“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing” – Jean-Baptiste Colbert
Continued Political Turmoil in the White House – and Abroad – Tempers Markets
President Trump’s softening tariff stances – offering exemptions for Canada and Mexico – have led the European Union and Japan to seek exemptions as well.
Trump also tapped Larry Kudlow, a so-called “perfect embodiment of Republican economic”, to replace Gary Cohn as Economic Advisor to the President. Kudlow, a free trade advocate, may push Trump to further back off his protectionist stance of increased tariffs. U.S. Markets reacted favourably to this news; however, as Robert Phipps, Director at Per Stirling Capital Management opined: “it’s not enough of an offset to protect the companies that are susceptible to retaliation in a trade war.”
Trump also fired Rex Tillerson from his post as Secretary of State on Tuesday; markets weighed on the news. Tillerson and Trump had some public rifts over North Korean, Russian and Iranian policy options. Trump loyalist Mike Pompeo, Director of the CIA, was tapped to replace Tillerson as Secretary of State.
On Wednesday, Trump threatened to impose heavy tariffs on Chinese goods – specifically, targeting Chinese tech, electronics and telecoms – world markets reacted negatively almost across the board.
Overseas, a chemical attack on a former Russian double agent and his daughter, using an exclusively Russian nerve agent, resulted in British PM Theresa May expelling 23 Russian diplomats from British soil. She also vowed to crack down on corrupt Russians & their money entering the UK, and lastly, May also cut off high-level talks between the two nations. The Russian Foreign Ministry threatened to retaliate.
Lastly, U.S. Special Counsel Robert Mueller issued a subpoena for documents relating to President Trump’s businesses, further weighing on markets.
Markets rebounded on Friday to close out the rocky week. Investors also began looking ahead to next week, when the Federal Reserve is expected to raise benchmark U.S. interest rates. Rate-sensitive sectors, such as utilities and real estate, rose on Friday, but they could perform poorly if rates increase sharply.
Sources: Globe Advisor