It was a busy week for White House newsflow as Rex Tillerson, the Secretary for State, was removed somewhat suddenly and rumors of further turnover circulated, with McMaster potentially next to leave. Lost in the noise was a special election in Pennsylvania which saw the Democrat challenger prevail by a razor-thin margin, a diplomatic stand-off between the UK and allied nations and Russia over an alleged poisoning of a double agent and a steady stream of questionable developments, especially in retail (Toys R Us announced it was to close all US stores and other companies inched towards bankruptcy). The tragic collapse of a newly installed pedestrian bridge outside Miami was a particularly harsh blow for the state of Florida, already reeling from the high school shooting.
Market newsflow seems particularly murky currently, as the sheen has come off tax reform as the discussion is replaced with gun reform, political noise and diplomatic posturing. Behind the scenes politicians voted to roll back the tighter controls on banks imposed by Dodd Frank, although the timing and magnitude of this rollback remains uncertain. Markets displayed an uneasy calm mid-month, with a small positive return. However, the sheer pace of political upheaval, combined with the investigations piercing stalwarts such as Wells Fargo and the shuttering of Toys R Us, an American icon, lead to a sense of impermanence and uncertainty. The rest of the month will be an interesting period to watch.