Saturday, 21 January 2017

Weekend Update 21/01/2017 – President Trump, What Next?

'You just never know. That unpredictability is the great thing about life. You change. The world changes. You live in a country where we are still blessed with enormous opportunity. Leave yourself open to the world of possibility. You have the ambition, you have the smarts and you have the toughness. So, turn the page on your biography - you have just started a new chapter in your lives.'

Lloyd Blankfein, “Mr. Goldman  Sacks," CEO of Goldman Sachs unintentionally backs Brexit and Donald Trump in a US speech to graduates, mid 2016.

The era of President Trump has arrived, and America’s financial “snowflakes” are in rapid meltdown. President Obama, the modern era version of President Carter is gone. President Trump, the modern era version of President Reagan has arrived. In Brexit Europe, Mrs May is the modern era Mrs Thatcher. With no USSR “evil empire” around, merely the regional powers of Russia and China, both merely seeking respect not global hegemony, a new echo era of Thatcher-Reagan is dawning. It maybe Thatcher-Reagan “Lite,” but it’s a world away from Carter “Lite.”

“A calamity” say the snowflakes. A “time to drain the swamp” say the voters in America and Great Britain. In election year sclerotic continental Europe, which country will be next to have a new broom sweep clean?

Trump Opens Presidency With Pledge to Clean Up `American Carnage’

by Margaret Talev 20 January 2017, 14:46 GMT 21 January 2017, 02:55 GMT
Donald Trump began his presidency with a combative, populist address aimed squarely at his aggrieved supporters, making little effort to reach beyond his political base or reassure foreign leaders.

His inaugural speech on Friday painted an ominous portrait of the nation at the cusp of his administration: a place of violent "American carnage" where "rusted-out factories" are "scattered like tombstones" and the middle class’s wealth is "ripped from their homes." His predecessor, Barack Obama, sat steps away. Trump promised an unapologetic nationalism that would protect U.S. jobs and a foreign policy that would eradicate Islamic terrorism and put the country’s interests ahead of all others.

"From this day forward, it’s going to be only America first, America first," Trump said.

Much of the speech was couched as an attack against a national political establishment that he said had pursued its own interests at the expense of the American people. "Today we are not merely transferring power from one administration to another or from one party to another," Trump said. "We are transferring power from Washington, D.C., and giving it back to you, the people."

Anyone looking for political moderation from the new president on his first day in office would find none.

Investing legend Jim Rogers says dump stocks if Trump launches trade war

By Sue Chang Published: Jan 20, 2017 1:36 p.m. ET
A veteran investor, who has witnessed several crises over the past half-century, is worried.
“There is a lot of optimism,” said Jim Rogers, chairman of Rogers Holdings. “People are focusing on the good stuff when it comes to [Donald] Trump,” he said.
But there is no telling what Trump will do once in office and that unknown bothers Rodgers the most.
“He very much wants a trade war. And if that happens, sell everything,” Rogers told MarketWatch.
By everything, he means U.S. stocks, which rode Trump’s coattails to record levels following his November victory on euphoria over Trump’s promises to cut taxes, eliminate regulations and boost infrastructure spending.
Some of that enthusiasm waned in recent weeks as doubts over Trump’s America-first agenda emerged although stocks held gains on Friday as Trump was sworn in as the 45th president of the U.S.

Donald Trump ‘could send America into the next Great Crash’ warns Nobel laureate Robert Shiller
Ambrose Evans-Pritchard in Davos, The Telegraph Thursday, Jan. 19, 2017
America should brace for a final blow-off surge in stock markets akin to the last phase of the dotcom boom or the “Gatsby” years of the Roaring Twenties, followed by a cathartic crash and day of moral judgment, according to a Nobel prize-winning economist.

Prof Robert Shiller said the psychological “narrative” behind Donald Trump is powerful and likely to carry Wall Street to giddy heights before the aging business cycle finally rolls over.

“I think there will be a Trump boom for a while. Stocks look high, but they are not yet super-high. In 2000 the (Cape Shiller) price-earnings ratio was over 45 and we may see a repeat of that,” he told The Daily Telegraph.

The Cape Shiller P/E index measures the average earnings of S&P 500 equities over 10 years in real terms, and is closely watched by investors as a gauge of underlying value. It is trading at roughly 25. This is the highest level in over 130 years, excluding the two anomalies of the late 1990s and 1920s.

