Trump tunes out of market meltdown as aides turn off TV news

Business Week: Barnier’s quest for Brexit answers, GDP growth and tracker payout

The television in the boardroom on Air Force One was switched off this week as US president Donald Trump returned to Washington DC from Iowa.

Trump usually has the TV tuned to Fox News, but when aides boarded the plane ahead of him and saw the network broadcasting a big red chart illustrating a startling decline in the stock market, they switched it off.

US treasury secretary Steven Mnuchin, who was also on board, waved away questions from the press corps, but would later claim to be “not overly concerned” about the sell-off, which he put down to a “market correction”. Time will tell.

It all started on Friday of last week when concerns about the impact of a tightening job market on the prospects for inflation was coupled with a surge in bond yields to send investors fleeing equities.

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The Dow Jones Industrial Average suffered its biggest daily fall since December 2008 when the financial crisis was at its peak. Things only got worse on Monday as it dropped nearly 1,600 points during the session, its biggest one-day decline in history.

The Vix volatility index, widely known as Wall Street’s “fear gauge”, hit its highest level since the days before Trump’s election in November 2016.

Asian stock markets followed as the equity market sell-off deepened, while in Dublin, the Iseq dropped nearly 2 per cent. By Tuesday, European shares were a sea of red, while London’s FTSE 100 endured its worst day since the Brexit vote.

The big worry for most people was pensions, many of which would have fallen by about 2 to 3 per cent at some stage. However, the advice was not to panic, and sure enough later in the day matters began to stabilise somewhat.

Wall Street closed higher with both the Dow Jones and the S&P ending the day up more than 2 per cent after a late rally. Only for both to be routed again on Thursday.

The whole affair was something of a baptism of fire for Jerome Powell who was sworn in as the US Federal Reserve's chairman on Monday.

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It almost seems like pleading with a stroppy child to tell you what he wants for Christmas, but he just won’t tell you.

EU chief negotiator Michel Barnier was back in London this week for more talks with the UK's Brexit delegation on the future trading relationship between Britain and the bloc – but for the life of him he couldn't seem to get a straight answer.

“The time has come to make a choice,” Barnier said. “The only thing I can say – without the customs union, outside the single market – barriers to trade and goods and services are unavoidable.”

Government sources in Dublin said it was essential the British government laid out “in black and white” what post-Brexit arrangement it was seeking with the EU. Best of luck with that.

Earlier, prime minister Theresa May caused confusion when she refused to answer a question from Sky News on Britain’s possible involvement in a customs union. Downing Street later ruled it out, dashing the hopes of those seeking a softer exit.

Britain also sent a peculiar message to the rest of the world about life after Brexit next year: please pretend we are still in the EU.

According to The Financial Times, a "technical note" prepared by the British government calls on non-EU nations to treat the UK during its post-Brexit transition period after March 2019 as if it was still covered by the more than 700 treaties Brussels has struck with third countries on everything from fishing rights to data sharing. In other words, Brexit doesn't mean Brexit.

Meanwhile, in Dublin, figures from the Central Bank showed that despite all the talk of an exodus from London, the banking sector in the Republic is still largely bereft of new players.

Not one new bank or lender was authorised last year, although there were a number of insurance authorisations, including Lloyd’s of London insurer Beazley, which is one of the few Brexit wins for Dublin.

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In 2016, Nobel Prize-winning economist Paul Krugman famously referred to the Republic’s gross domestic product (GDP) statistics as “leprechaun economics”, but, even accounting for some of his reservations, the State received stellar figures this week.

EU Commission estimates said the economy grew by 7.3 per cent last year, three times faster than the euro area. The surge was driven by the activities of multinationals operating here, but – even when you strip that out – the economy is motoring.

The commission said underlying domestic activity grew by 4.9 per cent in the first three quarters of 2017 – double that of the euro area. For this year, it estimated GDP growth of 4.4 per cent, before slowing to 3.1 per cent in 2019.

What with all this growth, the Cabinet approved the establishment of a working group of senior officials to make recommendations on the merger of USC and PRSI in advance of the October budget.

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One couple were in the news this week after they received €36,000 in compensation over the tracker mortgage scandal, despite being unaware they had lost out.

That was where the good cheer ended, though, as KBC Ireland informed the Oireachtas finance committee that nearly 2,500 customers were still on the wrong rate – nearly double the number the bank admitted as recently as October.

Permanent TSB, meanwhile, was accused of holding up compensation for thousands of customers by challenging a High Court ruling back in 2012.