Davos 2018: Trump puts North Korea high on agenda in 'America first' speech - as it happened
Rolling coverage of the final day of the World Economic Forum in Davos, including Donald Trump’s speech
- Trump’s speech covers trade deals, North Korea and immigration
- Boos as President describes media as ‘nasty, mean, vicious and fake’
- Trump says market would be down 50% under Hillary Clinton
- Calls for North Korea to be de-nuked
Markets move higher
Whether Donald Trump was right or not in his comments about the US stock market, there was no denying it was racing ahead today.
Even weaker than expected US fourth quarter GDP figures failed to hold back the Dow, which jumped to another new high of 26,497. Chris Beauchamp, chief market analyst at IG, said:
Fresh highs for US markets come as investors keep a close eye on the US president’s comments in Davos. Someone appears to have carefully written Mr Trump’s remarks with a view to making him more palatable to foreign leaders, reasoning that a more conciliatory tone will produce results.
The dollar recovered from its lowest levels, after being buffeted in the last couple of days by, firstly the US Treasury secretary seeming unconcerned about a weak greenback and then Trump himself talking about wanting a strong dollar. Connor Campbell financial analyst at Spreadex said:
Combined with Donald Trump’s uncontroversial Davos address, and a recalculation of Steven Mnuchin’s ‘weaker dollar’ comments after the very negative (over)reaction on Wednesday, the greenback actually reduced its losses against the pound from 1% to just 0.2%, while chopping down its decline against the euro to 0.3%, a third of what it was earlier in the session.
The recovery in the dollar helped give a lift to European markets, which ended the day (mostly) in positive territory. The final scores showed:
- The FTSE 100 finished up 49.70 points or 0.65% at 7665.54
- Germany’s Dax rose 0.31% to 13,340.17
- France’s Cac climbed 0.88% to 5529.15
- Italy’s FTSE MIB was 0.58% better at 23,856.99
- But Spain’s Ibex ended flat at 10,595.4
On Wall Street the Dow Jones Industrial Average is currently up 89 points or 0.34%.
On that note it’s time to close for the day. Thanks for all your comments, and we’ll be back next week.
Larry Elliott
Here’s our report of Donald Trump’s appearance at Davos. Larry Elliott writes:
Donald Trump took his battle with the media onto the global stage when he used a speech in Davos declaring that America was open for business to accuse his press and TV critics of being mean, vicious and purveyors of fake news.Part of the normally respectful audience of business leaders, politicians, academics and media representatives at the World Economic Forum responded to the president’s renewed onslaught on his media critics by hissing.Speaking to a packed hall, the US president boasted of his record since entering the White House and stressed that there had never been a better time for firms to hire and build in the low tax and red-tape cutting economy he was creating.Trump made his address as the latest US growth figures showed the economy growing at an annual rate of 2.6% in the final three months of 2017, weaker than the 3% Wall Street had been expecting.“The world is witnessing the resurgence of a strong and prosperous America”, he said. “I’m here to deliver a simple message. There has never been a better time to hire, to build, to invest and to grow in the United States. America is open for business and we are competitive once again.”
The full report is here:
Here’s the verdict on Trump from the president of the Council on Foreign Relations think tank:
Updated
The White House claims that Trump’s jibe at the media was received with laughter in the Davoshall:
Here’s their official transcript of the president’s remarks during the Q&A after his speech.
The other thing is, I’ve always seemed to get, for whatever reason, a disproportionate amount of press or media. (Laughter.) Throughout my whole life -- somebody will explain someday why -- but I’ve always gotten a lot. (Laughter.)And as businessman I was always treated really well by the press. The numbers speak and things happen, but I’ve always really had a very good press. And it wasn’t until I became a politician that I realized how nasty, how mean, how vicious, and how fake the press can be. As the cameras start going off in the background. (Laughter.)
That’s not how we, or many other people in the hall, heard it.
Updated
Back with the global economy panel, and Bank of England governor Mark Carney is asked about the path forward for monetary policy.
He begins by saying the nature of the recovery is stronger, broader and healthier. This is not a consumer boom led recovery.
As you get towards full employment, the pickup [in wages] should be there. There is that aspect pushing towards normalisation of policy.
The second element is investment picking up, savings down.
The third is the stance of policy as a whole of the G4, the members of the G7 practising QE. We’ve shifted collectively between 2013 to 2017 from bonds being taken out, to this year $1tn of net issuance, that should push up on rates.
You have a very tough judgement about where is the equilibrium rate of interest, which has been very very low and arguably should be raising a bit.
One has a sense of direction towards normalisation but we have to be patient and prudent in making those judgements.
Lastly, the UK is in a relatively unique situation, in that over the course of the next year as negotiations with EU progress, we will find out a lot more about what the supply capacity of the economy is , what right level of the exchange rate is, whether there will be tariff or other trade costs and how all of this effects demand. All those factors together will determinate the appropriate stance for monetary policy.
Carney is asked whether there is an asset bubble [caused by QE etc] which will burst and lead to meltdown. How likely is that on a scale of 1 to 10?
Carney admits the probability for an adjustment in asset prices has gone up [since prices have increased since the financial crisis]. The big question is whether the core of the financial system is in a position to amplify that in negative way. I would put that as quite low. The capital and liquid positions of institutions have been improved [since financial crisis].