The U.S. property market is recovering, but the mood among buyers is nothing like the subprime fever in 2005, when median expectations were for price rises of 12 per cent a year for the next 10 years, and the spread above mortgage rates was 6 per cent. “Today the spread is zero,” Shiller said, speaking at the World Economic Forum in Davos.

He believes the prospect of a Trump White House is a “horrible nightmare”, calling the incoming president a dangerous adventurer bent on a nuclear arms race that will draw the world into a spiral of conflict. But nobody, he said, should underestimate the Trump effect on the “animal spirits” of Americans.

“Trump is a phenomenal motivational speaker. He may not be my taste, but he is telling people that it is alright to flaunt your wealth, that it is OK to do whatever you want,” he said.

Shiller said recessions happen because of a collective “narrative”, a story that takes hold. People spend less. They postpone buying a new car. Small businesses put off hiring. The effect snowballs into a serious downturn.

Shiller, who won the Nobel Prize in 2013 for his “analysis of asset prices”, said the economics fraternity has neglected the potent effects of human mood and social shifts in driving the ups and downs of financial cycles.

Dry modelling of fiscal and monetary data miss the force of these tidal waves, he suggested, which is why central banks and economic authorities are so often caught flat-footed. However, he added that the Trump effect will by reinforced by his Keynesian stimulus of tax cuts and infrastructure spending.

Shiller believes Mr Trump will not allow the U.S. Federal Reserve to hold back his boom by raising interest rates. “Janet Yellen will be gone by the end of the year and then he will ‘pack’ the Fed.” He compared Trump’s ideology to the now forgotten Calvin Coolidge, president from 1923 to 1929, remembered only for his laissez-faire views and declaring that “the business of America is business”.

Trump’s “go out and spend” mantra may entice, but does the economist feel it will sate voters long-term? “Their support is not unconditional. Once things go wrong, I fear that things could turn very bad for the markets,” he said.

“What happened after 1929 is a sobering tale. American attitudes changed abruptly. People cut back on spending and this compounded the effects of the depression. There was a collective repudiation of what had gone before.

“There is a strong narrative to the Great Crash. People saw it as the day of judgment on the 1920s, and I think we could see a repeat of that. The public will reject Trump’s policies and what he stands for,” he said.
Shiller’s Nobel colleagues doubt the Trump era will produce a boom at all. One after another lambasted him at the annual meeting of the American Economic Association last week, warning that his policy mix will add little net stimulus, further entrench inequality, and risk a calamitous trade war. So far the markets do not seem to agree.

Buffett Supports Trump on Cabinet Picks ‘Overwhelmingly’

by Amanda L Gordon and Noah Buhayar
Warren Buffett said he “overwhelmingly” supports President-elect Donald Trump’s choices for cabinet positions as the incoming commander-in-chief’s selections face confirmation hearings in the U.S. Senate.

“I feel that way no matter who is president,” the billionaire Berkshire Hathaway Inc. chairman and chief executive officer said Thursday in New York at the premiere of a documentary about his life. “The CEO -- which I am -- should have the ability to pick people that help you run a place.”

“If they fail, then it’s your fault and you got to get somebody new,” Buffett said. “Maybe you change cabinet members or something.”

Buffett, 86, backed Hillary Clinton in the presidential election, stumping for her in Omaha, Nebraska, and headlining fundraisers. The billionaire frequently clashed with Trump and scolded him for not releasing income-tax returns, as major party presidential candidates have done for roughly four decades.
Trump’s cabinet picks include Treasury Secretary nominee Steven Mnuchin, a former Goldman Sachs Group Inc. banker; former Exxon Mobil Corp. CEO Rex Tillerson as secretary of state; and retired Marine Corps General James Mattis as Defense secretary.

Since the election, Buffett has struck a more conciliatory tone toward Trump and called for unity. In an interview with CNN in November, he said that people could disagree with the president-elect, but ultimately he “deserves everybody’s respect.”

January 17, 2017 7:27 PM

Haughty Palm Beach learns to love Trump, once a scorned outsider

By Patricia Mazzei
The genteel people of Palm Beach, home to the old-money fortunes of captains-of-industry scions, once ridiculed even their wealthy Kennedy neighbors — with their Irish Catholicism, Hollywood paparazzi and family scandals — as contemptible nouveau riche.

Then came Donald Trump.

