ECR Research Quotes for Thought
Last week, US President Trump surprised commentators, his own party and the opposition by striking a bipartisan hurricane relief/debt ceiling/government funding deal. Some dare to dream about more deals, other don’t buy it. Conservative columnist Jennifer Rubin belongs to the latter category:
A new, “more presidential” Trump did not emerge last week; the same narcissistic personality who puts his own “winning” above any other concern simply reappeared.?
Meanwhile, Trump’s former top strategist is setting the stage to blow up the Republican party:
In Bannon's mind, the rest of the GOP needs to get in line with Trump's populist faction, and his planned insurgency over the next year is aimed at coaxing Republicans into his ultranationalist fold: "The only question before us: Is it going to be a left-wing populism or a right-wing populism. And that is the question that will be answered in 2020."
All this, doesn’t mean people should give up on the US. As we wrote in our recent Global Political Risk Monitor:
Yes, the world is not – as many presumed until recently – moving towards the US model of economic freedom and reticent government. Modernisation no longer equals Americanisation, in other words. At the same time, such long-term developments are no reason to bet against America at this early stage.
If the US economy keeps performing in a decent manner, the Fed will have to tighten its policy. Many worry about the impact on emerging economies, but not Brookings fellow Brahima Sangafowa Coulibaly:
EMDEs will experience some adverse effects, but will ultimately manage to avoid systemic financial crises like those of the 1980s and mid-1990s.
The most prominent of the EMDMs – China – has been stepping up its geopolitical and geo-economic game over the past years. Many in the West are worried:
China's vision of multilateralism will certainly serve China well, allowing it to expand its economic and geopolitical influence in a manner that will become ever harder to resist. Whether this will be good for the world remains to be seen.
Many a politician and analyst wants China to reign in North Korea. Some point out that Kim Jong Un wouldn’t be irrational to use a nuclear bomb first:
Yes, Kim is brutally rational. And that is precisely why he may have to use nuclear weapons, but not in a first strike against American cities.
For now, our economists aren’t swayed from their EUR/USD views by the most recent political and economic developments:
We believe EUR/USD no longer has a great deal of upside potential, unless the US economy were to fall back and/or confidence in the US government were to disappear completely. We do not expect the latter two to ensue. In the quarters ahead, we still foresee a decline to 1.00, if not below this mark.