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What Happens Next? JPMorgan Has An Unpleasant Answer

Courtesy of Zero Hedge

Having done the "good cop" routine earlier today, when it explained why a Trump impeachment is "very, very unlikely" despite growing media speculation that VP Mike Pence may be preparing to step into the Oval Office, now it's JPMorgan's turn to play bad cop when previewing "what comes next" for both markets and politics. The reason for that is that according to JPM's Adam Crisafulli is that question is "one of the market's problems" because there simply "isn't any quick action that would help to alter the narrative in Washington" resulting in a quick and painless resolution.

Here is the full note:

What comes next? That question is one of the market’s problems. There isn’t any quick action that would help to alter the narrative in Washington. Congress could pass some legislation but there isn’t any consensus around the “big 3” pieces of the agenda.

Trump’s overseas trip (the first of his presidency), naming a credible and acceptable Comey replacement (could happen within days), and publication of the WH F18 budget (due early next week) will help change the conversation somewhat but the Russia/FBI headlines are unlikely to abate anytime soon (the conversation around impeachment is very, very premature – see earlier).

The month of May has been pretty quiet on the news front but that will change next week. Of all the events scheduled for the week of 5/22, the most important will likely be the flash PMIs on Wed (the first major eco data point for the month of May), the FOMC minutes on Wednesday (given the importance Fed policy will play in TSY yields).

As a reminder, Wednesday will be a critical day for another reason: that's when James Comey is scheduled to testify. In other words, the selloff that started today – driven largely by political fears and uncertainty – may get some resolution only a week from today, when depending on what Comey says, the DC scandal may blow over at least partially… or alternatively could get much worse.


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