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Congress First?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • It may be the US rather than Europe that generates most political uncertainty to investors this year. The US "American First" budget has met with resistance from Republicans in Congress. This follows Congressional concerns with Trumpcare, and bipartisan rejection of Trump's wiretapping claims. The British also denied tapping Trump Tower, with uncharacteristic vigor.
  • This political noise raises questions about cooperation between the White House and Congress. If cooperation is called into question, the seamless transmission of the president's policy agenda from Twitter feed to statute book may also be called into question, challenging investors' assumptions about tax changes and infrastructure spending.
  • The Bank of England had a hawkish dissent in favor of raising rates. UK Prime Minister May signaled "now is not the time" for a Scottish independence referendum. The proposal of a 2019 vote was seen as too distant to impact markets now; a later vote reduces current market interest further.
  • The G20 finance ministers gather in Germany for a taxpayer financed weekend minibreak. It is theoretically possible that something constructive comes from the meeting, but economists know only too well that theory does not always translate into practice.