“Trump, Congress Spoil for Fight With Shutdown Again at Stake.”
President Donald Trump and many Democrats and Republicans in Congress all enter the new year spoiling for a fight. Unresolved issues set aside in 2017 to make way for a tax overhaul are poised to surface early in 2018, giving Trump the opportunity for the confrontation with Washington’s establishment that he’s promised since his election.
The president wants the Mexican border wall he ran on as a candidate, but that hasn’t advanced farther than prototypes in the southern California desert. Democrats want protection for young undocumented immigrants brought to the country as children, whose lives were upended by Trump’s decision to end a program sparing them from deportation. Republicans need to deliver on promises to rein in the reach of the federal government in the hope of avoiding a wipeout in the November midterm elections.
A fight over government spending and immigration this month may bleed into a year-long battle over even bigger issues — House Speaker Paul Ryan’s push to cut spending on the social safety net and Trump’s campaign promise to finance a massive infrastructure construction plan. The backdrop for those battles will be the midterm election in November in which Democrats hope to take one or both chambers of Congress, an outcome that would derail Trump’s agenda for the remainder of his term.
And hanging over all of Washington’s business is Special Counsel Robert Mueller’s continuing investigation into Russian interference in the 2016 election, a probe that has already snared two top Trump campaign officials and an adviser. There is no sign that the investigation is concluding, contrary to the insistence of White House lawyers late last year.
Congress last year repeatedly delayed passing legislation to fund the government through October. Some Democrats want to use the next deadline, Jan. 19, as leverage to force Trump to sign legislation to protect the young undocumented immigrants known as “Dreamers.” Trump said on Friday that he won’t agree unless Democrats consent to fund a border wall and to a broader and more controversial overhaul of the immigration system.
“Emerging markets sailed through storms in 2017. What next?.”
After a year of double-digit returns, one of the key questions for emerging markets in 2018 is whether they will continue to be insulated from one another’s crises. Contagion, an intrinsic feature of the sector for years, shrank to such an extent that an almost 10 percent drop in Brazil’s currency in a single day in May had little effect on its emerging market peers.
Was that proof investors now treat individual emerging markets on their own merits, rather than as members of a homogenous poor and crisis-prone bloc? Or was it just a function of central bank money-printing and near-zero interest rates? Both played a part.
Not too long ago, a selloff like that of Brazil’s real currency BRL= on May 18 last year would have sent central banks in distant Asia and Africa scrabbling to defend their markets via interest rate rises or dollar sales. Instead, its Latin American neighbor Chile cut interest rates with little weakening in its currency, CLP= while in the Middle East, Oman announced plans for a dollar bond.
But a 2008-style crisis emanating from the United States or China would still spark indiscriminate flight from emerging markets towards “safe” assets such as the Swiss franc, specialists say. Emerging bonds earned double-digit returns this year, shrugging off Venezuela’s expected default, in a striking contrast to crises in Asia in 1997 or Turkey in 2001, shockwaves from which rippled through the developing world.
Russia’s decision on Dec 15 to cut interest rates by half a percent, just two days after the U.S. Federal Reserve raised rates, shows central bank policies are increasingly dictated by their own economic conditions, rather than the Fed. Mexico and Turkey raised rates a day before Russia’s cut.
Expectations of more U.S. rate rises and the European Central Bank halving its bond buying will test individual emerging economies in 2018, emerging market veterans say. But the sector as a whole is insulated by sweeping changes within the asset class and its investor base in the past decade.
Improvements made since turn-of-the-century crises are easy to pinpoint – inflation-targeting central banks, floating currencies, and borrowing that is now 80 percent denominated in emerging currencies rather than dollars. Increasing numbers of investors have also come to view emerging markets as a structural rather than short-term trade.
“Iran protests pose an unpredictable challenge for authorities.”
After nearly a week of rare protests in Iran, it is clear momentum is building. Despite restrictions placed on social media, demonstrators are still taking to the streets and tensions remain high.
The protests are the largest since the 2009 uprising over the disputed presidential election. That time the security forces cracked down hard, and they have threatened to do so again. The current demonstrations began in Mashhad, Iran’s second most populous city, and home to the shrine of a major figure in Shia Islam.
Ahmad Alamolhoda, the leader of Friday prayers in Mashhad and a hard-line cleric close to the supreme leader, is accused of encouraging his supporters to protest against President Hassan Rouhani, a political opponent. Initially, slogans were against inflation, corruption and the president’s economic policies. However, what followed took many politicians by surprise.
The protests against the president quickly turned into rallies against the country’s clerical leaders. Slogans of «Death to Rouhani» gave way to «Death to Khamenei», Iran’s supreme leader.
Within a day, the unrest had spread to some 25 towns and cities, and slogans went beyond the economic, including calls, for instance, for an end to Iran’s involvement in Lebanon and Syria.
Unlike the post-election rallies of 2009, which had well-known leaders and clear demands, and were mainly supported by more urban, middle class residents of the capital, Tehran, and a few other cities, the latest protests are happening in poorer parts of the country. There is no clear leader and they are fuelled by anger over inflation, unemployment and corruption of the political elite.
Although President Rouhani, elected for the second time last May, pledged to revive the economy, he has not been able to deliver much, leaving many Iranians frustrated. Last month, the president released details of next year’s budget, which calls for an increase in fuel prices and a cut in cash subsidies. It also became clear that the already huge budget of numerous religious organisations will be increased, something over which Mr Rouhani does not appear to have any control.
But some analysts say that four decades of mismanaging the country has left many Iranians hungry for change.