Don’t Get Done Get Trump

Monday, 27 March: Over the weekend news has emerged that Donald Trump went full Donald Trump when meeting the German Chancellor Angela Merkel. Reportedly Trump didn’t hide his feelings towards Germany’s defence spend (uncharacteristic), and in a behind closed doors meeting has had the audacity (a word not very often associated with Donald) to hand her a bill. ‘Politely’ letting Merkel or Germany know they actually owe NATO (with interest), $374bn. Ouch! Such a kind selfless act to go debt collecting for NATO but this is well, simply a reminder of how long the next 4 years are going to be. NATO suggests that members target defence spend of 2% of GDP, this isn’t a requirement or enforceable. Germany spends roughly 1.2% of GDP on defence, slightly below the guideline and because NATO doesn’t actually require this for membership even more embarrassingly this makes the $374bn bill for Germany to Germany. Very few countries spend hits the 2% target (UK included), so looks like he’ll have to draft a few more invoices. In the meantime let’s all hope Germany somehow finds a way to stump up the money and pay Germany, as it is just not on owing someone this much. Donald Trump two for two on bill rejections and in his spare time he’s also a very effective debt collector…. Potentially his next TV venture.

As mentioned, Trump failed his first significant test and failed to pass the healthcare reform bill on Friday. Trump guaranteed volatility if nothing else and these headlines will certainly bring large movements. This has also possibly sobered some investors up from the post-election rally. Investors are now having to reluctantly take the ear plugs out and realise his tenancy may not be dandy and he potentially won’t make much material change at all, despite his efforts via Twitter. Markets have reacted to this as they begin the new week and it’s been a day where risk has firmly come off the table, the FTSE eventually closing 0.59% lower after being down over 1% intraday. Other European bourses similarly struggled alongside the US dollar getting a bit of stick. As we write GBP/USD sits at $1.2583 as the dollar has dived 0.75% vs the yen in what has been a day for safe havens.

Today BT was slapped with a £42m fine from Ofcom. Well that’s what happens when you leave data roaming on…. but in this case it was due to late installations of high speed lines. This is the largest fine handed down from Ofcom, and BT will pay £300m in compensation to corporate customers. The Openreach division cut compensation payouts for delays between 2013 and 2014, a move seen as abusing their market power. Ofcom have subsequently come down on BT with no chill, with a fine that personifies ‘don’t try this again’.

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