By Michael O’Neill, Senior Analyst Agility FX
“May you live in interesting times” is an old Chinese curse. It is also an appropriate adage on the eve of the Year of the Rooster.
The new “rooster in chief” of the United States, President Donald Trump, has been crowing loudly and often since he took the oath of office, and for many people, interesting times have arrived.
These interesting times are unfolding like the titles of novels from the late, best-selling author, Tom Clancy.
Mr. Trump had barely warmed the chair in the oval office when he issued his first Executive order.
It was the wordy “Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal”.
This was the opening salvo in Mr. Trump’s mission to repeal Obamacare. Many American’s believe that this edict shrank their health care choices to Dead or Alive.
In 1989, Tom Clancy penned a thriller, “Clear and Present Danger”. It is a fictitious tale about a US president stepping up the war on drugs. In the book, the president justifies using the US military to combat drug smuggling from South America because the criminals represented a clear and present danger to the interest of the United States.
Fiction became fact on January 25, 2017. That’s when Donald Trump declared illegal immigration from Mexico as a clear and present danger.
He really did and said as much in: Executive Order: Border Security and Immigration Enforcement Improvements.
Mr. Trump plans on protecting the US from “illegal immigrants who seek to harm Americans through acts of terror or criminal conduct” by the immediate construction of a physical wall on the southern border, monitored and supported by adequate personnel so as to prevent illegal immigration, drug and human trafficking, and acts of terrorism.
The building of a wall fulfills a couple of Mr. Trump’s campaign promises. He promised a wall and delivered., sort of. (Mexico has not stepped up to say that they will pay for it) He promised more jobs and delivered. Building the wall will need workers and guarding the wall afterwards will require even more. That’s why Mr. Trump authorized the hiring of an additional 5,000 Border Agents. There is also a clear and present danger that it is unlikely Mexico will be paying their salaries.
On February 4, 2016, President Obama was heralding the signing of the TransPacific Partnership; a trade pact encompassing 12 nations (including Canada) as a deal” that puts American workers first. TPP allows America and not countries like China-to write the rules of the road in the 21st century, which is especially important in a region as dynamic as Asia Pacific”
Mr. Trump killed that deal before it even got going. He believes that bi-lateral trade agreements are in the best interests of the United States. As Sherlock Holmes often said “the game is afoot”.
Fourteen months ago, former US President Barak Obama rejected the Keystone XL pipeline saying it “will not serve the national interest of the United States”. The Secretary of State, at the time, John Kerry, said that the pipeline would not lower gas prices, have a major impact on America’s energy security or contribute meaningfully to the economy.
The pipeline builder, TransCanada Pipeline, (TCPL)contradicted Mr. Kerry’s claims. TCPL said that Keystone would create thousands of well-paying construction jobs, generate tens of millions of dollars in annual property taxes to counties along the route while adding $3 billion to US GDP.
Donald Trump didn’t agree with Mr. Obama or Mr. Kerry then and by his actions, doesn’t agree with him today. The difference is today Mr. Trump is President and the other two are in the history books
Mr. Trump was elected because he promised to “Make America Great Again”. He said that the way to do that was to create jobs, rebuild infrastructure and achieve energy security.
He made a down payment on all three promises on January 24th when he signed the “Presidential Memorandum Regarding Construction of Keystone XL Pipeline”.
That Executive order is, in effect, a personal invitation from the President of the United States to TransCanada Pipelines asking the company to resubmit its application “for the construction and operation of the Keystone XL Pipeline”. He even tossed in a sweetener promising a final decision within 60 days of receipt of the submission.
That memorandum is also Mr. Trump saying to Messer’s Obama and Kerry “put that in your pipeline and smoke it”
President Trump’s executive actions have destabilized FX markets and increased volatility within the G10 currency community. That volatility has resulted a weaker US dollar across the board. Mr. Trump and his Treasury Secretary nominee have made reference to the dollar being too strong which was a primary driver for the greenback’s weakness.
The Canadian dollar got an added boost from an energy friendly US administration.
Nevertheless, it is worth remembering that “living in interesting times” is meant as a curse not a blessing and it is only a coincidence that Tom Clancy novels are mirroring Washington policy.