Trump and the political dance of the seven veils
- Trump is going through a political dance of the seven veils, revealing a little more of what his administration may look like with each passing day. The equity markets liked the fiscal stimulus of infrastructure spending, the bond markets did not (bond markets sold off more than equities rallied).
- The next veil cast aside is the revelation of Reince Preibus as Chief of Staff, and Stephen Bannon as Chief Strategist. This is a coy move, balancing the Washington consensus (Preibus) with what might be termed "candidate Trump." Reiteration of immigration policy positions is less risk market supportive.
- The first international politician Trump met was the UK's Nigel Farage. Bannon has suggested working together with France's Marine Le Pen. Neither Farage nor Le Pen are known for their enthusiasm for the EU. The German-led EU summit on Trump was undermined as France and the UK had other plans for the weekend.
- Japanese GDP was better than expected, though nominal GDP (which matters for debt) was less buoyant as the deflator remains negative. Three Fed speakers make the agenda today, after Vice-Chair Fischer suggested rate rises were coming. The question is whether inflation will come faster. Yellen is no Volcker, after all.