NAFTA and Currencies
While I have many grievances with the new Administration I want to applaud a couple of smart moves. First of all, to get to talk to Xi Zinping, Pres. Trump agreed to recognize the decades-old “one China policy” which labels Taiwan as a breakaway part of China rather than an independent country. After his intermediaries with Beijing (Ivanka Trump and his grandchild, who attended a Chinese New Year party and then talked to Xi's advisers on behalf of the president), the important phone call could take place.
He appears to have walked back from his extreme support of West Bank settlers and to be preparing the ground for a new round of peace talks between Israel and some of its secret supporters among Arab countries, including Saudi Arabia and Egypt. The Middle East thicket is not susceptible to one-liners on Twitter and the new Secretaries of Defense and State have now reined in their boss.
I expect the Two Secretaries will also take in hand the dangerous love-feast between Trump and Putin. While a restart with Russia obviously makes sense (it was attempted by both of the previous US Presidents), it requires expertise which Pres. Trump lacks, despite his having had two wives who speak Russian (Ivana and Melania, both of whom learned Slavic languages as children which gave them a head start when they had to study Russian later.)
Our relationship with English-speaking foreign countries is now marginally less fraught as official talks with Canada and Mexico are taking place at a sherpa level to prepare a summit.
More significantly still, in order to get US infrastructure up to scratch, the Administration is working to create laws to public-private cooperation which build on the venerable tax-free bond issuance for needed finance with more modern variations.
And our rickety tax system will be reformed, which should help investment even if it doesn't do much for Trump voters.
I am a supporter of the fiduciary rule for retirement accounts, to make sure advisers put their customers ahead of the placements which pay off the most for the advisers. But this is an issue in all financial advising, and the 180-day delay may lead to a more general fiduciary rule by the SEC.
There are stock market implications which result from these few smart moves by the new Administration, discussed below. Today's market is mainly reacting to currencies where there are winners and losers.