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.