Recent developments from Washington are a prime example of why following world events is such a crucial part of a trader’s job.Time and time again we see how such events kick-start patterns. The latest example is US President Trump’s Senate exoneration, despite all odds to the contrary.
As though his party cronies aren’t as scared of his antics as any other sane person, his impeachment for allegedly exceeding his authority was blocked on purely partisan antics. And the near-miss trade war – so stoked a year ago – has died in a whimper, not a bang.
This latter occurred just as the damage to the US manufacturing sector was about to be dealt a swift blow, a sector succumbing to automation much more than anything approaching Chinese counter-measures. In short, his bluff was called, shown to be a bluff, and he got away with it nevertheless.
Why?
Quite simply: the markets love President Trump. He is willing to undermine the Central Bank and endanger the Democratic institutions that give meaning to his presidency, all in the name of breathing some more hot air into an already artificially over-inflated market.
His aim is cheap money, and nobody knows for how much longer the members of the Federal Reserve’s Open Market Committee will be able to withstand the pressure and act in direct contradiction to their mandate.
For now, the US markets are thriving and the rest of the world lagging (far) behind – but still following.
One fears to consider what will happen the day after – when sanity returns to the US administration. Will it sound a shot heard around the world, or will there be others waiting for their chance at global leadership?
