Morning Commentary: The Power of the Bully Pulpit

Foreign Exchange - Morning Commentary

The Power of the Bully Pulpit

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Alan Rose
Alan Rose
Foreign Exchange Head Trader
The bully pulpit is defined as a public office or position of authority that provides its occupant with an opportunity to speak out on any issues. The term was coined by President Theodore Roosevelt as he used the office of the Presidency to provide a platform from which to advocate an agenda.
 
President Trump uses his bully pulpit to the max and opines and tweets on almost any political, economic, and cultural event in our country and elsewhere. President Trump’s comments are sometimes difficult to parse as to whether it is political bluster and posturing or actually part of his political and economic agenda. His comments over the past 24 hours have covered a wide range of topics and have moved the markets once again.
 
Brexit negotiations have been difficult enough with PM May walking a tightrope between balancing her country’s interests and negotiating with the EU while avoiding a vote of no confidence within her own Tory party. President Trump had to weigh in on the negotiations saying that the current deal was a “great deal for the EU” and that the U.K. may not be able to trade with the U.S…whatever that may mean. His words have sent the British pound (GBP) to near YTD lows before the GBP recovered.
 
Regarding the upcoming meeting with President Xi from China, President Trump is maintaining a hard line and still weighing the possibility of imposing more tariffs on Chinese exports. This time he stated that the U.S. is weighing the possibility of slapping 10% tariffs on iPhones and laptops from China. Apple’s stock was already under pressure prior to the President’s comments and is expected to open lower.
 
Markets have learned not to react to every tweet or comment President Trump makes, but the power of the bully pulpit still carries much weight and cannot be ignored. We continue to encourage importers and exporters to be tactical and take advantage of any opportunities that come their way.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
  • Home prices in the top 20 U.S. cities grew in September at the slowest pace in almost two years adding to signs that buyer interest is beginning to wane amid higher interest rates and elevated property values. The Case-Shiller 20 city index rose by 5.1% from a year earlier and nationally, home prices rose by 5.5% from September 2017. U.S. interest rates are unchanged on the session.
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