That financial markets aren’t reacting to the political chaos in Washington right now doesn’t mean investors can rest easy.
U.S. assets are “not being traded like an emerging market … even though the politics are becoming more and more like an emerging market,” said Mark Rosenberg, chief executive of political-risk-analysis firm GeoQuant, in an interview after last week’s assault on the Capitol by a violent mob who supported President Trump’s bid to overturn the November election.
The breakdown of U.S. political norms and the damage to institutions has a long history, but, if things don’t change, America’s preeminent position in global financial markets could one day be at risk, Rosenberg and other analysts warned.
Attack on the Capitol
Those emerging market vibes were starkly illustrated by the events of last week. President Donald Trump is accused of inciting a violent mob of his supporters to attack the Capitol on Jan. 6 in an unsuccessful-but-deadly bid to halt the formal certification of his opponent’s electoral victory last November.
The House, as expected, voted Wednesday to impeach Trump, making him the first U.S. president to be impeached twice. Ten Republican lawmakers joined Democrats, who voted as a bloc, in approving the article of impeachment.
Financial markets have barely reacted to the turmoil. Stocks on Jan. 6, the day of the riot, remained positive, with the Dow Jones Industrial Average
closing at a record level. U.S. Treasurys, a traditional haven during periods of uncertainty, have instead sold off, pushing up yields as investors fret more about the potential inflationary implications of President-elect Joe Biden’s expansive fiscal agenda.
Stocks ended a choppy session near unchanged Wednesday as the House debated impeachment, with the Dow falling 8 points, or less than 0.1%, and the S&P 500
rising 0.2% — not far off all-time highs. Analysts said investors are more worried about slowing efforts to pass additional relief measures than they are about the outcome of the impeachment process itself.
Fever break or warning?
Philip Marey, senior U.S. strategist at Rabobank, said the crucial question is whether the Capitol riot marked “the culmination of the civil unrest in the United States, or [was] just another warning signal that the country is heading toward something worse?”
To some observers, the market calm is justified.
“If you take the view that the events killed off any remaining chance that Trump (or one of his family) could stand in 2024, then the events are perhaps a ‘positive,’ ” Steven Barrow, head of G-10 strategy at London-based Standard Bank, told MarketWatch in an email.
Indeed, for some investors the end of the Trump term and four years of tweets and off-the-cuff announcements that often sparked volatility across financial markets is a positive. Instead, political risks will revert to coming from outside the U.S. rather than from Washington, they said.
And Barrow argued that investors have long been aware that the U.S. political system is more prone to crises, such as periodic government shutdowns that are unknown in other developed countries.
GeoQuant’s Rosenberg agreed that investors have yet to be rattled by a polarized U.S. political backdrop.
In fact, GeoQuant’s own data-based index of political risk has shown a 0.9 correlation with the S&P 500 — meaning that stocks have tended to rise as measures of political risk have increased.
“That tells us either political risk is effectively irrelevant to equity markets or there is a significant reckoning coming,” Rosenberg said.
So far, the status of U.S. markets as a haven during periods of market or economic uncertainty appears largely undimmed, analysts said. That status reflects the role of the U.S. as the world’s largest economy and the deep liquidity of the U.S. Treasury market, analysts said.
The U.S. dollar, meanwhile, remains the world’s reserve currency — a role that was underscored last February and March as the COVID-19 pandemic sparked the near-shutdown of credit markets, resulting in a worldwide scramble for greenbacks.
That role is an important advantage for the U.S. economy, helping ensure steady global demand for U.S. debt and other assets.
But the U.S. dollar might also be where cracks could emerge. Rosenberg said the dollar’s performance, as measured by the ICE U.S. Dollar Index
and, in particular, the euro/dollar
pair, has had a significantly negative correlation to GeoQuant’s measure of U.S. political risk since January 2020 (see chart below).
“Only a fool would argue the dollar is on the precipice of losing its reserve currency status, but I think you can see in our data a relationship where increased political risk and institutional risk and political uncertainty is starting to hurt the dollar relative to gold, relative to bitcoin,” he said.
Rabobank’s Marey, in a note, argued that near-term calm on the political front is likely to prove short-lived thanks to decades of increasing political polarization that has seen the Democratic and Republican parties become more rigid, sorting themselves along ideological lines (liberal vs. conservative), race, and geography.
