Title: Brace for more drama…
- Insufficient funds
- Fanning the flames
- Weak Meat
- Becoming Switzerland
Trump suffered his first major defeat on Friday since taking office. The Republican-controlled house cancelled the vote to repeal and replace Obamacare once they realised they did not have enough support.
And then came the finger pointing.
Trump initially blamed Democrats. But he’s now turned his anger to Republicans.
‘President Donald Trump lashed out at Republican leaders and groups on Sunday for the defeat of the bill to repeal and replace his predecessor’s health-care law, after blaming Democrats for the loss on Friday.
‘“Democrats are smiling in D.C. that the Freedom Caucus, with the help of Club for Growth and Heritage, have saved Planned Parenthood & Ocare!” Trump said.
‘The criticism marked a shift for Trump, who had avoided blaming Republicans and House Speaker Paul Ryan for the defeat of the bill with no Democratic support.’
Trump had vowed to replace Obamacare with ‘something terrific’ during his presidential campaign. Looks like the Americans will be waiting a while longer.
After licking his wounds, Trump vowed not to rest until the law is dismantled and Obamacare is replaced.
He said, ‘Bad things are going to happen to Obamacare.’
And tweeted, ‘ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!’
He will be back, stronger than before.
And talking of ‘I’ll be back’, Obamacare is not the only setback the POTUS received this week. According to the Gallup poll, his approval rating has fallen to a new low; 37% after only two months in office.
And at least one person is gloating: that is Arnold Schwarzenegger.
You may remember their feud back in February as Arnold took over the show The Apprentice — formerly hosted by Trump. As the show’s ratings slumped, Trump taunted Arnold by Tweeting he was ‘a total disaster’.
Now Arnold got the chance to get back at him, and he took it.
Oh the sweet taste of revenge! He tweeted:
‘Oh, Donald. The ratings are in, and you got swamped. Wow. Now you’re in the 30s? But what do you expect? When you take away after-school programs for children, Meals on Wheels for the poor people, that’s not what you call making America great again. C’mon! I mean, who is advising you?’
More on this after the markets…
Over the weekend, the Dow Jones Industrial Average fell 59.86 points, or 0.29%.
The S&P 500 fell 1.98 points, for a 0.08% drop.
In Europe, the Euro Stoxx 50 fell 8.03 points, or 0.23%. Meanwhile, the FTSE 100 fell 0.05%, and Germany’s DAX index added 0.20%.
In Asian markets, Japan’s Nikkei 225 is up 177.22 points, or 0.93%. China’s CSI 300 is up 0.80%.
In Australia, the S&P/ASX 200 is up 45.59 points, or 0.80%.
On the commodities markets, West Texas Intermediate crude oil is US$47.97 per barrel. Brent crude is US$50.80 per barrel.
Gold is trading for US$1,248.71 (AU$1,637.57) per troy ounce. Silver is US$17.83 (AU$23.38) per troy ounce.
The Aussie dollar is worth 76.31 US cents.
In response to President Trump’s failed attempt to repeal Obamacare, the US dollar fell, and so did the Dow. Last Tuesday, US stocks suffered their worst selloff overnight since September 2016 as investors got a case of the jitters.
The thing is, markets have been rallying since election-day last November in the expectation of Trumps’ massive infrastructure spend and tax cuts. Yet the failed repeal of Obamacare has put a damper on this plan.
When Republicans won the White House and the two congressional chambers, they promised changes. Yet after vowing for seven years that they would repeal Obamacare, and now enjoying majority support, they failed miserably on their first attempt.
Now there is doubt they will be able to accomplish anything they promised during their election campaign. That is, reality is starting to set in that there may be no tax reform or infrastructure spending.
As the US increases the political drama — and Brexit starts to become a reality — investors are hitting the sell button. Has the Trump effect run out of steam? Could this be the start of a correction?
It’s not just the US stock market that looks shaky. The US housing market seems to have peaked, as the American dream is turning more toward rentals than owning a home. The US home ownership rate has been falling. According to the US census bureau, 52 out of the 100 largest US cities were in renter majority in 2015. The fact is that most households are renting not out of choice, but because they cannot afford to buy.