Immediately branded by the notoriously insular locals as a vulgar arriviste, he acquired the late cereal heiress Marjorie Merriweather Post’s landmark Mar-a-Lago estate — and the desirable social standing it bestowed — in 1985, only to spend the following three decades suing the town over and over again when it got in his way. The squabbles between Trump and the Palm Beach establishment became the stuff of tabloid legend.

My, how times have changed. Or at least, Trump’s place in the world has.

With Trump’s imminent presidential inauguration, Palm Beach has become far more tolerant of its most famous, and now most powerful, part-time resident. One might even be tempted to say the town has — gasp! — wrapped Trump in its collective embrace.

“That’s going too far,” chuckled Carey O’Donnell, a public relations and advertising exec and longtime resident who now lives on one of the three bridges leading to barrier-island Palm Beach. (The uninitiated often mistakenly identify Mar-a-Lago as being on the decidedly less upscale mainland city of West Palm Beach.)

Trump’s relationship with Palm Beach “has evolved over time,” O’Donnell conceded. “But certainly now there’s a drastic change. You wouldn’t call it an evolution anymore; now it’s a drastic shift — out of necessity, of course.”

And so, good luck finding a Palm Beacher today who offers something other than praise for the president-elect.

---- “It’s exciting, let’s face it,” he added. “Even JFK didn’t create the commotion that this is creating.”

The furor comes at a price — in annoyance, for residents of ficus-hedged homes accustomed to a certain degree of tranquility and discretion, and in hard dollars, for local government agencies saddled with new costs to protect Trump and his family. The Palm Beach County Sheriff’s Office estimated Trump’s Thanksgiving jaunt to the island cost about $248,000 in overtime.

The county has already asked members of Congress to assist in getting reimbursement from $7 million in federal funds. The problem: Palm Beach is hardly the only municipality looking for payment, given Trump’s penchant for dropping in on all his properties.

Trump’s mid-November weekend at his golf course in Bedminster, New Jersey, cost the township several thousand dollars. New York City, home to Trump’s primary residence, Trump Tower, estimated it would spend $35 million from Election Day to Inauguration Day, an “unprecedented” policing challenge costing about $500,000 a day.

Last week, the Palm Beach Town Council gave Trump permission to take off and land at Mar-a-Lago via helicopter during his “term(s) in office,” to alleviate motorcade traffic. His visits could be frequent: Asked in a recent interview about Camp David, the traditional presidential retreat, Trump dismissed it as “very rustic.”
“It’s nice, you’d like it,” he told the Times of London and the German newspaper Bild . “You know how long you’d like it? For about 30 minutes.”

“You’re not going to go anywhere else — believe me — and find the detailing you find at his places,” explained Toni Holt Kramer, a Mar-a-Lago member who, along with three other Palm Beach “gals” devoted to Trump’s candidacy, founded a group called the Trumpettes.

“We had to add Trumpsters, because men wanted to join, too,” she said, noting that they’ve been asked for interviews from across the globe: “We did one yesterday in France, and we’re the centerfold in this month’s issue of Vanity Fair!” (They are.)

Trump’s attention to detail at his properties is mythical. O’Donnell, the publicist, recounted hearing that, when it came to the Mar-a-Lago magazine, Trump objected to the use of contractions.

“He did not want a single one,” she said. “He’d make the editor go back and delete them.”

Unlike the Kennedys, who frolicked around town, Trump rarely leaves Mar-a-Lago (“Sea-to-lake,” because the property’s nestled between the Atlantic Ocean and the Lake Worth Lagoon).

When he and his wife, Melania, showed up at Christmas Eve services at the Episcopal Church of Bethesda-by-the-Sea, they received a standing ovation caught on cellphone video. The lack of decorum from parishioners — during communion, no less — prompted aghast letters to the Palm Beach Daily News, the society newspaper better known as the Shiny Sheet that has a section on its website dedicated to “Donald Trump in Palm Beach.”

“I don’t really know whether he goes to Taboo for lunch,” quipped luxury real-estate broker Pamela Gottfried, referring to the mainstay restaurant on Worth Avenue. “He’s got the best chef there!” Meaning, in Mar-a-Lago.

She and others interviewed for this story defended Trump as a full-fledged Palm Beacher, welcomed without reservations.

Freedom is the right to tell people what they do not want to hear.

George Orwell.

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