Ex-Trump Advisor Predicts 'Global Cryptocurrency'

Global Stock Markets

Gary Cohn, the former Goldman Sachs executive who led Donald Trump's National Economic Council until last month, weighed in on bitcoin and blockchain technology on Tuesday.

I'm not a big believer in bitcoin, I am a believer in blockchain technology, says Cohn

He then made a bold prediction about the future of the tech, telling the network:

Cohn clarified that this global cryptocurrency would not be "based on mining costs and costs of electricity and things like that," a reference to the power-hungry mechanism that bitcoin and other blockchains utilize.

It will be a more easily understood cryptocurrency that will probably have some blockchain technology behind it, but it will be much more easily understood how it's created and how it moves and how people can use it, he remarked.

Cohn was prompted by a question about Goldman Sachs' decision, revealed last week, to launch a bitcoin futures trading desk.

Cohn became Goldman Sachs' president and chief operating officer in 2006. He remained in the post through the aftermath of the financial crisis, which his firm was widely seen as contributing to through its mortgage-backed securities business.

When Trump took office in January 2017, Cohn left Goldman to serve as director of the National Economic Council. In March 2018 it was reported that he would resign, a decision that likely reflected his opposition to the Trump administration's proposed tariffs. Cohn left the post on April 2.

Trump's tariffs prompting some U.S. fund managers to look overseas

Global Stock Markets

President Donald Trump’s announcement of import tariffs, and the prospect of retaliation by other countries, is prompting some fund managers to pare their holdings of U.S. stocks and look for opportunities overseas. 

The high turnover of key staff in the White House, including the exit of Gary Cohn, the director of the National Economic Council this week is undermining confidence in policy making also. 

President Trump said Thursday that he would begin imposing import tariffs of 25 percent on steel and 10 percent on aluminum in 15 days, sparking fears of a global trade war. 

Gary Cohn, the chief economic adviser to Trump, who argued against trade protectionism, resigned late Tuesday after Trump first announced the tariff plan and his successor has yet to be named. 

Fund managers from Oppenheimer, Federated, and Wells Fargo are among those that now see international and emerging market equities as more attractive than the U.S., where the prospect of higher interest rates contributed to a slump in stocks in February, leaving the benchmark S&P 500 stock index up about 2.0 percent for the year-to-date, after turning in a 7.0 percent gain in January. 

Overseas stocks, by comparison, are benefiting from synchronized economic growth in both Europe, Asia and the Americas, but offer lower valuations. 

The gross domestic product of countries in the eurozone, for example, expanded at a 2.7 percent annual rate in the fourth quarter, outpacing the 2.5 percent gain in the U.S. economy over the same time. 

The Stoxx 600, an index of companies in the eurozone, trades at a trailing price to earnings ratio of 14.9, compared with a 22.7 P/E ratio for the S&P 500, according to Thomson Reuters data. 

Emerging markets such as China and Russia also look attractive given their prospects for economic growth and low equity valuations, he said. 

In the U.S., meanwhile, a Democratic party takeover of at least one branch of Congress in elections in November would bring more stability to Washington by curbing President Trump’s ability to expand protectionist policies, he said. 

Overall, U.S. fund managers have been reducing their stake in domestic stocks as interest rates rise, making bonds more attractive. 

U.S. balanced funds, which hold both equities and bonds, now have an average of 55 percent of their assets in stocks, a 4.0 percent decline from 2014, and nearly 41 percent of their assets in bonds, according to Lipper data. 

Yet Ashwin Alankar, head of global asset allocation at Janus Henderson Investors, said that he remains a fan of large-capitalization U.S. stocks despite the likelihood of higher trade costs and inflation. 

The recently-passed U.S. corporate tax cuts provide on-going fiscal stimulus that should balance out higher interest rates, he said, a boost to stock prices that is not found in other markets.

Global stocks sag as key Trump adviser quits, stoking trade war fears

Global Stock Markets

Global stocks and the dollar fell on Wednesday after a strong advocate of free trade resigned from the White House, fanning fears that U.S. President Donald Trump will proceed with protectionist tariffs and risk a trade war. 

Economic adviser Gary Cohn, seen as a bulwark against protectionist forces within the Trump administration, said on Tuesday he was leaving, sparking a global sell-off across a number of major asset classes.

MSCI’s world equity index, which tracks shares in 47 countries, was down 0.2 percent, having seen some strength in Asian trading following news that South and North Korea would hold their first summit in more than a decade.

The pan-European Stoxx 600 was down 0.4 percent, with Germany’s DAX, home to many export-led companies, down 0.5 percent.

European car-makers, which face the risk of a hike in import tariffs to the United States, were among the worst performers, falling 1.1 percent. 

Equity futures pointed to the U.S. S&P 500 index opening 0.8 percent lower.  

Cohn’s departure rippled through foreign exchange markets, with the U.S. dollar falling 0.4 percent and 0.2 percent respectively against the Japanese yen and Swiss franc — both seen as safe-havens in times of uncertainty.

The dollar is just off a 14-month low against the yen hit on Friday.

The Canadian dollar and the Mexican peso both retreated by around 0.5 percent against the dollar as Cohn’s departure was seen as raising risks that Washington could walk away from NAFTA negotiations.

Other emerging market currencies that typically move in sympathy with the dollar were lower, with the South African rand and Russian rouble both down around 0.5 percent against the dollar.

Commodities fell on worries that trade friction could slow global growth, with Brent crude futures giving up the previous day’s gains to drop 1.2 percent.

Copper on the London Metal Exchange lost 0.9 percent, paring a 1.4 percent gain from the previous session.

European government bonds rallied, with yields across the euro zone falling by 1-3 basis points, following similar strengthening in U.S. Treasuries overnight.

FTSE runs out of steam; global investors fret over resignation of Gary Cohn

European Stock Markets

A two-day rally of British stocks ran out of steam on Wednesday after the resignation of U.S. economic advisor Gary Cohn caused global investors to fret over the U.S. administration’s shift towards protectionism, stoking fears of a trade war. 
 

The FTSE 100 was flat by 0926 GMT, outperforming European peers thanks to strong gains in engine maker Rolls Royce after results. The blue-chip index still languished near 14-month lows hit last week.

Trade fears caused metals prices to slip, driving miners Glencore, Anglo American, BHP Billiton and Rio Tinto down 1.9 to 2.4 percent.

Oil prices also tumbled, sending oil majors BP and Royal Dutch Shell down 0.7 percent.

Rolls Royce shares charged ahead, up 14.1 percent after its turnaround plan boosted profit ahead of expectations.

The sharp rise in share price could be down to investors unwinding short positions in the stock, traders said.

Astec Analytics data showed the cost to borrow Rolls Royce shares has risen over the past month, indicating increased interest in shorting the stock leading up to these results.

Just Eat shares recovered slightly from the previous day’s results-driven losses, up 2.8 percent.

Paddy Power Betfair shares however fell 5 percent, the worst-performing on the FTSE after the betting company reported full-year results in which analysts said lower guidance disappointed investors.

WPP was also a notable faller, down 1.8 percent after the latest blow to the advertising agency model which has come under increased pressure.

U.S. consumer goods giant Procter & Gamble was reported to be cutting ad agency spending by $1.25 billion over the next three years to focus on internal analytics instead.

French advertising peer Publicis fell 2 percent to the bottom of the CAC 40.

Hill & Smith shares jumped 10 percent, set for their best day in nearly two years, after the infrastructure products maker reported record revenue and profits in its full-year results.

Overall analysts have been revising earnings lower for the FTSE 100 in the past weeks as the index struggles at 14-month lows.