“If the U.S. does not find an off-ramp from this route of increasing polarization, we are only going to see a further escalation of civil unrest,” he said.
Canadian politicians have been scared straight by Donald Trump’s raging exit. Will it last? – Toronto Star
Racism is definitely not a good trait for a politician. Nor is an inability to read the room.
Bloc Québécois Leader Yves-François Blanchet has been accused of both after his drive-by smear of new federal Transport Minister Omar Alghabra.
The most harsh condemnation came from Justin Trudeau on Friday, pronouncing himself incredulous that a party leader would wade into “insinuations” about Alghabra, who is a Muslim, after what everyone witnessed in Washington last week.
Blanchet, the prime minister said, was “playing dangerous games around intolerance and hate” when purporting to be asking mere questions about Alghabra and Islamic political activism.
“That kind of political pandering to the worst elements and to fears and anxieties has no place in Canada and all of us need to stand up strongly to push up against that, anywhere it happens in this country.”
Trudeau’s link to events in Washington reflects a larger phenomenon rattling through Canadian politics since the Jan. 6 siege of Capitol Hill.
How long it lasts is anyone’s guess, but that mob scene south of the border has prompted some soul-searching among political types in Canada too.
Many of the ingredients of Donald Trump’s toxic political brand are now being vigorously disowned in Canada — almost at the same speed with which many Republicans are turning their back on the president in the U.S.
Conservative Leader Erin O’Toole has revived a policy of refusal to deal with the Rebel News outlet, which traffics in the same kind of far-right disinformation that feeds Trump’s angry base in the United States. The reassertion of this rule came after a dust-up over O’Toole’s office emailing answers to Rebel questions, which were touted as an exclusive interview.
Two prominent Calgary women, meanwhile, both from the right of the political spectrum, have publicly denounced Twitter this week — slightly after Trump was banned from the medium, mind you, but in protest against the mob mentality it helps create.
Danielle Smith, the former leader of Alberta’s Wild Rose party, declared she was walking away from her radio-host job and Twitter, saying: “I’ve had enough of the mob.”
Meanwhile, Calgary MP Michelle Rempel Garner penned her own takedown of Twitter, describing it as the “biggest culprit of weaponized misinformation, hate, and the death of rational argument.” Rempel’s piece appeared in an online publication called The Line.
To her credit, Rempel acknowledged that she had fallen into the “trap” of Twitter, particularly its ability to reward politicians for generating instant emotion and black-and-white opinions. “It’s a threat because it eliminates nuance, and penalizes politicians who build relationships across the aisle,” she wrote.
Two other MPs, in that exact cross-partisan spirit, also wrote bluntly this week about how the poisonous politics around the Capitol Hill assault required active resistance in Canada. Liberal MP Anthony Housefather and Conservative MP Scott Aitchison collaborated on a National Post article headlined: “As Canadian MPs, we know our opponents are not our enemies. Let’s not become the U.S.”
Now, it should be pointed out that a week is a long time in politics and the road to partisan hell is paved with good intentions to be collegial. All of these resolutions to absorb the lessons of Jan. 6 in the U.S. capital could vanish like other New Year’s resolutions — most likely within the first five minutes of Question Period when Parliament resumes later this month.
In the case of the Bloc Québécois leader, Trudeau is correct: it does not seem that Blanchet gave much thought to how anti-Muslim remarks would be seen in the wake of the Capitol Hill rampage.
Islamophobia is a dark current running through a lot of the alt-right and white supremacist sentiment on display in Washington that day and Trump has tapped that current when expedient too.
Of all the times to “raise questions” about Alghabra’s Muslim background, the immediate days after the Capitol Hill assault would not be one of them.
If politicians are serious about holding back the tides of political hate that fuelled the pillage in Washington, they have to take ownership not just of their own words, but what they’re whipping up among their supporters.
Rempel’s born-again embrace of collegiality is worth watching on that point. Several years ago, I actually asked her whether she was uncomfortable with what her social-media fans were saying about Ahmed Hussen, when he was federal immigration minister and she was the critic. She answered that bad things were said about her too on social media.
Right now, it looks like some Canadian politicians have been scared straight by Trump’s fiery exit in the U.S. But it’s not enough to denounce their rivals or Twitter or even Trump — the test of any new resolve will be in whether they’re willing to call out toxic politics when it happens in their own ranks.
