If Trump was listed in the Dow Jones

We are not experts on US history but one suspects Donald Trump has created more controversy, and probably split more opinions than any US president in history. Donald Trump appears to be uniting the populous at least in the condemnation of his presidency. According to headline in the Independent newspaper a few days ago his approval rating has sunk to a new low. He has fired or lost all but one of the special advisors he appointed at the start of his term.  Last week he abandoned his business councils and leader’s forum after several high-level resignations post his comments regarding the events at Charlottesville. The fall in the US dollar from the start of the year has been correlated to the increasing unpopularity of President Trump. 

He has failed so far on reforming the health care bill and introducing tax reforms, he has also made several U-turns from pledges at the start of his Presidency. The considered view is that the president is becoming more and more isolated from the Republican establishment. 

Stocks and stock markets fortunes turn generally, at the point when everyone believes all hope is lost. We all remember how sentiment felt just before the market turned in 2009. If Donald Trump was a stock quoted on the exchange, is now the time for a recovery? Would hedge funds be looking to cover their shorts? Looking back, one can usually identify a moment when stocks fortune change, could last week’s departure of Steve Bannon be that point for Donald Trump? America and the world needs a president that can be respected. 

On Tuesday Provident Financial, the door step lenders share price fell seventy percent after their latest results presentation. The company lends to what would be known as sub-prime. The initial reaction may have been that Provident Financial results were a reminder of the events of a few years ago. We have written recently about the recent weakness of the UK consumer and the current level of the savings ratio within the UK economy.  On this occasion technology appear to take the blame for the collapse in profits of the credit business as the firm introduced more technology leading to less human interaction, not a weakness in the consumer. We have commented in the past how banks are introducing more technology and further disintermediating themselves from their clients. Perhaps the regulators should take note of today’s events and realise the consequences of such actions.

As we approach the meeting of central bankers in Jackson Hole, there is a certain expectation that   Mario Draghi could outline how the ECB will start to wind down its bond purchase program. Ahead of the speech the spread between German and Italian bonds has been widening over the past weeks. How the central bankers of the world unwind their respective quantitative easing programmes is a question that has tested many worlds economists. This topic may well feature high in the debating circles in the coming days in Jackson Hole.

Posted on August 22, 2017 .