PERSPECTIVE: Why Traders Should Pay Attention to Comey/Russia Developments

Market impacts may be muted now, but will grow if no timely resolutions

Financial and commodity traders typically do not like to follow policy-related developments, until they either cost them money or make them profits.

The Comey/Russia investigation focus. The current situation regarding President Trump’s firing of former FBI Director James Comey and the possible linkage with ongoing investigations of Russia’s alleged interference with the US 2016 elections are a prime example of perhaps significant policy-related market impacts.

History is clear that it takes policy developments a while to have sustained market/trader attention. That was even the case with some of the biggest market movers in the past, including grain embargoes and President Richard Nixon eventual leaving his post.

While the current Comey and Russia situation is by no means a crisis event now, veteran Washington watchers and analysts clearly believe it has the chance of turning into one.

Bond and gold markets are beginning to note the topics in various market commentaries.

Agriculture traders prefer talking about the impact of droughts and blizzards on various commodities rather than having to assess the impact of a White House situation that has major media in both print and television fixated.

Democratic lawmakers smell an opportunity to garner more seats in Congress during 2018 elections, especially the House, as a result of the ongoing situation. An already visceral Congress has become more so ever since President Trump fired Comey.

The political impasse could impact the agenda of President Trump and GOP leaders in Congress. Democrats already are starting to slow-walk congressional activity.

Republican leaders insist the turmoil should not harm their legislative agenda, including overhauls of health-care and tax laws. House Speaker Paul Ryan (R-Wis.) said yesterday that Congress can “absolutely” get health-care legislation completed by the end of the summer, and he expects work in Senate to take a month or two. The Senate has begun working group meetings on their bill, but significant work on the bill will not begin until the Congressional Budget Office (CBO) releases their score of House-passed legislation. The CBO announced yesterday that will come the week after next.

There are signs that Trump’s infrastructure plan could be pushed to 2018 due to a full agenda — some sources had previously indicated the infrastructure topic was already a likely 2018 or beyond timeline.

Tax reform legislation, already a complex topic, could become more so if lawmakers and White House officials are forced to focus on other sensitive issues unfolding.

There is an undercurrent of unease among some in the GOP about the timing and rationale given for the FBI director’s firing even as party leaders dismissed Democratic protests. Trump’s aides and his congressional allies struggled yesterday to defend the decision, diverting precious time from other key issues.

As for potential market impacts ahead, if the Trump administration reaches new trade agreements with Canada and Mexico and perhaps bilaterals with other countries, will an already contentious Congress have enough votes to clear trade bills that were sensitive even before the recent Comey and Russia issues? Concerns over trade policy was one of the key factors in some 2016 elections, and was a top issue that election-year experts say helped Trump win the presidency.

Even the timing of the new farm bill could be impacted. That is because House Agriculture Committee Chairman Mike Conaway (R-Texas) was tapped to resurrect the House investigation of Russia and the 2016 elections. Recent days have shown this topic can be very time consuming.

Perspective: So, while market traders like things neat and tidy, and would rather read multi-page commodity reports with charts and graphics, Washington is frequently more complex than explaining a chart gap has been filled, etc. – try charting a president and/or politicians! The complex ways of Washington have turned much more complex ever since Trump became president. He will not change until some event forces him to. Will the Comey/Russia topics be the factors that truly contain this president’s unpredictability? We shall see.