Winnie Byanyima, Director of Oxfam International, says:
“President Trump’s boastful sales pitch was a victory lap for the trillions of tax cuts that the wealthy elites and corporations have clamored for. The evidence is clear: these tax cuts are looting the US treasury to enrich the 1%.“Yes, global markets are breaking records, but gains are overwhelmingly going to the richest, while leaving the rest of the world to fight over crumbs.”
Davide Serra, the chief executive of asset management group Algebris, has welcomed Trump’s speech:
Heads-up: I’ve updated my earlier post about the stock market gains under Trump.
If you take the Dow from election night in November 2016 to today, it is up around 44%.
Since the inauguration it’s up 31%, but to be fair to Donald Trump the rally started straight after his election.
Still not 50%, but Trump’s claim isn’t too outlandish.
Donald Trump’s trip to Davos is over.
The White House press pool say that the US had an “uneventful motorcade to the Davos Landing Zone”
The president has boarded Marine One, ready to head back to Zurich.
Beatrice Fihn, Executive Director of ICAN (the international campaign to abolish nuclear weapons) says:
“Donald Trump just said we have to de-nuke North Korea. Rather than trying to threaten them with more nukes and make it more likely to use them, the best way he can make sure North Korea does not have nuclear weapons is to join the Treaty to ban those weapons.That is how the majority of the world is moving towards nuclear disarmament.”
Trump’s right about one thing - the market has gone up a lot since the last election.
By one measure, it’s up by a third:
Benioff: Stock market wouldn't have crashed under Hillary
I just spoke to Marc Benioff, the founder and CEO of Salesforce, about Donald Trump’s speech to the World Economic Outlook.
He says:
I thought it was a great speech. I thought his economic narrative has become greatly enhanced now that the tax cuts have passed.
The most important thing that happened this week is that six out of the G7 country leaders were here and that this multi-stakeholder dialogue that’s so important right now was enhanced by the World Economic Forum.
Q: Does America First really fit with a multi-stakeholder approach?
For the most part, what you see if what you get. Everyone knows what his policy is, and he’s fairly transparent about his positions.
Q: Would the stock market have crashed under Hillary?
No, I don’t think so.
Q: Are the media fake and vicious and mean and nasty?
Aren’t we all sometimes?
Lagarde warns on financial vulnerability, inequality and geopolitical risks
Christine Lagarde is asked what could go wrong, after the IMF forecast improved global growth of 3.9%.
She starts by saying the growth is well spread out, and we should celebrate the policies implemented by central banks.
What could go wrong? There is financial vulnerability, US tax reform will be positive in the short term but might lead to serious risks.
Secondly, the excessive inequalities which are growing in many places.
Thirdly, the lack of international co-operation and the geopolitical risks which could result.
Turning to the Bank of Japan’s Kuroda, he says the Japanese economy is expanding modestly in a well balanced manner. The 2% growth in the last seven quarters is a substantial improvement.
This is the second longest boom in the post war era. The economy is likely to continue its modest expansion.
..The deflationary mindset has been more tenacious than expected, so BoJ will continue to pursue powerful monetary easing with persistence under the quantitative and qualitative monetary easing.
There are various risks but from my perspective they are mostly external.
Updated
There is now a panel on the Global Economic outlook, with Haruhiko Kuroda, the governor of the Bank of Japan, Bank of England governor Mark Carney, Hong Kong chief executive Carrie Lam, IMF managing director Christine Lagarde and Mary Callahan Erdoes, chief executive officer of J.P. Morgan Asset Management. It is chaired by the FT’s Martin Wolf.
Updated
More on the US GDP figures, which came in below expectations in the fourth quarter. Economist James Knightley at ING Bank said:
US fourth quarter GDP has come in at 2.6%, a little below the 3% figure expected by the market, but this masks some real strength in the report.Consumer spending was up 3.8% while fixed investment was up 7.9% and government spending jumped 3%. However trade was the surprise weak spot, subtracting 1.1% from headline growth after a surge in imports. This will recover and we doubt it will unleash a new wave of protectionist action from President Trump, who is sounding a little more conciliatory in Davos.Inventories were also heavily run down, which subtracted a further 0.7% from GDP growth. This too will recover given very strong order books as highlighted by very good durable goods orders and bodes well for ongoing job creation.We continue to forecast 3% full year growth for 2018. Strong domestic momentum will be boosted somewhat by tax cuts, while dollar softness puts the US in a great position to benefit from the global upturn in demand. We also see the growing potential for inflation to hit 3% in the summer as high energy prices, the unwinding of distortions relating to cell phone data plans, rising medical and housing costs and the potential for wage rises add to price pressures. Consequently, our current forecast of three Fed funds rate rises this year may be too conservative.
Dennis de Jong, managing director at UFX.com, said:
President Donald Trump will be disappointed today after the fourth-quarter GDP figures showed his initial targets have fallen short of the mark, but the US is still on a sound financial footing.The Trump administration had targeted 3% growth but despite the latest figures falling below expectations, the President still has reasons to be bullish.
IHS chief economist: Trump could have been worse
Larry Elliott
Nariman Behravesh, the chief economist of consultancy firm IHS Global Insight, tells us:
It could have been worse, but he should have stuck to the script.The prepared comments were fine. It was only when he got into the Q&A....
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