Standing on the waters casting your bread
While the eyes of the idol with the iron head are glowing
Distant ships sailing into the mist
You were born with a snake in both of your fists while a hurricane was blowing
Freedom just around the corner for you
But with the truth so far off, what good will it do?
Jokerman dance to the nightingale tune
Bird fly high by the light of the moon
Oh, oh, oh, Jokerman
Live Squawk, London, 18 January 2017
Eight years ago on January 20th, I was lying in hospital waiting for a charming surgeon to repair some arthritic damage to my neck. Scalpels and sawbones were scheduled at lunchtime, but due to delays I ended up watching all of the Obamas’ hope-filled Inauguration and so the date of both events are firmly implanted in my brain, which is still very much attached to my neck.
President Obama was to oversee an extremely deep recession, verging on depression, and by pumping money into the economy managed to create an asset bubble the likes of which has probably never been seen before. One now feels the storm clouds are gathering and surely the fool’s gold of central bank QE policy will shortly go ‘pop’. Can Donald Trump be able to carry the economy forward, despite a pop, especially coming into office with social media and its unerring ability to spread hate, rumours and ‘fake news’ at lightening speed.
Conventional wisdom on the 45th president seems to be a mix of Ronald Reagan and Jimmy Carter when they both assumed office. Those with memories as long as mine remember the contempt held for James Earl “Jimmy” Carter Jr., as well as the fear that Ronald Reagan engendered with his Russian rhetoric. However, neither of them had Twitter accounts, and Trump has already shown strength, albeit an unorthodox manner, in his treatment of car manufacturers as well against the entrenched interests of the ‘Deep State’ that wants to renew the Cold War. Rather, Trump isn’t afraid to express a wish to build bridges with Russia and support a UK trade deal post-Brexit, yet shows toughness to China.
While the world’s elite and their wives attend the self-congratulatory love-fest at Davos, Trump did not send a delegate or representative to the World Economic Forum. There is a slight wringing of hands over this in Davos, and possibly for reason. Trump may just turn out to be the most important President in the Post War World. His authority and leadership could pave the way for other populist leaders, such as Marie Le Pen in France. With the world seemingly in a perilous state, one prays that the more unlikeable traits and impetuousness of Trump will be subdued and a stronger leader emerges. (( I didn’t fully understand: However prayers are really answered and one must fear that he is receiving an economic hospital pass reminiscent of Blair’s to Brown in 2007 and that the world’s economies and Europe’s in particular are in a rickety state.)))
Back to January 20, 2009, the hopes were for a reforming liberal president (and a ‘reformed’ neck). Gold then stood at $854.60 an ounce, the Dow Industrials were at 7949 and crude oil at $38.47 a barrel. Flash forwards eight years, and QE is in full bloom. The Dow is knocking on 20,000, also on optimism for jobs returning to the US. Gold though at $1,185.50 possibly reflects a slight fear factor, while oil above $50 a barrel is nudging back towards levels where fracking becomes profitable. It’s all sunny in the playground that is the market at the moment, quite different to expectations after the election in November.
My gut tells me to buckle in for a bumpy ride, with a possible ‘pop’ and yet more examples of markets not exactly moving according to expectations. But as we well know, uncertainty and unpredictability increase volatility and lead to market opportunities. Just be careful of trying to read Trump, or anyone else for that matter.
This column is the opinion of the author and does not necessarily reflect the opinion of Live Squawk.