Tags: James Comey | Trump Administration | trump | comey | congress | investors

Hey, Congress: Comey Is Just a 'Distraction,' Get Back to Work!

Hey, Congress: Comey Is Just a 'Distraction,' Get Back to Work!
Former FBI director James Comey is sworn in during a Senate Intelligence Committee hearing on Capitol Hill, Thursday, June 8, 2017, in Washington. (AP Photo/Alex Brandon)

By    |   Thursday, 08 June 2017 10:00 AM

After Former FBI Director James Comey's prepared remarks before the Senate Select Committee on Intelligence became public yesterday, it seemed to me that it will be practically impossible to accuse the president of acting at any time in any way that could be qualified as “obstruction of justice.”

I don't see any indication that President Donald Trump willfully attempted to bribe, in whatever way, Mr. Comey.

As an investor, it could be helpful to keep in mind the ruling of the SUPREME COURT OF THE UNITED STATES, No. 98—131, UNITED STATES, PETITIONER v. SUN-DIAMOND GROWERS OF CALIFORNIA ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT (April 27, 1999) that reads: “… For bribery there must be a quid pro quo – a specific intent to give or receive something of value in exchange for an official act…”  

I hope that Congress will be able to consider this whole situation as a “distraction” and to return ASAP to its political agenda.

The equity and forex markets remain calm, so far.

On the other side of the pond, the European Central Bank (ECB) issued its policy decision.

The news release on the ECB monetary policy decisions reads: “The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases. Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases, at the current monthly pace of 60 billion euro, are intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.”

It is important to take note that today’s news release dropped “or lower levels” from the April press release that said: “… The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels…”

In simple words, the ECB says that for its quantitative policy: “This is not the end, but the end is perhaps in sight.”

Of course, it remains too soon to expect any specific date for when the ECB will finally start ending its quantitative policy.

The ECB said inflation in 2017 would average 1.5 percent and down from a previous forecast of 1.7 percent. Inflation would fall to just 1.3 percent in 2018 down from 1.6 percent and inflation would average at 1.6 percent in 2019, down from a previous forecast of 1.7 percent.

All these inflation forecasts are all below the ECB’s statuary target of an inflation rate of just under 2 percent.

Interesting is the fact that ECB President Mario Draghi dropped a previous warning that risks to the growth outlook remained “tilted to the downside” and said they were now “broadly balanced.” There is “a stronger momentum in the euro area economy,” Draghi said, but a “very substantial degree” of stimulus was still needed to support stronger inflation.

All this is important because the monetary policies of the Federal Reserve and the European Central Bank now seem well underway to diverge further with the Fed definitively in a tightening mode and the ECB remaining in an easing mode.

It is completely legitimate to expect that the Fed will raise rates next week and it will be interesting to see what the FOMC will hint about the path forward of the Fed’s tightening situation.

This situation should have its consequences on the FX markets over the median term.

Finally, we also have the U.K. general election.

There will be an exit poll at 10 p.m. London time or 5 p.m. EST. The latest opinion polls have a conservative lead of between 1 percent and 12 percent, which rather clearly demonstrates the problems of relying on U.K. opinion polls.

The level of uncertainty about the outcome suggest that there will be some market reaction:

  • A conservative majority in Parliament of 50 seats or more would be seen as a good result by the conservative party.
  • A hung parliament, which is a state of a parliament when no single political party (or bloc of allied parties) has an absolute majority of seats in the parliament (legislature).
  • A very low conservative party majority would introduce an element of uncertainty into financial markets that would most probably show up with a weakening of the British pound.

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

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I hope that Congress will be able to consider this whole situation as a “distraction” and to return ASAP to its political agenda.
trump, comey, congress, investors
Thursday, 08 June 2017 10:00 AM
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