President Donald Trump has unveiled the U.S. Government’s budget for the fiscal year 2020.
It was presented under the title: “A Budget for a Better America: Promises Kept. Taxpayers First.”
Trump’s proposals include plans to build the wall on the Mexican border.
On page 2 under the “Budget message of the President,” Trump says: “As President, my highest duty is the defense of our Nation—which is why finishing the border wall is an urgent national priority.”
Trump also says: “This year, I asked most executive departments and agencies to cut their budgets by at least 5 percent.”
The Democrats in the House of Representatives have rejected the president’s proposed record budget of $4.7 trillion that would push the federal deficit past $1 trillion even with counting on optimistic growth.
The Associated Press (AP) reported: “Trump on Monday called his plan a bold next step for a nation experiencing “an economic miracle.” House Speaker Nancy Pelosi called his cuts “cruel and shortsighted ... a roadmap to a sicker, weaker America.”
AP comments further that Trump’s proposal for the new fiscal year, which begins October 1, sets up a showdown with Congress over priorities, especially as he reignites his push for money to build the U.S-Mexico border wall.
So, as an investor one could easily say that the United States is contemplating the prospect of another government partial shutdown later this year that, in case that would be the case, would again cause damage to the people involved and that will be taken into account by the financial markets, no doubt about that.
No, there is no reason for complacency.
Besides that, the U.S. Bureau of Labor Statistics just reported that the Consumer Price Index (CPI) increased 0.2 percent in February on a seasonally adjusted basis after being unchanged in January.
Over the last 12 months, the all items index increased 1.5 percent before seasonal adjustment.
The index for all items less food and energy rose 2.1 percent over the last 12 months, down from 2.2 percent in January.
The food index rose 2.0 percent over the past year, its largest 12-month increase since the period ending April 2015.
The dollar is down a bit and quotes around 97.
No, the Fed doesn’t have to change anything to its policy at next week’s meeting on March 19-20.
Over in Europe, in the UK it’s voting day again in the UK Parliament, that is to say there is yet another vote on the interminably tedious process of separating the UK from the European Union.
Today’s UK Parliamentary vote takes place against the backdrop of yesterday’s agreement between the UK Prime Minister Theresa May and the President of the European Commission Jean-Claude Juncker. It was not quite an agreement at five minutes to midnight in the grand tradition of the European Union, but it was pretty close to it.
What matters now is the UK Attorney General Geoffrey Cox’ opinion on the so-called “Joint Declaration” and whether he thinks it’s legally binding or not and whether Parliament then votes to exit the European Union on the government’s terms.
Anyway, Attorney General Geoffrey Cox says that the legal risk of the Irish backstop hasn’t changed.
He concludes his opinion: “The legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have, at least while the fundamental circumstances remained the same, no internationally lawful means of exiting the Protocol’s arrangements, save by agreement.”
If the UK government is defeated today, the option of a “No-deal” exit comes up for a vote on Wednesday, and if that is defeated, then the option of a “delay” will be voted on Thursday.
It’s worth remembering that this whole debate is also about what would happen while the UK and the European Union spend the next two years negotiating the actual exit.
The British pound has weakened to around $1.3050 but I don’t expect a collapse as there is still Thursday’s vote.
Today’s vote is scheduled for this afternoon around 3:00 pm NY time.
Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.
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