This weekend saw the beginning of an Asian tour for the Presidential team. Beginning in Japan, Trump will then visit South Korea tomorrow before spending 2 days in China, 2 in Vietnam and finishing up with 2 days in the Philippines.
Trump’s first topic of conversation with the newly re-elected Japanese prime minister Shinzo Abe was trade: the President made upfront requests for Japan to build more and more cars within the United States. He stated “Try building your cars in the United States instead of shipping them over. Is that possible to ask? That’s not rude. Is that rude? I don’t think so.”
Given Japan’s particular strength in engineering, carmaking and international trade, it’s no surprise that the US imports vehicles in their hundreds of thousands, but Japanese carmakers are already huge contributors to the US economy. According to The Japan Automobile Manufacturers Association, three quarters of all Japanese cars sold in the US in 2017 were built in North America. Just how Trump can persuade the likes of Nissan, Honda or Toyota so shift production and nudge that figure toward 100% isn’t known, but it hasn’t taken long for the President to make what’s likely to be the first of many demands and requests that’ll emerge on his Asian tour.
The President’s days in China will likely gauge the most interest and he’s expected to press China’s leaders on international trade in opioids and manufacturing, North Korea and foreign investment.
Fed board of governors to be shaken up further
While the appointment of Jerome Powell as Fed chair wasn’t outside of expectations, the future make-up of the Federal Reserve is due to change again in the near future after the President of the New York Fed, Bill Dudley, announced his retirement in 2018. Dudley, one of the more outspoken members of the Fed, will hang around until the middle of the year to ensure that a proper handover process has been completed with his successor, but many are already speculating that Kevin Warsh will take up the position.
Warsh was one of the few names in frame for the top job, but was passed over a few weeks ago and could shake up the operations of the closest Federal Reserve branch to Wall Street.
The week ahead
This week’s data slate is significantly quieter than the last, with no tier one data releases. As such, much of the focus will remain on the political, not economic, front as markets continue to closely watch the fall out of Mueller’s Russian connection probes and the furore over the GOP tax cut bill.
Have a great week