Skip to main content

Market reaction to Trump's nomination

So far not much!

Everyone predicted that the market would drop 100 to 200 points (the S&P 500) and in fact nothing has happened.  So far Trump has made unsurprising nomination -- his real chef of staff will be Steve Bannon, whilst Reince Piebus will be the nominal chief of staff.  For starts RP is a good friend of the GOP, whiles Bannon is a sworn enemy of Paul Ryan.

Its not clear what Trump will do on Obamacare, while the GOP wants to abolish the thing, Trump has said that he will abolish Obamacare when Congress sends him a replacement plan...it could take a while since the GOP has never moved beyond a white paper that was very short on details (it had none).

The big moves now afoot are to pass Trump's agenda as fast as possible -- there are some ways it can be done, it seems that the GOP in Congress is keen to privatize Social Security and replace Medicare with vouchers (that would increase in value at the rate of inflation while medical costs are rising at three or four times the rate of inflation.

If they also abolish the EPA, the Education Department the government could be left with basically running the military and have, overall, very few roles.

I am almost certain that Americans are not too keen on seeing Social Security privatized -- after all, it would put the money in the hands of Wall Street, that has not covered itself in glory.  They like Medicare and don't want the project terminated.  Yet the agenda of the 1% is back in business with the abolition of most of the US Federal government.

Now there is a big difference between Congress' plans and the White Houses plans -- we know that Trump has some unfinished business with many GOP senators and congressmen/women and that Trump likes his revenge!  If Trump forces the GOP to produce a new ACA law to replace the current program...it is possible that this would be a good thing.  I am far from certain that Trump has the intellect to do the work, but time will tell.

In the meantime, the Democrats got exactly what they deserves, for while Trump was hated by a large segment of the population she was despised by many democrats who decided that they had better things to do than for vote for Clinton.  The next four years should be educational for Democrats and for America's population as a whole.


Comments

Popular posts from this blog

Trucker shortage? No a plan to allow driverless rigs

There are still articles on how America is running out of truckers -- and that its a huge problem, except its not a problem, if it was a problem salaries would rise to so that demand would clear. Trucking is one of those industry where the vast majority of participants are owner/operators and therefore free agents.

Salaries and cost are extremely well know, "industry" complains that there are not enough truckers, yet wages continue to fall... Therefore there are still too many truckers around, for if there was a shortage of supply prices would rise, and they don't.

What there is though is something different; there is a push to allow automatic rigs to "operate across the US", so to encourage the various authorities to allow self driving rigs you talk shortage and hope that politicians decided that "Well if people don't want to work, lets get robots to do the work" or words to that effect.

This has nothing to do with shortage of drivers, but every…

Every punter says oil prices are on the rise: Oil hits $48/bbl -- lowest since September 2016

What the hell?

How could this be, punters, advisors, investment bankers all agreed commodity prices  in general and oil prices in particular are on the rise...its a brave new era for producers and exporters -- finally the world is back and demand is going through the roof, except not so much!

What happened?  Well energy is complicated, the world operates in a balance -- 30 days of physical reserves is about all we've got (seriously) this is a just in time business.  So the long term trend always gets hit by short term variations.

Global production over the past 12 months has risen by somewhat less than 1.5% per annum.  As the world market changes production becomes less energy intensive (maybe), but the reality is that the world is growing more slowly -- America Q4 GDP growth was around 1.9% (annualized) Europe is going nowhere fast (the GDP growth in Germany is overshadowed by the lack of growth in France, Italy, Spain (lets say 27 Euro members generated a total GDP growth of 1.2…

Paying for research

This morning I was reading that CLSA -- since 2013 proudly owned by CITIC -- was shutting down its American equity research department -- 90 people will be affected!

Now the value of a lot of research is limited, that is not to say that all research is bad. In fact, I remember that GS's Asia Aerospace research was considered the bible for the sector.  Granted, there was little you could do with the research since the "buy" was for Chinese airlines...that were state owned.  Still it was a vey valuable tool in understanding the local dynamics.  It seems that the US has introduced new legislation that forces brokers to "sell" their research services!  Figures of $10,000 an hour have been mentioned...

Now, research can be sold many times; if GS has 5000/6000 clients they may sell the same research 300x or 400x (I exaggerate) but this is the key -- Those who buy the research are, I presume, prohibited from giving it away or selling it, at the same time the same rese…