The only article you should read

There is always much to read, much to divert us. We know deep down that much of it is noise, but we also know that deep down we can’t ignore all of it. In the weeks ahead we know some big questions will be answered: Will the Fed hike? Will the Italians vote No to reform? Will Italy’s bank recaps fail? Will Austria elect a far-right President? How good is the US data? Will the ECB extend QE or try to taper? Or both??

Ah, but once we have the answers, will we not just have more questions? Sure the Fed hikes, but how much will it do next year? And if the ECB continue QE, for how long into the new year? Does Renzi try to form a new government without elections? Does Austria signal a shift for France or the rest of Europe? Oh for the days of a simple monetary policy decision from a central bank! Up or down 25bp, how you left…

But the market will keep on plugging away. Blondemoney reads that this morning the EUR/USD options market has less downside skew because Fillon just won the Republican primary… as if an election still five months away, with the Socialist candidate still to be decided, could right now be measured in basis point shifts on a currency derivative! But god bless the markets for keep trying to price this stuff.

No, the most important thing you can do with your time today is read this article from politico.com: “Trump Advisers Hit Mitt”.

mitt

It’s all about how some of those closest to Donald Trump, such as his key campaign manager, Kellyanne Conway, are now publicly coming out against appointing Romney as Secretary of State. You might wave this aside as the usual political jiggery pokery. But hold on a minute. This was a deliberate outspoken attack by someone close to Trump about how appointing Mitt would be a “betrayal”. Maybe it was said to make those who feel betrayed feel better, thus shoring up core Trump support; maybe it provides an excuse for Trump to ditch Mitt while looking like he was trying to make friends with the core Republican party; but maybe, and most disturbingly, it was a deliberate attempt by Trump to humiliate a man who called him “a con man, phony and a fraud” during the campaign.

Either way, it means that we cannot judge the new President as we would have done those of the past. There are going to be pronouncements that are just not rooted in the way we are used to Presidents doing things. This market continues to think it has the new administration all mapped out. It should realise the new administration is going to be in a state of flux for far longer than just the next few days: potentially for all of the next 4 years.

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