Balance of Power: Global Markets Ignore Missiles and Trump Chaos
(Bloomberg) -- Donald Trump’s Russian woes are deepening. North Korea is pressing ahead with its nuclear-missile program. And worries about Brexit are increasing.
But global markets don’t seem to care. Take the reaction to yesterday’s news that special counsel Robert Mueller is now using a federal grand jury as he investigates alleged collusion between Russia and the Trump campaign. The Dow Jones Industrial Average initially fell — but only by 0.2 percent and it promptly resumed a rally that this week saw it charge through 22,000 points. In South Korea, stocks are up 18 percent this year.
The fact remains that traders are much more attentive to the latest thinking at the Federal Reserve and other central banks about how quickly interest rates will rise and balance sheets will be reduced. And with the 10-year Treasury yield unlikely to go back above 2.5 percent any time soon, traders seem optimistic that rates will stay low.
It’s exactly a decade since the subprime crisis started rumbling through global financial markets, a reminder that the world can change very quickly. But for now, traders seem content that the good times will last for a while yet, whatever Donald Trump or Kim Jong Un do.
Mueller advances | Mueller is said to be using a federal grand jury in Washington to collect information on the Trump campaign's ties with Russia, a further sign that his probe is progressing and won't be wrapped up quickly. It's not clear whether the panel has begun deposing witnesses, although a Trump attorney said he hasn't heard from them. The president, meanwhile, lashed out once again, calling the investigation a “total fabrication.”
China-India tensions worsen | China and India are flexing their muscles as a military standoff along their shared border stretches into an eighth week. India is renewing its submarine fleet to deter Chinese forays into the Indian Ocean, while the defense ministry in Beijing said yesterday that it was losing patience and a Communist Party official said sovereignty is more important than stability, another warning to its southern neighbor.
Malaysia's leader tightens his grip | Two years after facing a scandal involving billions in allegedly stolen funds, Prime Minister Najib Razak is now positioned to extend his ruling coalition's 60-year grip on power. In a series of stories this week, Bloomberg's Kuala Lumpur bureau showed how Najib has shrewdly exploited the country's ethnic and religious divisions to keep his opponents off balance before an election that may come later this year.
Putin's “new normal” | Trump just signed a new sanctions bill, but Russian stocks aren't feeling the chill as they head for their best week since April. But now that the U.S. plan is law, some of Russia's biggest companies are going to have to adapt to restrictions on western finance and technology. The curbs could last for decades, and economists say that will sap the country's already-lackluster performance.
Sessions hunts leakers | Reassured -- for now -- that he's not about to get fired, Attorney General Jeff Sessions will set out his plans to crack down on intelligence leaks today. But in a sign of the difficulties he faces, the Washington Post yesterday published transcripts of calls between Trump and the leaders of Australia and Mexico that had, of course, been leaked. Even Democrats are starting to suggest this is getting out of control.
Trump uncut | The leaked transcripts of Trump's calls with Mexico's Enrique Peña Nieto and Australia's Malcolm Turnbull displayed the president's unorthodox approach to diplomacy. And his limitless self esteem. Turnbull patiently pushed back on Trump's assertion that asylum seekers aren't fit “to work for the local milk people,” while Trump referred to himself as “the world’s greatest person.” The president suggested Mexico’s army was afraid of drug dealers. And he told “Enrique” that his “words are so beautiful.” “You are very kind, Mr. President,” Peña Nieto replied.
And finally... New Jersey isn't everyone's idea of a vacation destination and yet that's where Trump is heading for a 17-day working holiday. His 55-acre golf club features two driving ranges and a 16-acre practice facility, giving him ample opportunity to hit the greens. While two weeks was about normal for President Obama, the inevitable photos of Trump teeing off are likely to further annoy his critics who say he just doesn't work hard enough.