I guess that Trump, after the disastrous result of the failed negotiations on the reform of the hated ObamaCare law and the about-face of the group of supporters of the Freedom Caucus, has made some reflections. Perhaps he understood that "House of Cards" was only a pale imitation of the difficulties in managing the powerful American lobby groups and that too much democracy does not match the urgencies of his policy of breaking with the clientelisms that revolve around the House White.
He will certainly have envied his Russian ally, Vladimir Putin, and those like him who manage vast populations with authoritarian power and face reformist impulses that are unlikely to be feasible in adequate and efficient laws in the short term.
The effects of these Trump political difficulties have been felt on the market and so the shares of companies linked to domestic sales have dropped since the beginning of March by an average of 5% compared to the quotations of the corporates that sell more abroad which remain positive, while the banks have dropped by 9%.
The fiscal crux of Trump's program, which also involves the ObamaCare reform, is beginning to be perceived as a difficulty and a burden for the financial markets because it affects the expected results on US GDP growth. And we have already seen an anticipatory correction of the movements in the ETFs linked to US infrastructures on March 17th.
Leaving aside the mistakes of Paul Ryan, the speaker of the White House whose days are numbered despite the confirmation by President Trump, for Republicans, without the money saved from the excessive costs of ObamaCare, it will be difficult to initiate tax cuts without incurring an increase in the deficit and therefore in the discontent of the party base.
So too investments not only in shares and derivatives but also in the US dollar are slowing down. For Europe, there is an opportunity to "showcase", starting from the signing in Rome on the renewal of the founding treaty which has completed its 60th anniversary, with the result of giving the new generations a sense of belonging and the ideal of a Europe that in the overwhelming words of Esteban Gonzalez Pons seeks a credible restart: “Europe is not a market, it is the will to live together…Europe is peace, it is the return to freedom of Greece, Spain and Portugal . Europe is the fall of the Berlin Wall…”.
Words that see a continent squeezed between the populisms of the Northern countries and the migratory waves that land on the beaches of the South of the European Union, and in the East by the civil war in Ukraine and the sanctions against Russia while in the West by the "walls Trump's ideals. A European Union that has left behind the wounds of the Second World War and now faces the most evident risk of disintegration towards Brexit.
In a few weeks, the political uncertainty that had already dominated 2016 will forcefully return to present the bill to investors with the start of the Brexit negotiations. Volatility will not be reflected so much in the VIX as in the currencies between the British pound, the euro and the US dollar, despite the emerging currencies that seek to reabsorb the rises in US rates to distinguish themselves and find a balance right outside the correlation with commodities. From currencies therefore the real outcome passes to the economic and political prospects of the EU and of the former United Kingdom (listen to the disagreement with the Scots).
The latest appeal of the "British Sherpas" to theArticle 24 of the WTO shows how serious the situation is. In fact, appealing to this article within the World Trade Treaty could lead to a ten-year agreement (a sort of "grace period") to keep commercial tariffs on exports at zero. Onerous measures would thus be avoided at the end of the two-year period of negotiations, giving time for the definition of a definitive FTA Free Trade Agreement. And obviously to keep the "passporting" on financial products to banks based outside the EU in London.
They are two risky solutions that do not take into account possible new elections in 2018 in Great Britain, as already in the bets of English bookmakers. Since 29 March, for invested portfolios, uncertainties have remained decidedly more widespread than certainties.
It will not be an easy road for the European Union from here on out, but even in this second phase of rethinking globalization has shown how the European Union is irreversible, the real alternative to chaos. It is not just a shared dream, but a reality that it is up to us to build day by day for future generations, who are also called to express themselves without leaving room for the political cunning of certain factions that have always been interested only in preserving their own interests at the expense of common good.
