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My view on what's going on in the financial markets and the global economy, and a few other things that might interest me from time to time.

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President Trump's Keynote Address at the WEF in Davos Yesterday

Updated: Jul 19, 2020

If you want to watch President Trump’s keynote speech form yesterday morning at Davos, watch it here. And before I recap, rest assured that although the speech was typical #POTUS and was positive (as far as the economic path in the U.S.), it certainly was not everyone's cup of tea as a number of global issues were not even mentioned (directly). For example, see Nobel prize winning economist Joseph Stiglitz’s response in Independent.

During his keynote address at Davos yesterday, President Trump

  • Stuck to his script, which was good

  • Alluded to but avoided outright confrontation on contentious issues (e.g. climate change), although there were indirect references / criticisms

  • Did not mention his impeachment hearings in the Senate (started yesterday) or recent confrontation with Iran

  • Took many economic victory laps, made lots of self-congratulatory comments on the US economic performance because of (in his opinion) Trump Administration policies

  • Did not miss the opportunity (as he never does) to bash the Fed on their interest rate policy

Whilst his speech was targeted to the top business people and politicians attending / watching Davos, #POTUS delivered a message that will appeal to his core back in the U.S. In fact, the speech very much felt like the soft launch of the President’s re-election campaign.

Here are some other sound bytes from the speech:

  • He touted the amazing performance of the US economy: “it’s soaring”, “an economic boom like the world has never seen before”, etc. Took a no-holds-barred approach as far as bashing the “poor economy” he inherited from the Obama administration (uh…that should be expected, along with the customary Fed bashing).  

  • Noted that the Administration concluded two trade agreements last week: the “new” NAFTA (USMCA agreement) and the China trade agreement. Perhaps coincidental but certainly set the stage nicely for him.

  • US economy has added 7m jobs in three years, more than three times the number of jobs that was projected by the government when he took office. Other economic-focused comments:

                   - unemployment rate 3.5% (lowest in 50 years)                    

- his administration has “created the most inclusive economy to ever exist”. Went over stats highlighting the progress of teens, minorities, women, veterans, disabled Americans, etc. (NB - this needs to be fact-checked) - described the Trump economy as a “blue collar boom” – said it was focused on working / middle class, and that the middle class has experienced higher income growth than the wealthy (NB -this certainly needs to be fact-checked) - stocks up 50% / $19 trillion added to household wealth since he took office

-12,000 factories opened under his administration (vs 60,000 factories closed during the Obama administration)

-10m people lifted off of welfare since he took office

  • #POTUS took a shot at the Fed as mentioned already. He said that the Fed “raised interest rates too quickly and then lowered them too slowly.” As he often does, President Trump alluded to the advantage of other countries in the world (vis-a-vis the U.S.) that currently have negative interest rates.

  • Lots of economic upside still in the US as deregulation takes hold and the benefits of the various trade agreements kick in. Other countries should take note of the U.S. economic model

  • “Restoring constitutional rule of law”, discussed in context adding 190 federal judges and two Supreme Court justices during Trump’s three years in office [N.B. with a conservative tilt of course]

  • Said that foreign investment is “pouring into the US”

  • Spoke positively of relationship he has with President Xi of China

  • Noted that the US is energy independent and is the largest producer of oil and natural gas in the world; referred to the transition from energy-dependent to energy-independent as an "American energy revolution"

  • In an attempt to show he cares about the environment, he said that the US will join the "1 trillion new trees" initiative launched at the WEF

He skirted the issue of climate change and the environment. The closest he came to taking a swipe at environmentalists was by saying that people must reject the negativity associated with the future, and that the world would be a better place if folks generally were more optimistic. He said doomsayers were wrong about over-population in the 1960's, a mass starvation crisis in the 1970's and end of oil in the1990's, none of which ever came to pass. His message was that the world “must reject the perennial prophets of doom and their predictions of the apocalypse.” I interpret this clearly as a swipe at Greta Thunberg and many other folks around the world that care deeply about the effects of global warming, which is not conjecture, but a reality.

Conclusion: President Trump’s speech yesterday morning was much better than the one he made during his 2018 Davos session, mainly because he has earned it as the U.S. has been the world’s best-performing economy during his time in office. I honestly think that the U.S. economic performance, along with President Trump's optimism about the future, resonated with most of the crowd. Even though the speech was largely self-congratulatory and had plenty of the MAGA themes he has already espoused, the fact is that he was more balanced than usual, and the listeners were largely ready for someone at this conference to be more positive about the future.

Following President Trump’s speech, I listened to some of CNBC’s interviews with CEO’s, bankers and politicians from around the world, and most – perhaps shocking to some of my readers – seemed pretty positive on Trump’s speech. Larry Kudlow’s interview with CNBC was also good and is here.

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