The truth is that a third of American families admit they would have trouble coming up with an emergency US$2,000 fund, as the SCE Credit Access Survey reported.
Yet there is some good coming out of this trillion dollar infrastructure plan — whether it happens or not— and even if we are not yet sure where that money is coming from.
It looks like in his first two months as President, Trump has managed to reduce the US deficit by US$100 billion.
That’s right, in his first two months in office Trump has managed to reduce the budged deficit by US$100 billion, just by talking about spending.
Compare that to Obama’s first two months in office. During that time Obama increased the budget by US$400 billion by actually signing a trillion dollar stimulus package. You see, Obama was a lot more action and a lot less bluster.
The result? Obama managed to have the largest debt increase of any president…ever.
By the way, his stimulus package was deemed a complete failure as it was unsuccessful in bringing unemployment to under 8%.
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Fanning the flames
In Europe, things are heating up.
UK Prime Minister Theresa May is expected to trigger article 50 this Wednesday, which means that the country will be effectively exiting the European Union.
Whether they will benefit from leaving or not, it looks like they have an unlikely supporter: Trump. Yep, him again.
The US president may have snubbed German Chancellor Angela Merkel, as he ignored her request to shake hands. Yet he had no problem getting photographed walking hand in hand with Theresa May.
An indication on future relations? Could be.
Yet, even 10 months after the referendum, the British remain very much divided on if they should be leaving or not.
And Brits are not the only ones.
As the EU faces an uncertain future, tensions between northern and southern countries are increasing.
Greece and Eurozone creditors cannot agree on the reforms they will be requiring from Greece before they can issue a new loan, as Eurogroup President Jeroen Dijsselbloem said last Monday.
Yet that was not all he had to say.
This is the best bit (emphasis mine):
‘During the crisis of the euro, the countries of the North have shown solidarity with the countries affected by the crisis.
‘As a Social Democrat, I attribute exceptional importance to solidarity. (But) you also have obligations. You cannot spend all the money on drinks and women and then ask for help.’
Talk about adding fuel to the fire…
On the opposite side of the planet, Brazilian producers are sighing in relief.
China has lifted an import ban on Brazilian meat after a scandalous revelation of a bribery scheme that was allowing tainted meat to pass inspections.
Brazil is the world’s largest exporter of beef and chicken. According to Bloomberg, Brazil accounts for almost 20% of global beef exports, and 40% of chicken exports.
The numbers involved in the scandal were minimal, but it has dealt a massive blow to the industry. In just a couple of days exports fell from a daily average of US$63 million to just US$74,000.
China may have lifted restrictions yet Hong Kong — Brazil’s largest beef importer — has yet to follow suit.
And Australia is swooping in to take advantage of this massive blowout.
You can read more — including an investment opportunity this presents right here in Australia — in the latest Port Phillip Insider Extra issue. You can go here to learn more and take out a trial subscription now.
You’ve probably heard that Chinese Prime Minister Li Keqiang is in the country for a visit talking trade with Malcolm Turnbull.
On his first day, he sent a ‘subtle’ warning as trade tensions between China and the US increase: Australia doesn’t have to take sides. And he added a less subtle warning as he reminded the host (that’s us) enjoyed a US$50 billion trade surplus with China last year.
This could all end if there is instability in the region.
From the Southern China Morning Post:
‘Li’s comments followed a report by the Financial Times that said Canberra had rejected a possible deal with Beijing over the US$3.8 billion Northern Australia Infrastructure Facility due to concerns about its impact on Australia’s relations with the United States, citing unnamed Australia officials.
‘If confirmed, it would be another blow to President’s Xi Jinping’s “One Belt, One Road” infrastructure and economic initiative to project China’s influence across Asia and beyond.’
In other words, Australia is caught in the middle of the trade war crossfire, and will need to maintain a delicate balance with its relations between the US and China.
That is, it needs to become Switzerland.