The Donald Trump Inauguration Extravaganza is finally over.
We’re sure the inauguration went without a hitch, and that it was a memorable occasion for everyone attending and watching around the world. We suspect Trump’s speech was typically full of bravado, eschewing ‘hope’ and ‘change’ for the more concrete promise of jobs.
However, we’ll admit that we’re hazy on the details.
With the inauguration taking place early this morning Australian time, we’ve written this a day before the president-elect assumes his new role as Commander-in-Chief.
Then again, what’s a new title (or 18 acres of prime Washington DC real estate) to Donald J Trump?
Judging by Trump’s loose tongue and blanket media coverage since his election victory, we were convinced Mr Trump was already the 45th President of the United States.
Yet, from today, he can officially start putting his words into actions.
So, as we look ahead to the next four years of Trump-mania, what can we hope to expect from the property mogul cum Leader of the Free World?
The populist line of thinking is that Trump will endanger the global order, setting the world on a path to war.
We agree that Trump is dangerous. But not for the reasons the mainstream bleats about. What makes Trump dangerous is that, as the establishment choice, his term will be anything but unpredictable. And make no mistake; Trump is most certainly part of the establishment. Hillary Clinton was too, which is why it mattered little who won. But Trump’s victory didn’t represent the people sticking it to the establishment elites — far from it, they played right into their hands.
You only need look at the amount of airtime each presidential candidate received during the election campaign to see why Trump was the establishment choice all along.
Of the 1,713 stories that aired on ABC, CBS and NBC news broadcasts during the six months from 1 January to 31 August, Donald Trump received 1,773 minutes of coverage. Hillary Clinton received 1,020 minutes. Gary Johnson, the Libertarian nominee, received less than one minute of coverage.
Press coverage alone doesn’t seal presidential victories. But if the elites wanted to shut down Trump, they could have done so easily by restricting coverage, as they did with Johnson.
Yet they didn’t.
If you ask yourself why that is, you might come to an uncomfortable truth: Trump is the establishment choice packaged in a digestible, populist, anti-establishment wrapper. Which makes him the establishment’s Trojan horse. The perfect tool to use on an unsuspecting world, which views Trump as an independent, brash buffoon.
If we follow this line of logic, Trump’s strategy to antagonise China, while putting the US on a protectionist path, will make a lot of sense. We’ll offer one explanation for why the establishment is directing Trump to carry this plan out below.
But first, it should be obvious enough that having the two largest economies embroiled in a trade war would be devastating for the global economy, and in particular Australia. Not least because China and the US are two of our most important partners. China’s importance to our economy can’t be overstated, but our cultural and military ties to the US are equally significant for our national security.
Yet, in Canberra this week, it was another trade dispute that dominated headlines coming out of Parliament House.
The Trans-Pacific Partnership, a free trade deal that would include Australia, Japan, the US, and nine other nations, left Malcolm Turnbull and Opposition leader Bill Shorten at loggerheads.
Trump has already signalled that he intends to pull out of the deal in his first day as president. Shorten also claims the deal is dead. But Turnbull hasn’t given up hope yet. He spoke with Japanese counterpart Shinzo Abe last weekend in a bid to salvage confidence in the deal going forward. However, considering the US was the leading voice behind the TPP, the other member nations may have to go it alone if they can’t convince Trump to renege on his promise.
Convincing Trump of this won’t come easy. As the mouthpiece of the establishment, Trump wouldn’t be president today if he campaigned on a policy that went against their interests. Time will tell whether Australia’s commitment to the TPP remains intact, should the US drop out.
Not surprisingly, Trump, and the elites’ plans for the world, dominated Markets and Money this week.
Global strategist Jim Rickards was on hand once again to give readers an insider’s perspective on the events playing out across the world. And he didn’t waste any time getting to the point.
On Monday, Jim said that he expects the markets to be disappointed by Trump’s stimulus policy. To add fuel to the fire, the Fed will then raise rates in March, which Jim says will come at the wrong time. At that point, the market will fall out of bed, the US economy will slow down, and the Fed will have to go dovish again.
Jim expects that to mean rallies in two specific markets, which you can read about here.
One way or the other, the Fed’s policymaking is likely to come under sustained pressure under President Trump. As Jim outlined on Tuesday, the odds of the US avoiding either a recession or inflation over the next four years are small. That ensures the Fed will intervene in markets again at some point. And it means that Trump’s public disdain of Janet Yellen, and the Fed, is not likely to die down anytime soon.
That’s especially true given the fact that Trump’s stimulus measures won’t be supported by the Fed through easy monetary policy. With Trump’s stimulus likely to be smaller than markets anticipate, any tightening by the Fed could put the US economy under even more stress.
Who’ll get the blame for this? Trump, of course. As Jim outlined on Wednesday, a new global financial panic will be a lasting legacy of the Trump administration. It doesn’t matter that Trump had nothing to do with the Fed’s manic policymaking of the past 10 years. History cares little for small details like this.
Where will the next crisis come from, then? Deutsche Bank collapsing? A failure to deliver physical gold by a London bullion bank, exposing the hyper-leveraged ‘paper gold’ market for what it is? A natural disaster on the scale of Fukushima?
Any one of these events would do, says Jim. In whatever shape it comes, though, it will be beyond the scope of the Fed and other central banks to contain it. Having failed to normalise interest rates since 2008, central bankers have no rabbits left to pull out of their hats.
But Jim says that there will be a knight in shining armour ready to save the day with $10 trillion in newly-printed reserves. This, as we teased above, is why the establishment elites ‘hired’ Trump to carry out their grand plan. To find out what the elites’ true intentions for the global economy are, click here.
On Thursday and Friday, guest editor Shae Russell provided Markets and Money readers with a special preview of Jim’s new book, The Road to Ruin. To read the two chapters that were reprinted in Markets and Money, click here and here.
One final note before we leave you this week: Vern Gowdie and Markets and Money Publisher Kris Sayce were in Baltimore this week attending a gathering with former Fed chairman Dr Alan Greenspan. Needless to say, Greenspan dropped a few bombshells during the meeting. He outlined how the market could fall 10% or more after Trump takes over the White House, and how the global elites are planning to steal your money (and what they plan to do with it). He also made a shocking comment on gold as a currency that left Kris speechless.
To get the full details on the ‘Greenspan disclosures’, click here.
Until next week,
For Markets and Money