Three major central banks meet in the week ahead, and there are several important reports due out that will give investors more insight into how the economies have begun the new year. However, the uncertainty surrounding these events and data pale in comparison to known and unknown impulses from the new US Administration. Â
On one hand, there is little thus far that should be surprising. The executive orders, like freezing new regulations, are what other presidents have done, including Obama, or ideas that Trump supported during the campaign, like withdrawing from TPP, supporting pipelines, the wall on the Mexican border, not funding international activity the support abortions, and limiting immigration by Muslims. Â
On the other hand, it is not so straight forward. There are no indications that the rhetoric about prosecuting Clinton over her emails is going forward, and in fact, press reports suggest that officials in the new Administration may also be continuing to use private networks and unsecured communication. China has not been cited as a currency manipulator, as Trump had pledged as a Day 1 priority. The freezing of immigrants from several Muslim countries is what Trump supported, but that Saudi Arabia was not on the list, (nor Egypt, Turkey, and Azerbaijan). Despite the role of Saudi nationals in the 9/11 attack, raises questions even from those who support the initiative.  Â
That the freeze includes people with green cards and those in transit, struck many as particularly severe, and a judge sought to limit the impact on some new arrivals. Many airports were scenes of large spontaneous protests. The situation was still playing out Sunday morning. A study by the libertarian Cato Institute found that between 1975 and 2015, immigrants from the seven countries from where immigrants are frozen, have not committed fatal terrorist attacks on US soil. Also, Muslim Americans with family backgrounds in those seven countries have killed no Americans in the past 15 years. Â
When Trump signed the order to officially end the TPP negotiations, he noted that Clinton also opposed the deal, though during the campaign he accused her of being duplicitous and really supporting the final agreement. Trump also express interest going forward in bilateral agreements rather than multilateral arrangements. Couldn’t TPP form the basis of a bilateral US-Japan free-trade agreement? Â
Investors are also continuing to wrestle with the conflicting views represented by different Administration officials. The President seemed to endorse actions that are defined as torture, but then said he would defer to Defense Secretary General Mattis, who is opposed. What does it mean to say that NATO is obsolete but important? Some members of the cabinet are more pro-trade than others, and it is not clear who will be the “deciders.” Â
The rubber meets the road in the middle of March. The debt ceiling is expected to be reached. This is the authorization to pay for what has already largely been spent. It is the bill that comes after the meal. The debt ceiling has been lifted nearly 75 times since the early 1960s. It is part of the US political ritual where Congress uses the debt ceiling as leverage to try to get concessions from the President. Â
