Economics
Chief economist update: Trump trumps Fed

It appeared that not only us, Australians all, were celebrating Australia Day on January 26. Our American brethren were too ... but for a different reason.

The Dow rose by 0.7% on the day (January 25 in New York); the S&P 500 increased 0.8% and the Nasdaq jumped 1.3%.

Trump did it! Wall Street's gains came after POTUS announced that he has reached a deal with the US Congress to end the record 35 days of partial government shutdown despite not getting his way - i.e. funding to build a wall.

What he agreed to open would be shut again after three weeks - until 15 February - should Congress still refuse him wall money. After which, Trump would use his presidential might to declare building the wall a matter of security emergency.

Well who could blame him? The President got away with imposing the 25/10 tariff on steel and aluminium by coating the move as a matter of "national security".

The Fed's fresh iteration of being "data dependent" - a given for all central banks on the planet - means zilch given Trump's unpredictability.

Case in point, the Fed was on its way towards normalising monetary policy aided by Trump's tax cuts and infrastructure spending that, in turn, was expected to bump up global growth and support developed country central banks to go ahead and normalise theirs and then ... boom.

Tariffs, trade war, reversal on Iran deal, death of NAFTA (now known as USMCA - United States-Mexico-Canada Agreement), his ditching of APEC (Asia-Pacific Economic Cooperation), and so on and etcetera.

Figure out Trump and we can figure out where the global economy and fiscal and monetary polices, and financial markets, are headed ... at least, until 2020.

Read more: TrumpFedDowCongressAPECNAFTANasdaqPOTUSS&PTariffsUSMCAWall Street
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