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Tags: politics | donald trump | invest | america

In US Politics, Nothing Is as It Seems

In US Politics, Nothing Is as It Seems

By    |   Wednesday, 23 November 2016 07:24 AM EST


Investors could do well keeping in mind that in the poker game of American politics nothing is necessarily quite what it seems.

Trump has signaled by twitter, YouTube and something as startling as a conventional media interview as the one he just did with the New York Times, the policies he was committed to may not in fact be policies he is committed to, and as a result he will not necessarily stick to every campaign pledge made.

This is not certain, because nothing is certain, but flexibility is being signaled, in particular on the issues of waterboarding and the Paris Climate Change Agreement may see a change of policy.

This is to be sure a relatively eclectic set of policy pledges. 

The question for investors is whether other policy pledges are also up for change and, which is also important, what importance will Congress have to accomplish these changes.

We have not had any recent tweets on the wall or the fence on the Mexican border, nor for that matter on the wall or the fence on the Canadian border. The threatened tariffs against China have not appeared on a twitter feed of late either.

These are issues that have a considerable bearing on the economic outlook of the United States and thus ultimately on the performance of financial markets, which at this moment, apparently don’t take that into account.

It is also worth observing Trump’s staff nominations and appointments are not necessarily consistent with the new policy positions and it may be that the signal of the appointees should guide market expectations for policy action. 

Meanwhile, today we have also the release of the Federal Reserve minutes from the November meeting and it will, as usual, offer the opportunity of some flexible interpretations.

That the Fed is intellectually riven, is an undeniable fact. No, the Fed is not an institution making decisions in the binary framework of the Taylor rule, but it is a complex and divided entity with different members pursuing different policy frameworks.

The concept of a December Fed rate hike seems to have enough support from enough members of the Fed to be considered a consensus, although the rationale for such a move may differ on an individual-by-individual basis.

Some of these fore-plans probably will become evident in the minutes released today.

The markets are likely to focus on the prospects of a December rate hike and maybe on prospects of inflation which is sure to be highlighted given its pre-Trump emergence.

But the confused ideology of the Fed may actually prove to be the bigger issue in 2017. ..

Meanwhile in the oil market, OPEC appears to have agreed on to defer anything until such point that the oil ministers can agree to agree something. In other words, no one knows what to do about the Iranians and the Iraqis and in consequence, oil prices have given a little back of their recent gains.    

On the calendar, today, we have the release of a plethora of opinion polls in Europe, reporting the level of business confidence. Ultimately, a Purchasing Managers Index (PMI) opinion poll is just the same as any other opinion poll when it comes to the risks and the accuracy of the reported data and the same sample biases and reporting biases that have been evident in other opinion polls are likely to be evident here.

The Markit Flash Eurozone PMI signals its strongest growth so far this year.

So, so far, so good.

In the UK, the Chancellor of the Exchequer will deliver the “Autumn Statement” of fiscal ideas, but as he has already delivered most of these ideas directly into the hands of the media, there is perhaps limited room for market reaction. Given the state of the UK government finances and the prospects of reduced tax revenues in the wake of the EU referendum, the results have perhaps little room for fiscal maneuver.

In the United States, we have durable goods orders, but also Thanksgiving Day, which is likely to subdue things a little bit.

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

© 2023 Newsmax Finance. All rights reserved.

Investors could do well keeping in mind that in the poker game of American politics nothing is necessarily quite what it seems.
politics, donald trump, invest, america
Wednesday, 23 November 2016 07:24 AM
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