The Inauguration of the billionaire property developer and businessman Donald J. Trump as the 45th President of the United States has ushered in a new era in American politics and international standing.
US equity futures were flat, European stocks rose and Asia was mixed after the dollar posted a modest rebound overnight despite Mnuchin's "strong dollar" comments, while oil was flat and gold fell, as investors focused on President Donald Trump’s plans to boost growth. The pound fell after a U.K. court ruled that Parliament must vote on triggering Brexit.
"Trump is a boost to volatility traders because of his inherent unpredictability... stop underestimating this man... All bets are off, and that is very good for volatility… but potentially very turbulent for the world."
"If anyone were to say China is playing a leadership role in the world I would say it's not China rushing to the front but rather the front runners have stepped back leaving the place to China," a top Chinese diplomat said, adding that "if China is required to play that leadership role then China will assume its responsibilities," he added.
While President Trump chose not to attend the elite extravaganza in Davos last week, choosing instead to lambast the great-est and good-est of the world's executives in their crony capitalist safe space, the cognitively dissonant CEOs reassured each other by saying 'ignore the tweets', confident that "if [Trump] knows the facts, he’ll respond according to the facts." It depends whose 'facts' those are, of course.
There is much we don’t know about how the Trump presidency will play out. But of one thing we can be fairly certain. President Trump is very likely to preside over the largest expansion of Federal budget deficits in our history.
The “bond shock” story bubbles away in the background. And with the next 50-75bps rise in yields (due to perhaps expectations of trade wars or Chinese repatriation, or even further gains in inflation), the risk of a financial “event” is likely to jump. 2016 started with pessimism and ended with optimism; 2017 starts with optimism…
If there is any economic assumption that goes unquestioned, it's the notion that profits will remain robust for the foreseeable future. This assumption ignores the tidal forces that are now flowing against profits.
With all the partisan narrative defining Trump as a tariff-setting, anti-trade, economy-buster, we thought it ironic that free-trade-wunderkid Obama just escalated trade wars by bringing his administration's 16th trade-enforcement complaint against China with WTO, urging tariffs on subsidised Chinese aluminum, after accusing them of funneling artificially cheap loans from state-run banks to producers.
Are investors so focused on Dow 20,000 that they've become complacent about the true risks of Donald Trump's vows to tear up trade agreements, erect 17 commercial tariffs, and deport millions of immigrants?
“140 characters of unfiltered Trump is likely to create tensions .... Markets that are already shaken by the fallout from Brexit, the coming elections in Europe and indeed the increasing specter of cyber warfare could again see a safe-haven bid.”