Trump at 100

The Day So Far…

The press this morning is once again dominated by President Trump as this weekend marks his first 100 days in office. The increased press attention appears to have only increased the erratic nature of the former TV star who appears adamant in making a defining statement to mark this symbolic milestone.

The main headline from last night was that the commander in chief of the US armed forces stated that a ‘major, major’ conflict with North Korea is possible, but that he would seek a diplomatic solution. Although this sounds very confrontational, in reality it is just more peacocking with very little prospect of the situation escalating to the point of actual military engagement, especially given the presence and involvement of China in the region. The other two hot topics are the NAFTA agreement, which the President has once again changed his mind for a third time, suggesting a deal maybe terminated if the US does not get a “fair deal”, and finally, he remains steadfast that “if there’s a shutdown, there’s a shutdown”. The one take away here is that the market appears nonplussed by this latest confusion on Capitol Hill and the more he underwhelms on the details the more the market has lost interest. However, for the time being equities remain elevated and outstanding corporate earnings from the likes of tech giants Alphabet and Amazon last night have helped kept sentiment positive on balance.

Elsewhere, the EUR has rallied this morning following the release of the latest Euro-zone core CPI data which rose at its fastest rate in nearly four-years. The aggressiveness of the move higher in the EUR/USD is reflective of the fact ECB President Mario Draghi stuck a particularly dovish tone when referring to inflation as “subdued” in yesterday’s press conference.

The Day Ahead…

US Q1 GDP is scheduled for release this afternoon with the consensus being that economic growth has tailed off in the first three months of the year in a similar fashion to what was seen from the UK this morning. Furthermore, we have the release of Chicago PMI and the April final University of Michigan Sentiment, neither of which I would expect to greatly impact the market unless the former is substantially out of line. At this present point in time markets appear to be allocating more weight to political developments rather than the economics which in summary continues to stabilise if not improve in the case of Europe. Finally, the data slate finishes with the US Baker Hughes rig count where I would expect the rate of active rigs to increase for a 15th consecutive week.