Macro Digest: Goodbye Mr. President – Hallo Mr. President Elect

Obama final speech was classic Barrack – excellent, but thin on “progress to report”….now on to Trump’s press conference (5 pm CET), which with new Russian link allegations will have massive exposure…

Trump has animated the “free spirit” of the US – and even seasoned economist and hedge funds I talk to has been “won over” by the momentum, maybe it’s time to remind everyone that:


Yes, economics matters – No, it’s not entirely about psychology.


Economics and its underlying incentive structure does make the future – Tweet’s don’t (although as Twitter shareholder I wish it did!).

Short-term both market and clearly political forces can go off-course from trend and a lot of the mean-trend, but last I checked the US was in massive slow-down relative to its long-term growth (Sub 2% growth vs. 3.5% since 1950s) – Most of the jobs created has been temporary jobs (close to 50%), the demographics discount (growing older means 0.50-0.75% subtraction in top line growth under unchanged to slow productivity)

Getting to back to “long term” growth of 3.0-3.5% can only be done by being more productive – not by forcing jobs to stay in the US. Short-term you “boost” growth but always at the expense of future growth (credit financed)


Trump policy mix has some growth supportive elements and some negatives – long-term (economics): It’s net negative – Building walls figuratively and practically never done anything good for growth and prosperity.

The US new foreign policy will be random and opportunistic and will ultimately lead to another draw back from US international leadership. G-7 is today de facto lead by Germany and Ms. Merkel, by virtue of Trump vacating the position. A position she does not want, especially in an election year.

Taken the US “home” will be main take from Trump – he is 100% domestic driven in his focus, similar to his hero Richard Nixon. The Trump Presidency will also mean immense pressure on Fed (again similar to Fed under Nixon (Burns, the then Chairman)


In the bigger picture Trump is the final part of this cycle which either started with Nixon taking the US off the Gold standard in 1971, or by the Reagan experiment with supply economics (& running massive fiscal deficits) and reintroduction of laissez-faire in 1981 and then the 30 years “nightmare” of more and more central bank intervention not only in rates setting but also in less and less free traded markets.

Tonight we may get some insight into Trump agenda, but I doubt it…I have over the last few weeks tried to “get my head around Trump”, but sadly I have reached the conclusion that the Trump Presidency will be at best chaotic and experimental, and at worst mirror Nixon’s few years in office to a T…..


Sadly, the President Trump will be exactly as Trump the Candidate, despite creative spin by his advisors.

Disbelief in free press, targeting “dumbing” of opponents, and non-factual claims will prevail. I hope political activists and the press will be up for the job – as Obama, rightly, said yesterday, Democracy is under pressure, that’s the real crisis. Change is GOOD – make no mistake – Trump, as I said constantly through 2016, was the anti-dose to the Clinton/Bush political dynasty of elitism. Clinton lost the election – Trump didn’t win it. What is unfolding is driven by socio- and economic need for change. Sometimes we need to feel, smell and touch what we don’t want to move forward again – I think 2017-2020 could be such a period.

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