Day 14: Trump Becomes Volatile, Markets Respond Equally

Trump has issued more executive orders than he’s spent days in office so far, and week two of his Presidency started off with a divisive refugee ban. From there, things have been even more tumultuous for the markets, with justice department firings and rocky discussions with global leaders.

Refugee Ban Tarnishes Foreign Relations and the Dollar

• Many Republican leaders, from John McCain to the Koch brothers, have spoken out against the travel ban.
• This fracturing highlights new potential uncertainty that any of Trump’s campaign goals, including stimulus plans, will easily be enacted.
• The US business world is on high alert following the ban, Fast Company reports, as its vagueness and potential to shake up immigration law in the future could impact employees.

Gold has been on a small rally this week following Trump’s executive action to halt incoming travel of citizens from seven specific Middle-Eastern nations. The travel ban caused major moves off of risky assets and into safer financial investments like precious metals. Some investors are monitoring the potential fracturing of the Republican Party, which would likely increase market uncertainty into 2017.

Trump also issued an immigration ban that put his administration at odds with many foreign leaders like Australian Prime Minister, Malcolm Turnbull. The disagreement was reportedly over a previous agreement made with President Obama, according to the Washington Post. Regardless of the reaction to the tense conversation, if more discussions with global leaders become volatile, markets could react the same way.

Trump Picks Supreme Court Nominee, Tells GOP Senate to “Go Nuclear”

• Republicans see Neil Gorsuch’s as a spiritual successor of previous Justice Antonin Scalia.
• Trump encouraged the “nuclear option”, which would change the confirmation process to a simple majority vote.
• Democrats are split between obstructionist tactics and thoughtful examination.

On Tuesday Trump tapped Neil Gorsuch as his Supreme Court nominee. In true divisive fashion, the Senate immediately went to war over the pick, with minority leader Charles Schumer sharply dissenting because of Gorsuch’s history. The Republican majority Senate would need to earn eight votes to get the 60 total needed to confirm the Supreme Court nominee; however, Trump is suggesting other means to achieve that goal.

Learn more about Neil Gorsuch and his history in the legislative system:

With TPP Out of the Way, Trump Now Sets Sights on NAFTA Reform

• Trump calls for “renovation of NAFTA”.
• President’s comments continue to signal markets will be volatile during coming months.
• Stocks tank as Wall Street traders consider Trump’s statements on NAFTA.

It didn’t take long for Trump to retract the United States from the Trans-Pacific Partnership (TPP) last week, as he’d promised his entire campaign. Trump has now set his sights on the North American Free Trade Agreement (NAFTA), also a regular target during his Presidential campaign. He was unspecific on what exactly his plan was, but it was clear he’s ready to renegotiate.

We’re not making enough stuff for our trading partners to buy with all those US dollars they have been accumulating. But foreigners aren’t simply sitting on those surplus dollars—they’re buying the one thing we are producing prodigiously: debt. –Peter Schiff, The Real Crash

 

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