St. Louis Fed President James Bullard, made some interesting remarks today in Tokyo.

“The equity markets are up a lot in the U.S. since the election. My interpretation is that a lot of that is in anticipation of corporate tax changes and possibly personal tax changes that are afoot in the U.S. All by themselves those tax changes would revalue the U.S. corporate sector on the order of 10 to 15 percent, which is about what has happened since the election, he said.

"The business confidence numbers shot up after the election. The president was perceived as more pro-business than the previous administration,” he said.

Bullard continued: “Washington does have to deliver at some point and I think that is a concern going forward, whether the honeymoon period would end at some point and maybe the reality of American politics would settle in. We’ll see if that happens or not. I think the jury is out on all that. The idea that the economy is growing a lot faster than trend and that this going to push up inflation, I don’t think is matching up with the numbers that we’re actually seeing.”

Besides that, it’s a fact that in Washington the whole “Russian question” isn’t going away.

It’s also a fact that President Donald Trump has made little progress in delivering on his agenda and investment positions that were taken after his election in the hope of benefiting from the promised corporate tax cuts, healthcare overhaul, infrastructure spending, less business regulation, rising inflation, which, by the way, on May 12 the Cleveland Fed estimated the 10-year expected inflation rate stood at 1.84 percent, etc. have stalled.

The Bureau of Economic Analysis just released data on personal income that show an increase of 0.4 percent in April while disposable personal income (DPI) also increased 0.4 percent and personal consumption expenditures (PCE) also increased 0.4 percent. Overall not bad data, but that confirm on a yearly basis the lackluster trend.

The Conference Board's Consumer Confidence Index, declined slightly in May to 117.9 from 119.4 in April. The Present Situation Index increased marginally from 140.3 to 140.7, while the Expectations Index declined from 105.4 last month to 102.6 in May, which could be qualified as a lackluster performance.

Because all that it’s certainly prudent for an investor also keeping an eye on overall developments which show many uncertainties.

For only mentioning two geopolitical uncertainties, we have:

• When, not if, the first serious incident related to North Korea is going to happen.
• What will result from German Chancellor Angela Merkel's message on Sunday that suggested the U.S. was no longer a reliable partner. Europe should pay more attention to its own interests “and really take our fate into our hands.”  

Anyway, it didn’t take long before Trump came back through his Twitter feed this morning to his complex “German question” stating: “We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change.”

We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change

— Donald J. Trump (@realDonaldTrump) May 30, 2017

Now, both of these two uncertainties are potentially momentous events in terms of their long-term consequences, and at least until now, markets didn’t react too much to any of them.

In part, this is because financial markets always struggle with episodes of seismic change.

For example, in 1914, the assassination of Archduke Franz Ferdinand of Austria in Sarajevo was a seismic event, but not something that moved financial markets that much at first. Of course, it caused havoc when that event precipitated Austria-Hungary's declaration of war against Serbia, which in turn caused the Central European Powers (including Germany and Austria-Hungary) and Serbia's allies to declare war on each other, which ended up in starting the first World War (WWI).

The initial indifference of the markets is in part because financial markets will price in political consequences only when the economic impact is more glaringly obvious.

As Mark Twain said: “History doesn't repeat itself, but it does rhyme.”

I’m not saying we are on our way for something like that, but long-term investors could do well adjusting their investments somewhat for some kind of a seismic event in case that should happen, hoping it should never occur.

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments.