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Awfully big speeches

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US President Trump is to deliver an awfully big speech on tax today. Leaks suggest a range of proposals. What matters to markets is what is likely to get through Congress. Our expectation is that the 35% corporation tax rate could come down to around 25%.
  • There is a risk that Trump will use today's speech to rally his support base with inflammatory comment. Trump's candidate in the Alabama Republican primary was defeated by a large margin. The latest healthcare reform proposals have failed to gain Senate support. Distractions with domestic (anti-business) rhetoric or with international (geopolitical/trade) rhetoric would impact markets.
  • President Macron of France gave an awfully big speech yesterday. The realities of German politics led to an unexpected focus on EU integration rather than the Eurozone. The proposal of a Eurozone finance minister and budget was kept. This is a factor in German coalition negotiations and therefore relevant to investors.
  • Fed Chair Yellen gave a moderately big speech on inflation. The Chair dismissed the predictive power of inflation-linked securities and focused on slack in the labor market. The problem of predicting inflation was highlighted. The remarks were consistent with a December rate increase.