US-German meetings will draw attention before the G20 finance ministers meet

Research Team at BBH suggests that before the G20 meeting, there are two US-German meetings that will draw attention.

Key Quotes

“German Chancellor Merkel will meet Trump in Washington, and Treasury Secretary Mnuchin will meet Schaeuble, his counterpart in Germany. Over the past year or two, the US Treasury Department’s semi-annual reports on the international economy and foreign exchange market have become more critical of Germany. In the early days of the Trump Administration the line has been pushed more forcefully. There has been a striking juxtaposition of roles. Merkel has defended the liberal global order against the threats to it by American protectionism.”

“Traditionally, Americans often saw Russia posing a greater threat than many Germans. Now Merkel is trying to keep sanctions in place of the seemingly more accommodative Americans. Mnuchin appears to be part of the free-trade wing of the Trump Administration and will likely get on well with Schaeuble. They can commiserate over the soft money policies of the ECB and the bureaucrats in Brussels. The market impact may be in inverse proportion to the news coverage. The more talk, the less was done.”

“G20 finance ministers meeting: No fresh initiatives can be expected. The outlook for the global economy has improved marginally. The most important change since the last meeting is the inclusion of the new US Treasury Secretary. Many partisans fail to appreciate the fact that there are two distinct economic wings of the Trump Administration.

There is a protectionist, unilateralist (most definitely not isolationist), American-First wing. It is facing off against a more free-trade wing that accepts the basic premises of the liberal global world order of the post-WWII era. The G20 statement, and how the final version evolved from the preliminary leaked version may occupy analysts and journalists, but investors will likely file it with the "good to know" rather than an inducement to act.”

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