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A Tale of Two DCs

| Posted by: Paul Donovan | Tags: Paul Donovan

  • It was the best of times, it was the worst of times. The dismissal of the US White House communications director could be interpreted as the reasserting of authority over the executive branch, or a signal of the worst chaos the White House has known since President Jackson's inauguration.
  • It was the age of wisdom, it was the age of foolishness. The US cabinet meeting yesterday focused discussions on fiscal policy, which markets will like. The risk is that if President Trump is not capable of getting a legislative agenda through Congress, the easier path is to pursue trade protection – a fear now voiced in China's media.
  • It was the epoch of belief, it was the epoch of incredulity. The dollar continues to suffer. Regardless of what domestic US investors believe, international investors do not understand US politics as well and are less inclined to offer the US the USD 2.8bn per day that it needs. Hence dollar weakness.
  • It was the season of light, it was the season of darkness. Actually, as today's data is nearly all manufacturing sentiment data, it is just the season of darkness. The correlation of most of these surveys to economic reality has fallen noticeably in recent years.