Asia

One of the least convoluted, most insightful and thus best forecasts of what the first few months of the Trump administration will look like, came from one of the respondents of today's Dallas Fed manufacturing survey. This is what the respondent said:

President Trump looks to do things that will be favorable for business, which would improve employment and growth if successful. However, protesters are all over the place, so I tend to think that will cause trouble for the country and for business.

In what will likely be interpreted as the latest "test" by the Kremlin to gauge western military preparedness, Reuters reports that Russia has quietly unleashed the biggest military build up targeting the Arctic since the fall of the Soviet Union.  "It is part of a push to firm Moscow's hand in the High North as it vies for dominance with traditional rivals Canada, the United States, and Norway as well as newcomer China." It is also part of the ongoing scramble for resources above the commodity rich arctic circle.

Markets will again zero in on the U.S. this week, and not just because of Donald Trump in Bloomberg's opinion. The Federal Reserve meeting and nonfarm payrolls may set a clear direction for dollar and yields for the next few months.  U.S. GDP data on Friday showed the largest negative contribution from net exports since 2010. This will give the president ammunition for his Twitter feed because it confirms his view on the evils of globalization. So prepare. Beyond Trump’s rhetoric, it’s going to be a big week for orthodox economic developments in the United States.

European, Asian stocks and S&P futures all drop after traders were left with a sour taste from the potential fallout of Donald Trump’s order halting some immigration and ahead of central bank decisions from the U.S. and Japan.  Markets in Hong Kong, China, Malaysia, Korea, Singapore, Taiwan and Vietnam are all shut due to the Lunar New Year public holiday, leading to a quiet Asian session. Oil rebounded after sliding as much as 0.7%.  Gold was unable to hold its overnight gains and has dipped into the red to $1,190 after rising just shy of $1,200 in early trading.

While we remain in the purely abstract, theoretical and hypothetical realm of Trump tax reform - there have been no concrete proposals floated yet, with Trump as recently as a week ago slamming the critical border-adjustment tax, only to full reverse himself on it just a few days later - Bank of America has created a useful matrix taking a deep dive into the potential (and we do underline the word potential, because at this rate Trump may spend much of his first year dealing with immigration reform and Obamacare) implications of Trump's tax reform.