Macro Digest: State-of-the-Union and FOMC preview

 

Conclusion: Zero market impact, market focus will move on to FOMC and government shut-down in February

 

There was close to zero economic impact to  be taken from this speech apart from the 1.5 trillion infrastructure plan, which so far looks extremely unlikely both politically and practically. This suggestions reminds me of the Obama plan post 2008/2009 crisis where co-sharing of cost for infrastructure should have released new spending but due to local states unwillingness to fund (read: tax) locals fail to have an impact.

 

-          No mentioning of China, despite this being his #1 priority in 2018 if you look at his action rather than listens to his words

-          No mentioning of Russia – despite the recent Oligarch report

-          No focus on the issues on the Americans mind:  Race, Me2 campaign, youth, and inequality

 

President Trump has managed to make the narrative about the stock market (just for record: The stock market rose more in Obama's 1^st year than Trumps), reduced regulation and the promised impact from tax.

 

Business loves it and Making America great again is an easy sell, however on all the issues which matter over time the US is still unclear in its message, my conclusion remains: Don't listen to what he says, but what does.

 

Today it will be back to business for the President with another government shut-down looming in early February, NAFTA, immigration laws.

 

 

 

Trump focuses on immigration and infrastructure in first State of Union: (Politico)

 

Trump's State of the Union was optimistic and a nod toward compromise. Now both parties must man up (Fox News)

 

State of the Union: Trump hails 'new American moment' (BBC News)

 

Trump Makes Bipartisan Pitch In First State Of The Union, But Also Plays To Base(NPR)

 

Full text of Trump's State of the Union Speech (Vox)

 

 

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FOMC tonight is expected to give No change  (CME FED Funds predictor below) –watch text which is widely expected to have hawkish tilt

 

 

 

Zerohedge has this text from Goldman on expected wording for tonight:

 

 

 

This excellent overview of economic data since last FOMC meeting from BKassetmanagement.com

 

 

Finally,  VIX broke the 14.58 top – signal of top or risk-off?

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

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