes following the event worth your while. Deep human emotions transcend everything.