2017/06/13 Commentary: The Sessions Session
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Commentary: Tuesday, June 13, 2017
The Sessions Session
The US equities seem to be enjoying the gradual progression of a development on some of the contentious claims on Trump administration possible involvement in potential collusion with Russia (or at least Russia-affiliated individuals) during the 2016 US general election. While some of its opponents on the Left will point to what they felt Attorney General (AG) Jeff Sessions was not willing to say during Senate Intelligence Committee testimony today, it is what he said that was most striking. Especially in the context of some key questions also left conveniently unanswered in ex-FBI Director Comey’s testimony in front of the same panel last Thursday, Sessions did something that Left-wing opposition Senators are not used to seeing: he hit back hard on contentious questions citing vague innuendos. As noted in the opening graphic label, you can see this for yourself in the associated video.
Especially note Sessions’ fiery response to Senator Wyden’s leading question from 01:30 onward. Shortly after that Sessions is pressed on why he cannot answer all concerns that even regard his private conversations with the President. You will need to access the full testimony for his extended response that there are matters Cabinet officers can withhold from Congress pending the decision by the President on whether they can be released.
Some Democratic Senators repeatedly objected to this. Ahhh, how quickly they forget. Regarding often obfuscatory testimony of Obama AG Eric Holder, the Dems had no problem on many matters of Justice Department withholding of information. Yet this just gets back to the exploration in our January 14th Commentary: America’s Kool-Aid Crisis post on the intractably partisan nature of US politics at this time.
Yet as Sessions’ testimony was supposed to bring bombshell answers to the questions left unanswered in Comey’s testimony, it mostly had the opposite effect. It is dawning on some still moderate Democrats “there is no there there” on the entire alleged Trump campaign collusion with Russians last year, which equities seem to like.
Authorized Subscribers click ‘Read more…’ (below) to access balance of the discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review your options. As this is a ‘macro’ assessment, Market Observations remain the same as Friday morning’s update (lower section) of Wednesday evening’s Commentary: Self-Inflicted Wounds are Back post, and there is no Extended Trend Assessment in this post.
NOTE: Given the likelihood the US economy will now get the structural reform that we (along with Mario Draghi and others) have been loudly complaining was not forthcoming since our dual It’s Lack of Reform, Stupid posts in January 2015, we need to adjust our view that a potential economic and equity market failure is coming. We previously referred you back to our December 8, 2015 post for our major Extended Perspective Commentary. That reviewed a broad array of factors to consider Will 2016 be 2007 Redux? While a continued regime of higher taxes and more regulation (i.e. under Clinton) might have fomented a continued weak or even weaker US economy, the tax and regulation changes proposed by a Trump administration that will likely be approved by the heavily Republican Congress now diminish the similar fears we had to what transpired in 2007-2008.
[Thanks to Washington Post washingtonpost.com for the graphic. All rights reserved.]
▪ As noted, this ‘macro’ assessment does not include any Market Observations in an updated Extended Trend Assessment, as that all remains the same as Friday morning’s evolution of that analysis in our last Commentary: Self-Inflicted Wounds are Back post. Yet even as much as US equities liked Sessions’ strong testimony today, that wild card of what might pique the President himself into coming forth with overly aggressive (or even poorly founded) tweets or statements remains a bit of a risk.
One of the ways in which Donald Trump has been his (and his administration agenda’s) own worst enemy not surprisingly came to the fore during Sessions’ appearance today. That was Trump’s decision to claim that the recommendations from Sessions and Deputy AG Rosenstein to fire James Comey for mishandling various matters were marginal, and that Trump had already made his mind up to dismiss Comey… and that it was based on his pursuit of the Russian collusion investigation.
As we noted back in our May 14th WEEKEND: It’s Official: US Politics Broken post, Trump really blew it with that claim after being given the gift of the combined assessment from Sessions and Rosenstein that Comey had to go based on violating so many FBI protocols during and after the Clinton email investigation. And Trump was adamant about it in that telling incredible interview with NBC’s respected Lester Holt.
This is what scares us and others (and at times the equities) about the President: it almost seems that he is frustrated about having to balance so many details, and is inclined to assert the princely prerogative of just saying his instincts are right and he just wanted to do it (on some other, more worrisome, matters as well.) All he had to do was stick to script and allow that he was following the advice of Justice Department professionals.
But Noooooooo… he had to be the Big Cheese who called the shot. And that made for some of the few really uncomfortable moments for AG Sessions this afternoon. He could not explain why the President said such a thing, and why the Congress and the American people should believe that it was the reasoned assessment of Sessions and Rosenstein which led to Comey’s dismissal, and not Trump trying to derail the Russia investigation. Ultimately he relied on rightful analysis of Comey’s missteps, and that seemed to suffice.
Politics-Off, Economics-On
And while that potential for political missteps (especially by President Trump) can hit the equities at times, the economics are still passingly friendly enough to support the selloffs.
As shared in brief emailed notes since Monday there is possibly another reason the equities might weaken overall that is not quite critical as yet. It is interesting that the Organization for Economic Cooperation and Development’s latest Composite Leading Indicators were released Monday morning. While the OECD analysts tend to take an upbeat view, the actual graphs and statistics show growth may actually be stalling in key countries. Those include the US, along with sustained weakness in China.
In some cases this is more so an indication of previous stronger growth signs lapsing into what the OECD now says is (its oft-used term) ‘stable growth’. The key phrase is only included as it relates to Canada, yet might apply to the US, UK and Italy as well: “…compared to last month’s assessment of growth gaining momentum.”
That said, there is enough upward growth momentum left to encourage visions of higher corporate earnings, which will also underpin equities. Yet there seems to be a real growth concentration in Germany with the balance of the Euro Area lagging behind, as usual. The page 3 tables are instructive on the loss of upward momentum in the US. That is likely based to some degree on softer sentiment in the wake of the self-inflicted Trump agenda wounds from the political distractions.
As such, the future progress (or lack thereof) on the Trump agenda can still impact the equities and other asset classes.
On Message?
So once again it may come down to whether the President can stay on message and focus on the bigger picture. The Republican Party is going to get no help whatsoever from a still fairly unified obstructionist Democratic Party. And the Republicans have some deep internal divisions (much like the Democrats) which need to be addressed through arduous compromise efforts that are not helped by distractions from the President.
He needs to lead on major legislative efforts instead of distracting from them with tit-for-tat responses to less important irritations. As explored in last Wednesday’s Commentary: Self-Inflicted Wounds are Back post, the President has already made the task of the Solicitor General in getting his temporary travel ban approved that much harder with his recent tweet storm. Yet since then (and especially during the Comey testimony) he has been much more reserved.
Is it possible that his new legal team have finally been the ones who have convinced the President of the value of keeping his own counsel instead of responding aggressively to minor slings and arrows from his detractors? Anyone who is bullish the equities based on the future success of the Trump reform and stimulus agenda should hope so.
▪ There is no Extended Trend Assessment in this post. This is a ‘macro’ assessment. In spite of the short-term impact of various matters reviewed previous, Market Observations remain the same as Friday morning’s update (lower section) of Wednesday evening’s Commentary: Self-Inflicted Wounds are Back post.
Thanks for your interest.
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