Trump is good at firing people, and that’s what happened today once again. Steve Bannon, an extreme nationalist, was relieved from his job as a political strategist. He accompanied Trump for around a year, first in the campaign, and then in the White House. Markets are certainly happy about scapegoating Bannon. For now.
Trump’s failure to unequivocally denounce white supremacists and neo-Nazis may have been the last straw. It may have been triggered by Gary Cohn’s disappointment from the president. The clashes in the Trump Administration were known for a long time. Bannon is far from being the first one to leave.
Contrary to some of the previous departures, this one has been met with a cheer: it is not the establishment person (such as Spicer or Priebus) that is out this time, but rather the extremist.
The US dollar is up, especially against the safe haven yen. USD/JPY had already plunged to new lows before it performed a swift recovery: from 108.60 to 109.59, almost 100 pips.
After the disbanding of two economic councils and the abandoning of another potential one, Cohn’s resignation would have been too much for markets. Banning Bannon is a boon for markets.
Trump is the trouble
But the bigger problem is the one at the top job. Donald Trump showed his incompetence on several occasions: Charlottesville, North Korea, and health care are just a short list of issues. Things that markets hoped for, such as infrastructure and tax reform, seem far far away.
So, there is no reason to cheer. Scapegoating yet another White House official, even if this one was totally unhelpful, will not solve the biggest problem: President Donald Trump.
Once Trump goes, there may be more hope for significant positive steps for the economy and for other topics.
More: Trading a potential Trump impeachment in 3 phases with the USD
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