- • Equity markets hit hard by US political uncertainty
- • Bannon seems to be getting upper hand in White House over globalists: Jakobsen
- • More risk lies ahead: Jakobsen
- • JPY at centre of attention
- • Gold up, testing key $1,295/oz level
By John Acher
Equity markets have been hit hard by political turmoil in Washington where the nationalist Bannon camp appears to have at least temporarily got the upper hand in the White House over the globalists, says Saxo Bank's chief economist Steen Jakobsen.
Rumours are swirling about more possible firings of members of the Trump team, including that Trump's economic adviser Gary Cohn
-- a globalist -- could be removed. The speculation about Cohn contributed to rattling the US stock market and the US dollar on Thursday.
The Nasdaq dropped 1.9% and the VIX volatility index jumped 3.8% on Thursday amid the heightened uncertainty about the Trump administration.
Jakobsen says that for now the Trump administration appears "rudderless" and that the political uncertainty will persist. "The Trump situation is becoming worse and worse."
"There were big hopes that the general, John Kelly, would re-calibrate the White House. But it clearly hasn’t changed anything," Jakobsen says.
"The administration is in dire straits," he says.
"Bannon has the upper hand right now despite all the rumours about him being thrown out," Jakobsen says, adding that Trump's "Twitter storm" on Thursday was "all Bannon."
”Don’t be surprised if we see some of the globalists resign over the next two or three weeks," Jakobsen adds.
Amid the uncertainty, safe-haven gold is up, testing key resistance at the $1,295/oz level.
Saxo Bank's FX strategy chief John J Hardy says that markets were already at risk of a selloff before the latest Trump turmoil, and that risk has only grown.
"All the focus is on risk-on, risk-off," says Hardy, noting the centre of attention is the Japanese yen.
The 'rudderless' White House. Photo: Shutterstock
John Acher is a consulting editor at TradingFloor.