Trump's speech to the joint session of Congress is the most important event this week - BBH

Analysts at BBH suggest that the most important event this week for investors may be US President Trump's speech to the joint session of Congress.  

Key Quotes

“Those hoping for detailed plans regarding tax reform and infrastructure spending are likely to be disappointed.  He may offer some hint about the controversial border adjustment.  Although he seems to want to punish importers and dismantle the global supply chains, there are legal and practical constraints.  News that he will not support the currently construed adjustment in the GOP plan helped spark a late rally in retail shares before the weekend.”

“Many investors continue to grapple with Trump's concrete policies, and the priorities are becoming clearer.  His infrastructure initiative does not appear to be a 2017 priority.  Treasury Secretary Mnuchin suggested that he was hopeful of an agreement on taxes by the congressional recess in August.  This may prove optimistic, especially if the repeal and replacement of the national healthcare take long.  The end of taxes associated with it was expected to help fund the other tax cuts.”

“The threat to cite China as a currency manipulator on day one proved to be bluster.  Mnuchin suggested that no judgment will be made until the April review as part of the Treasury's Congressional mandated report on the international economy and the foreign exchange market.  Under the current criteria, China is not guilty of currency manipulation.  Both Bush and Obama had indicated when they were on the campaign trail, that they would cite China too.  However, as they became aware of the facts and the framework, they too refrained from citing China.  If the Trump Administration moves toward a valuation metric, it would also be difficult to cite the yuan as many models suggest it is near fair value.   The BIS measure of China's real equilibrium exchange rate pulled back early last year but has been trending higher since last August.”