The FOMC was a bit more hawkish this Wednesday. That is in spite of the fact that Fed Chair Janet Yellen is right that federal funds at 1.00%-1.25% are nominally accommodative compared to the Core U.S. Consumer Price Index data that just dropped back from 1.9% to 1.7% Wednesday hours before the afternoon FOMC announcements.
There is a lot of argument on both sides why this was either the right or wrong thing to do. That said, the real point is the market response in what was a fraught environment due to the President returning to Twitter: U.S. equities decided that the U.S. leaving the Paris Accords was a good thing. And that was reinforced by the equities still strong performance after Friday morning’s less than bullish U.S. Employment report.
It may be more so on style than substance that President Donald Trump’s dismissal of FBI Director James Comey fails very badly. Yet, in spite of what were broadly accepted reasons for the dismissal, the disquieting manner in which so many aspects of it were handled became the ‘substance’ in terms of the lower standing of the President even within his own party; and needless to say the not-so-loyal opposition from the Democratic Party.
Major market decisions out of last week into this week seem stalled by the looming next House of Representatives vote on the Trump administration’s American Health Care Act, the fraught repeal and replacement for Obamacare. The fate of this legislation is a key indication for two key market factors flowing from Washington DC.
It is not just U.S. President Donald Trump who is being held to the standard that was set by the aggressive actions of President Franklin Delano Roosevelt during the opening phase of his first term in 1933. As has been true for every President since Roosevelt who has been measured by that standard (which did not exist until the first Roosevelt administration), it is a significantly unfair comparison by any measure.