Week In Politics: Capitol Riot, Trump's 2nd Impeachment And Inauguration – NPR
MARY LOUISE KELLY, HOST:
When a week in politics feels like a month, we know it’s a good time to pause and ask what just happened. Well, for the first time in U.S. history, a president was impeached for a second time. Also, we’ve learned more about how violent the insurrection at the Capitol was intended to be. The inauguration and more security threats loom. And the Biden-Harris administration is pushing forward with its plans for the next four years.
Well, joining me now, Lanhee Chen, a Hoover Institution fellow and policy director for the Romney presidential campaign. Welcome to you.
LANHEE CHEN: Thank you.
KELLY: And Errin Haines, editor-at-large of the news site, The 19th. Welcome to you.
ERRIN HAINES: Thank you. Thanks so much for having me.
KELLY: We are going to kick off with the big-banner, historic news – an impeachment, a second impeachment, which this time included 10 Republican votes in the House. Congressman Kevin McCarthy was not one of them. He did not vote against the president, but he did say this.
(SOUNDBITE OF ARCHIVED RECORDING)
KEVIN MCCARTHY: That doesn’t mean the president is free from fault. The president bears responsibility for Wednesday’s attack on Congress by mob rioters. He should have immediately denounced the mob when he saw what was unfolding.
KELLY: Lanhee, I’m going to let you take this one on first. And I should note for people listening that you are informally advising some Republican members. Speak to how fractured the Republican Party is after all of this and especially this week.
CHEN: Well, I think there are significant divisions, and, you know, it goes a lot deeper than just how one feels about Donald Trump. I think there are questions about the future arc of where the party goes in terms of policy. I think there are great disagreements about how the Republican leadership ought to deal with the misinformation, frankly, that’s been spread to a lot of voters, for example, about claims of election fraud recently.
And I think a lot of these issues are going to get sorted out over the next few years. I think some of it’s going to come in the form of elections, primary elections, in the coming years. But also, I think there has to be a very direct conversation between Republicans about what the party stands for – exactly what the agenda is and should be going forward. And I think all those questions will demonstrate the degree to which there is division but also the degree to which Republicans can come together in the coming weeks and months.
KELLY: Well, and speaking of the coming weeks, I suppose we have a Senate trial to get through in those coming weeks. Errin Haines, let me bring you in. What struck you this week watching the second impeachment of Donald Trump?
HAINES: Well, certainly, what was different this year from where we were really just about a year ago is that you did have those 10 Republicans joining Democrats, including the highest-ranking woman in the Republican Party, Representative Liz Cheney of Wyoming.
You know, it – hearing, you know, the case for or against impeachment, you know, on both sides was really striking. And hearing from Republicans, some of whom, you know, certainly were wanting accountability in terms of the insurrectionists but not wanting to go so far as to hold the president accountable despite the fact that he was at the Stop The Steal Rally just ahead of the storming of the Capitol and the weeks and weeks that he, you know, has perpetuated the false claims of a rigged election – not really wanting to tether him directly to the events of January 6 was really remarkable. And so I think that maybe foreshadows, you know, how a final vote may go once this goes over to the Senate along party lines and the justification for that.
KELLY: Now, all of this – impeachment – is happening, of course, against the backdrop of a pandemic. We watch vaccines being slowly rolled out. And, of course, we’re bearing witness to the staggering economic impact of this pandemic, which Joe Biden referenced last night when he announced his new $1.9 trillion pandemic plan.
(SOUNDBITE OF ARCHIVED RECORDING)
JOE BIDEN: And it’s not hard to see that we’re in the middle of a once-in-several-generations economic crisis with a once-in-several-generations public health crisis. A crisis of deep human suffering is in plain sight. And there’s no time to waste. We have to act, and we have to act now.
KELLY: Errin, let me return to that number – $1.9 trillion. It feels crazy to ask is that enough (laughter), but would that be enough financial support for Americans to get through what the CDC is projecting will be the deadliest months of the pandemic, and they’re still ahead?
HAINES: Well, we are in the worst of the throes of this pandemic. And, you know, this huge challenge needs a huge response. And that is what President-elect Biden is proposing in this $1.9 trillion plan, which is going to provide wide-ranging relief, the campaign says, to millions of workers, including the women who have been disproportionately economically impacted by a pandemic that is not interested in the peaceful transfer of power, did not stop, you know, amidst, you know, a racial reckoning and did not stop even, you know, in the midst of that insurrection, where we saw members, you know, coming down with the coronavirus during the insurrection at the Capitol. And so, you know, a lot of these – the pillars of that plan are going to center around issues that have affected women, from child care to school reopenings…
HAINES: …To hunger to evictions.
