'Trump Time' - Let the games begin - Massive political uncertainty – President’s conflict with the CIA – ‘Strong dollar policy’ to end as U.S. has $120 trillion plus debt – Trump inherits Bush and Obama’s humongous debt
"We would be very surprised to see a discussion of asset sales under Chair Yellen’s leadership, but a shift to more active management of the maturity of new Treasury purchases could be an option; shortening the duration of new purchases would quicken portfolio runoff once it begins." - Goldman Sachs
In what is sure to be one of the fieriest confirmation hearings to date, Steven Mnuchin, Trump's pick for Treasury Secretary, is set to take questions from the Senate Finance Committee this morning as Democrats will undoubtedly being looking to score theatrical points with the working class folks of the Midwest by peppering the "Foreclosure King" with zingers on his time at Goldman Sachs and OneWest.
European and Asian shares, and S&P futures slipped, while government bond yields jumped to multi-week highs on Thursday after Yellen's hawkish speech. Oil rose after API reported a drop in crude inventories. The euro rebounded as investors look to Mario Draghi to address rising European inflation that make the ECB's stimulative policies look increasingly out of sync.
Speaking to Bloomberg TV in Davos, JPM CEO Jamie Dimon said “the euro zone may not survive,” and added that "what went wrong is going wrong for everybody, not just going wrong for Britain, but in some ways it looks like they’re kind of doubling down."
European shares decline led by a plunge in Pearson shares, S&P futures were modestly in the green as Asian and EM stocks gained. The dollar rebounded against most major currencies after retreating 1.3% on Tuesday to the lowest in a month following Trump's "strong dollar" comments and halted a seven-day drop against the yen. "Everything is just a partial reversal of the price action yesterday," RBC Capital Markets currency strategist Adam Cole said.
"Populism is not a bug, but is a key feature in any democratic society. It functions as a sort of pressure relief valve for free societies. Indeed, it allows for an adjustment and recalibration of the existing order at the exact point in the cycle when it is needed most. In our current corrupt, unethical and depraved oligarchy, populism is exactly what is needed to restore some balance to society."
The week ahead will be a busy one, with a plethora of events including the Davos shindig, where particular focus will be on Chinese President Xi Jinping, the first Chinese president to attend. China will also announce GDP on Friday, which also marks the inauguration of Donald Trump as the 45th US president. Tuesday brings Theresa May's long-awaited Brexit speech.
Sterling fell, equities slid, Chinese markets got a helping government intervention hand again, and gold climbed over concerns U.K. Prime Minister Theresa May is prepared to lead Britain out of the European Union’s single market and as the U.S. President-elect suggested other countries could break from the bloc.