Rising Geopolitical risk, falling US political risk - AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, explains that the increase in geopolitical risk may turn out to reduce political risk in the USA. 

Key Quotes

“The Trump administration was receiving a lot of negative press ahead of the recent Syrian gas attack.  It was under pressure from the failure of the healthcare bill, a steady stream of controversy surrounding the investigations into Russian interference in the election, Trump’s Twitter responses were descending into a tiresome pattern of deflection, spin, and attacks on the media, and media focus was turning towards White House infighting and instability.”

“The US missile attack on Syria, in response to a chemical weapons attack on Syrian people, has generated widespread support from the US Congress, media and internationally.  Trump has navigated with relative calm his meeting with China’s President Xi.  His Secretary of State, Tillerson, has appeared balanced and in command of tense international events, concerns over a strange chumminess with Russia have faded.  Trump got his pick for the Supreme Court (Gorsuch) up, Steve Bannon was removed from the National Security Council.”

“The outlook for tax reform has been downgraded, but Trump’s economic team appears to be taking the lead and working on a plan to achieve broad Congressional appeal, having learned a lesson from the Healthcare bill failure.  The involvement of respected administration figures, Mnuchin, Ross, and Cohn is likely to sustain market expectations of a successful overhaul of the tax code, even if it does take longer to happen.”

“While geopolitical risks appear elevated, news may quieten down and Trump may come out appearing more presidential with capable and respected team members displaying more influence.  Confidence in his administration may lift and help boost US economic confidence and yields.”