KELLY: Yeah. Lanhee, your thoughts on the Biden plan and, I suppose, whether Republican lawmakers will vote for it.
CHEN: Well, I think there are elements in here that some Republicans have already expressed support for. For example, you had a few Republicans like Marco Rubio and Josh Hawley express support for expanded direct payments at the $2,000 level, which is essentially what this plus up in the Biden plan would do – increase the level of direct support to $2,000.
I think that the question is going to be, of course, whether some of the other elements in this package that, quite frankly, probably don’t belong in a COVID relief package – whether things like, for example, a debate over the minimum wage – if that is going to turn off some Republicans. But in my view, it’s going to be very difficult for those Republicans who are already on the record supporting elements of this package – the enhanced unemployment insurance, the direct payments, you know, assistance for COVID-19 vaccine distribution…
CHEN: …It will be a challenge for those Republicans to then turn around and oppose elements of this simply because Joe Biden is the one that’s put them on the table instead of a…
KELLY: We just have a…
CHEN: …Republican president.
KELLY: Forgive me – we just have a minute or so left. But a quick parting thought from each of you as we look ahead to what promises to be another remarkable week in politics – an inauguration in what is basically a green zone. The Mall is closed, the outgoing president – President Trump – says he’s not going to be in attendance. What are you watching for next week, Lanhee?
CHEN: Well, I’m hoping that the country can begin to come together, and we can begin to deal with some of these challenges. I do think it’s important that Congress takes up action on this stimulus package quickly in order to help move the country ahead and begin to heal some of these divisions that we’ve seen.
KELLY: Errin Haines – last word to you.
HAINES: Well, we are marking this inauguration in the wake of the Martin Luther King Jr. holiday on Monday. And I leave you with this quote from King who said that in the days ahead, we must not consider it unpatriotic to raise certain basic questions about our national character.
KELLY: Well, there are certainly a lot of questions about our nation and its character and what may come next. That is Errin Haines, editor-at-large of The 19th news site, and Lanhee Chen, Hoover Institution fellow and policy director for the Romney 2012 presidential campaign.
Thank you to you both.
CHEN: Thank you.
HAINES: Thank you.
(SOUNDBITE OF DATA’S “ELECTRIC FEVER”)
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
National Rifle Association Files Bankruptcy Citing NY Politics – BNN
(Bloomberg) — The National Rifle Association of America filed for Chapter 11 bankruptcy on Friday with plans to regroup in Texas, citing opposition in New York.
The group intends to restructure and reincorporate, according to a statement on its website. The gun rights group said the filing will help it “exit what it believes is a corrupt political and regulatory environment in New York,” according to the statement.
“The move will enable long-term, sustainable growth and ensure the NRA’s continued success as the nation’s leading advocate for constitutional freedom – free from the toxic political environment of New York,” the NRA said.
Chapter 11 bankruptcy allows entities to continue operating while working on a plan to repay creditors. The petition listed assets and liabilities of as much as $500 million each.
The organization has been beset by complaints over lavish spending and internal battles as it has battled a lawsuit by New York Attorney General Letitia James to dissolve the New York-based organization. She accused the NRA’s leader Wayne LaPierre and three others of fleecing it. Washington D.C. Attorney General Karl Racine filed a separate lawsuit against the NRA’s charitable arm, accusing it of misusing donor funds.
The NRA counter-sued James in federal court, accusing her of violating its First Amendment rights. The organization also accused her of weaponizing her regulatory and legal power under the guise of protecting state residents.
For years, the NRA has received millions of dollars annually from the NRA Foundation, whose donors get a tax deduction. But the Covid-19 pandemic has disrupted the grassroots fund-raisers that have been so successful.
“The plan can be summed up quite simply: We are DUMPING New York, and we are pursuing plans to reincorporate the NRA in Texas,” LaPierre, the NRA’s chief executive, wrote in a letter on the organization’s website, citing “costly, distracting and unprincipled attacks” by politicians.
Story Link: National Rifle Association Files for Chapter 11 Bankruptcy
©2021 Bloomberg L.P.
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