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From the March 23 edition of Bill Blain’s Morning Porridge
“Offer him full and unfettered cooperation, no.. full and willing cooperation.. Then I will tell you which papers to burn.”
There is plenty written elsewhere about yesterday’s Lone Wolf terror attack in London. Hardening electoral sentiment is one danger – that’s their aim. Populism fuels Islamophobia which is the perverse goal of the Jihadis. Many analysts are terrified of the potential effects of attacks in France before the final ballot: how much will outrage benefit Le Pen? Be vigilant.
Back to markets, and it feels like we are in a limbo phase. Something is happening, but we don’t know what it is. The biggest game in town remains the dollar and the outlook for the US… but for how long?
Trump’s set-piece reform and replacement of Obamacare is proving a nightmare to move through Congress. Its become his touchstone – and if he fails expect ructions. There are signs and signals a compromise is on the cards: getting rise of affordable care (leaving millions of American’s uninsured). The Donald is discovering Government of the people by the people is not an easy thing.
The debate has revealed the complexity and cost of health insurance while exposing fault lines in Republican politics – appeasing the Freedom Caucus isn’t easy! Some kind of compromise involving State budget reconciliation rules will be worked up.. not that I understand exactly how. I’m sure barrels of pork will be involved somehow. All of which stinks of Beltway politics… which I thought we were going to avoid. Ach well.
So where does that leave the rest of the Trump Jump policies? Do they fall by the wayside because they are difficult? Do we still get the spending and overarching tax-reform we have been promised? Er.. increasingly I doubt it. The Swamp could yet swallow Trump’s ambition.
We will probably get more tinkering around the edges with the promised reforms slipping down the agenda till next year, or the year after that. Gridlock.
Other articles raise the threat of Trump lashing out to create a collision with the Fed – pushing back against Yellen’s tightening programme to desperately keep growth numbers up. Messy. That won’t help markets.
The Trump basket of tax-reform (both corporate and personal), plus a healthy big dollar-number infrastructure plan to rebuild America was going to change the world. Instead it’s bogged down in Washington Trenches while the new Emperor fiddles and suspects treachery in every corner.
Instead of fixing the US’s chronic internal communications and infrastructure, we’re going to get a 350 ship navy. Marvellous.
The ships built by the last President to achieve that number are now being recycled into shaving blades. Remember, a new road or railway is for ever.. a new aircraft carrier is until the new Chinese ballistic missiles make it obsolete. (Which probably already happened..)
Trump may not have grasped it, but he needs the support of Congress; the House and Senate – not just Republicans but also Democrats – to move through policy. The danger is he keeps haemorrhaging support while “distracted” by Fake News, Russian, Travel Bans, Mexican Walls and the rest. At some point he’s going to understand he is the servant of the people, not the other way around. But we know that.. its just that he doesn’t. Trade it accordingly.
Comprehensive tax reform now looks a massive ask – if its not revenue neutral it requires 60 Senate Votes, otherwise even a straight majority means it will expire in 10-yrs. Somehow I doubt its going to happen.