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Trump Transition: What’s Next?
Markets still seem to be in a post-election hangover, as the US dollar and equities have been able to extend their gains until early this week. It’s pretty clear by now that there’s no turning back so let’s have a look at what’s lined up next.
The election results are in but the Electoral College is still set to meet in December to officially elect and proclaim the new US President by January. However, the preparations are already rolling out as Trump and his transition team are getting ready to move into the White House. In fact, both candidates had been given access to some space in the federal office since August.
Cabinet Appointments
Right now, the focus is on naming the next Cabinet members as Team Trump is vetting thousands of candidates for various government positions. This week, he announced that Republican National Committee chairman Reince Priebus will be his chief of staff. Steve Bannon of Breitbart News will be his chief strategist and senior counselor. Other folks that are being vetted for positions include former Speaker of the House Newt Gingrich, former Alaska Governor Sarah Palin, former New York City Mayor Rudy Giuliani, and Dr. Ben Carson.
More cabinet appointments are set to be announced in the next few days while Trump gains access to the Presidential Transition Headquarters in Washington, DC and a multi million-dollar budget. Trump is also scheduled to attend a Secret Service intelligence briefing and be handed the nuclear launch codes and the triggers in a briefcase. Just kidding about that last part, it’s not like in the movies!
Initial Interviews and Meetings
Incoming President Trump isn’t set to be inaugurated until January 20 but he is already starting to meet with other heads of state to align economic goals. He has also had an initial meeting with outgoing President Obama to discuss the smooth transition of power in the next couple of months.
Word through the grapevine is that the meeting went much longer than planned because the new Commander-in-Chief appeared overwhelmed about the responsibilities of being President. His aides were reportedly surprised to find out that the entire White House staff of nearly a couple thousand full-time employees would have to be replaced within 72 days. With that, Obama has expressed willingness to schedule more meetings with Trump to help familiarize him with the job at hand.
This week, Trump just finished meeting with UK Independence Party leader Nigel Farage. Many believe that this was engineered to enable the British government to strengthen its ties with the US ahead of Brexit negotiations and the actual exit from the European Union. While the positive outcome of the meeting seems to have restored some confidence in both US and UK economies, this has led many to believe that opposition leaders could be able to have some face time with Trump before any of the actual elected officials do.
Next up, Trump is scheduled to meet Japanese Prime Minister Abe who is seeking to gauge the sincerity of Trump’s campaign promises pertaining to Japan. In particular, Trump has repeatedly threatened to withdraw troops from American allied countries unless they pay a larger price. Abe is also set to discuss the Trans-Pacific partnership, which is a trade deal between the US and several Asian countries, that has been one of the cornerstones of Abenomics.
While in the transition process, Trump has also granted several media interviews, starting off with his post-election sit-down on 60 Minutes. When asked if he would really build a wall along the border of Mexico, he toned down his response in saying that he would be good with a fence on certain areas. He also reiterated that he plans on deporting 2-3 million illegal immigrants who have committed crimes in the country.
In the same interview, Trump also called upon protesters and supporters to stop harassing minorities, adding that he wants to bring the country together. He also noted his pledge to appoint judges who oppose abortion rights and restrictions on Second Amendment gun rights. In terms of longer-term goals, Trump shared that he wants to clean up the system when it comes to lobbyists.
A Bit More Uncertainty
As it is, Americans are trying to take a glass half-full view of the election results, and this kind of optimism is mirrored in market performance. Stock markets have been closing higher since the results were announced last week, as traders are choosing to focus on Trump’s campaign promises of lowering the corporate tax rate, increasing infrastructure spending, and deregulating banks.
Because of that, traders might be able to turn their attention to the December FOMC meeting, which might feature a 0.25% interest rate hike. Then again, a lot may happen until then and a slight hiccup can turn the tables. Fed Chairperson Yellen’s job may even be on the line since Trump has the power to appoint a new US central bank head.
Much of this uncertainty is being felt in Mexico, as the country’s citizens have been the target of Trump’s lashing out on immigration and crime. Mexican President Nieto has noted that the election outcome will open a new chapter in the relationship of the US and Mexico, although he remained hopeful that trust and mutual respect will prevail. Uncertainty is also being felt in emerging markets whose currencies are giving up the most ground to the US dollar. reference
With that, markets might be stuck in limbo for a while as traders keep close tabs on Trump’s transition schedule and what he could be saying in interviews. Of particular interest is his economic agenda and how fiscal stimulus might be increased without causing debt to balloon. To be specific, his plans on the North American Free Trade Agreement and the Keystone pipeline may likely to spur some action in the markets.
After being sworn in, Trump will also have access to the official @POTUS Twitter account so watch out for rants at 3AM, although he did say that he plans to keep his own account and tone down his rhetoric. So far, so good.
http://www.forbes.com/sites/kenrapoza/2016/11/11/whats-next-global-markets-under-trump/#5f766d8f1a61
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