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Saturday Sanity Break, 4 February 2017 - Trump and economies

February 4, 2017

The initial 'Trump bump' for US shares was followed by uncertainty and nervous retracement.  Friday was a stellar day in US markets, largely attributed to  President Trump's 'starting the clock' in his well-signalled review of the Dodd-Frank bill. If this results in a substantial easing of American financial regulation it will boost values of US financial sector stocks, as predicted by market participants on Friday.  Given the madness in American markets with the loose regulations earlier in the current decade, one can be confident there will be another great crash before too long.

 

The American economy created 227,000 jobs in January, according to the government nonfarm payrolls report, and the unemployment rate rose slightly to 4.8%.  Weak wages growth - wages rose only 2.5% from a year ago- confirms there is no strong boom underway.

 

The WSJ opined: 'What [the review of Dodd-Frank] means ultimately is anybody's guess. The post-crisis law touches virtually every corner of the financial world. Parts may go, all of it may go. The order just starts the review process. Still, this was something that clearly was on Wall Street's wish list, and the market responded.

 

Mr Turnbull's hard words with the American President seems to have passed amidst much grumbling about 'death of diplomacy'. Early in the time of Australian financial deregulation, Australia's Michael Porter once said: 'The answer to a leak is a flood'. Donald Trump's Tweets and other White House emanations seem to have followed our Porter's advice.  One must say the provision of information is quite refreshing.  Democratic politics will very likely be changed forever with long-suffering taxpayers the likely winners.

 

Australia's economy looks to be in recovery mode also, thanks to substantial recovery of many commodity prices. Henry worries that this cannot last, and with the death of vehicle manufacturing recent rates of job creation cannot last. House prices in Melbourne and Sydney continue to rise at an unsustainable rate and parents with kids needing somewhere to live worry if they will ever be able to afford to enter the housing  market. Full-time jobs are hard for young people to get.

 

Overall, the budget deficit is proving impossible for the current government to fix and Australia's government debt is approaching half a trillion. In the absence of  'Banana Republic' work the debt will double to almost a trillion before we wake up and get serious.  What an irony if it is a Shorten government that finds itself handling that particular hot spud.  At least the ludicrous negative gearing fire that is under the south-east city housing boom will be fixed.

 

Kulture

 

Fiona Prior experiences Sydney Theatre Company’s production of Colm Tóibín’s The Testament of Mary. To set the scene … Imagine you are a mother who has witnessed an unspeakably barbaric execution of your son for his participation in a war/cause; a cause about which you were never convinced. More here.

 

The Sporting Life.

 

Caaaaarlton!'s gals opened the AFLW season with a sell-out crowd and a glorious win over the old enemy, Collingwood. Henry was not at the game but replay suggest that the Blues gals were more used to the cut and thrust of footy. Skills on both sides will surely improve as the season progresses, but both teams went hard at the ball and looked for players free to take a mark.

 

Roger Federer's amazing win over Rafael Nadal at the Australian Open was 'one for the ages' as experts frequently commented. (Also, one for the old folks.) The Williams' sisters was also a win for relatively elderly players, giving hope to those of us who are twice the age of these warriors.

 

Patrick Smith's sledge of  chief Cricket selector, Trevor Hohn's, foolish shot at Victorian player Cameron White, drew a vigorous cheer from Henry this morning. How dare such an average former player snipe at a bloke who is a far better player and who has been so bold as to raise a question or two about weird, unexplained and in my view unfair selections.  Let's see how Mr Hohn's team goes in India.

 

The blokes footy will be starting soon and Henry's focus will sharpen.  On the face of it, Caaarlton! has few standout newbies, but like a former US President they may be talking quietly and carrying a large stick. Unlike the Trumparumpa as Henry is informed is a name used in New York.

 

Image of the week.

 

 

 

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