2017/04/12 Commentary: More Diametric
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Commentary: Wednesday, April 12, 2017
More Diametric
As opposed to last Tuesday’s Commentary: Dopier Diametric on the blatant reversals of US political leaders for no better reason than playing to their political base in the moment (like the Democrats on the Neil Gorsuch Supreme Court nomination), there are a couple of current reversals that seem a bit enlightened. Of course, foremost among those is US President Trumps’ switch from his ‘America First’ campaign promises to be more aggressively engaged in pressing geopolitical issues. And how ‘diametric’ that reversal is remains an interesting aspect for the markets as well as overall US policy. In what might be considered a bit of ‘double diametric’ elsewhere, the International Monetary Fund (IMF) has shifted back to demanding more Greek debt forgiveness from the European Union (EU) creditors prior to approving IMF involvement in the next round of Greek bailout funding. That may actually become a more pressing issue for the markets later this month into May, and we will review it further below.
Yet for now the US President’s actions are diametrically opposed to the ‘America First’ policy of ignoring the world and concentrating on US issues and rebuilding that he promised during the election campaign. Considering how much his campaign positions worried the rest of the developed world in the face of major geopolitical challenges means that, on balance, this is a positive development. And certainly any caring individual can easily relate to the immediate trigger for his decision to act decisively:
The alleged (still refuted by Russia and a few others) Syrian government poison gas attack on its own civilians in the rebel-held town of Khan Sheikhoun. This is another example of the power of social media, as people who were there could post videos taken with their smart phones of the horrifying images of those affected by the poison gas. These were truly disgusting and depressing images. They also seemed to verify that Syria had not completely ended its chemical warfare efforts after agreeing to do so in the wake of its attacks in 2012. It also seems to indicate that (as US officials and others have said) the Russian guarantors of that cessation of Syrian chemical weapons programs have either been complicit or incompetent in failing to enforce the chemical weapons ban.
So while not an overall solution to the Middle East problems, the signal from the Trump administration is the USA may well once again act. Which is a very important change…
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2017/04/18 Commentary: Really HUUUGE!
2017/04/18 Commentary: Really HUUUGE!
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Commentary: Tuesday, April 18, 2017
Really HUUUGE!
So we need to grant that the US President is not exaggerating this time if and when he refers to the weapon used in that Afghan cave strike as “Really HUUUGE!” Yet there are many other developments at present which are capable of either directly or tangentially impacting the markets which are also Really HUUUGE! We will only be touching on each of them in order to cover all of those important developments. Some have a direct market impact while others are a bit more subtle pending further developments. As the MOAB drop in Afghanistan followed the previous Tomahawk missile strike in Syria, those are combined into Really HUUUGE! Development #1.
That is due to the key factor we explored at length in last Wednesday’s Commentary: More Diametric post. That is the return to a geopolitical environment where what the US thinks and is ready to do matters. That is after eight years of the Obama administration’s almost guaranteed American inaction. As noted there, the idea that the actual use of military force (even in limited doses) is the key to commanding the respect of your allies and instilling a bit of caution in your adversaries seems to something that Obama either never grasped; or was so averse to the risks that he could not bring himself to take action.
Whatever the actual military impact of the recent US action may be, the ‘message’ to both US allies and adversaries is that the Obama Doctrine of ‘leading from behind’ (or as critics pointedly noted ‘hiding from behind’) is OVAH!! (in Italian street parlance.) As such, even beyond sheer MOAB size, the policy shift in indeed Really HUUUGE!
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