Submitted by Michael Every of Rabobank

Nothing matters. We (mostly) all know that. Events come and events go, but markets go up regardless. Yet suddenly, lots of things might just matter all at once. And markets actually went down!!

US presidential candidate Biden, who is way ahead in the polls, has outflanked President Trump in the populist stakes with a Build Back Better plan and a USD700bn "Buy American" pledge to create 5m new manufacturing jobs; that while Peter Navarro's proposal for the same gathers dust on the White House desk. Biden also says he backs unionization and collective bargaining.

Unless Trump comes up with a sweeping new plan he will lose #MAGA ground to a man who spent his career building the neoliberal consensus Trump won by running against. I said Trump would win in 2016 because he said the economy stank: now the economy more than stinks --jobless claims were still around 1.3m yesterday-- his message is that everything is Great Again. As such, polls and news show he seems to be shedding both billionaire and working-class supporters simultaneously, which is quite the trick.

Biden also decried that "throughout this crisis, Donald Trump has been almost singularly focused on the stock market, the Dow, the NASDAQ – not you, not your families." How very dare you, Sir! More audaciously, Biden proposed to raise the corporate tax rate and that for the wealthiest Americans. How very, very dare you, Sir! Forget about toppling George Washington: this is a genuine revolution for markets to contemplate. No more tax cuts to pump into the stock market? Who would that leave to drive markets higher? How else can an economy work? Of course, to underline again, this is a man who spent his career building the neoliberal consensus. One wonders how Biden envisions the Fed operating under his administration: will he allow them to continue to be almost singularly focused on the Dow and NASDAQ, or will he want their support on the fiscal front for actual investment? It's unclear.

Back to things that suddenly matter. The White House imposed sanctions on four Chinese individuals over human rights abuses of Uighurs, including the head of Xinjiang province, who is a member of the 25-person national Politburo. This is more of a shot across the bows for now given primarily the sanction means they and their families cannot enter the US. However, it shows that sanctions can happen.

Indeed, on that front --and of huge potential significance-- Reuters reports that Chinese banks in Hong Kong are "preparing to lose USD access" if the US imposes its toughest sanctions on them and cuts off USD access. What was being blithely dismissed as a nuclear option nobody would ever use is now seeing the same people rush to construct bomb shelters. Several large foreign banks are also so deeply enmeshed in the special autonomous region that they are sweating. FT also reports foreign banks are scouring their client lists to see if they will be impacted should such measures hit. Indeed, all banks are torn between US sanctions law, which demand global compliance, and the new Hong Kong national security law, which demands the same - yet in the opposite directions.