As January Goes, the Year Doesn't

Wed, 2017/01/25 - 2:11pm | Your editor
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At last the stock market stopped teasing about the Dow-Jones Industrial Average going over 20,000. But if you remember what happened in 2016 you will realize that January doesn't set a trend for the whole year—either downward as then, or upward as now.

With the new Adminstration just beginning to get its act together, and Pres. Trump still worrying about how popular he really is, there are grounds for worry.

China remains a key concern both economically and militarily as the country more or less shuts down for the New Year of the Rooster.

Russia is its enigmatic self and Washington is deeply split on how to handle Putin.

Britain will be first up for coordination but unfortunately its political progess toward exiting the European Union is uncertain.

Then there is Mexico against which candidate Trump promised Armageddon to allegedly save American jobs. For me, how the talks with Peña Neto go will be a major determinant of just what Trump's reign will involve. I have my fingers crossed that there will be sensible changes to the NAFTA treaty rather than a trade war. That treaty accounts for about a third of US trade, double what we do with China.

However, until the White House stops the tweeting and misstatements, I worry about exactly how we will be governed. Given the displomatic unknowns—not even mentioning the Supreme Court or Obamacare or global warming—it is far too soon to write that as January goes so goes the year.

A big accounting scandal and a couple of little ones hit European stocks today, one reason the DJIA rose. BT, formerly British Telecom, issued a serious profits warning because of fiddling with the books at its Italian unit. Swiss Novartis was accused by the US Securities and Exchange Commission of using bribery to sell its drugs in Greece, the second DJ-listed drug major in trouble with how it garnered sales.

A US-listing is popular with global companies, but it opens the door to enforcement of accounting rules. Ultimately, this is good for markets because stockholders need to be able to believe corporate reports are complete and honest


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