No Trump Card In Comey Delivery

The world has reached a kind of state of non-stop hysteria. This hysteria however, has little to do with the facts, with the reality of the day.

It has everything to do with selling advertising space on news sites. We have gone over this enough before, but yesterday on the Hill in Washington, the moral destitution of the media, politicians, and even lawyers was all too clear. everyone purely took their party line.

Now I don’t think it is this bad in Australia, but we seem to be headed in that direction with freedom of speech only allowed if you have the same view as some people want you to. We need to be watchful, but you know what, we need to, in some ways, be thankful too. For this massive disconnect of even the mainstream media now from reality, to counter the challenges of social media, creates a tremendous investment opportunity.

That the media was constantly talking about 50% property crashes in this country, while we were constantly screaming invest now, gave us all the opportunity to buy property at good prices. Most people were distracted by the various media Armageddon stories. If the press had got it right about property since 2008, which is when we said the bust was over and opportunity abounded, then there would not have been all the great opportunities and the time to select the best possible properties. So, even though it is frustrating at times, that the media is off on some imagined fictional tangent away from the reality of our times, it gives us our precious window of opportunity.

Yesterday former FBI Director Comey have his testimony to the Senate Committee.

The headlines in today’s media screamed “Trump Lied”.

So, of course, most people assumed this was very bad and Trump was now in trouble. When actually, what Comey was referring to was his opinion that Trump lied when Trump made the comment that the FBI was in “disarray". Hardly a wrong doing of any kind really, when the new President is seeking to shake, well just about everything, up. You could say it was unkind, but it certainly isn’t even in the universe of impeachable offences. Media mis-leading at its extreme. Trump was inappropriate perhaps in asking for his FBI Director’s loyalty. Even here though, it is a marginal wrong doing, if at all.

The other issue was Trump saying he “hoped” that the Director would drop the case against someone else. This was highly conversational however and could not be taken as a directive. In fact, Comey did not see it as a directive, though he did see it as a desire from the President. The reason they have meetings is to discuss things, but at no time according to Comey’s testimony did the President clearly direct anything, except to ask Comey to make public the fact that the President was not under investigation in any way. This was and is the case, but Comey had not made it public. Which left a cloud around Trump that should not have been there.

So we don’t have to like President Trump, and while he may have been a little inappropriate, there is no significant event or comment that could at all lead to the impeachment of a President.

The great loss of the day was the respectability of just about everyone else, except Comey and Trump. Comey was forthright and honest, and Trump while not perfect, will come out of this OK.

Financial markets were more spooked by the UK elections where exit polls at the time of writing, and remember these can be totally unreliable, had PM May virtually losing the election. No iron lady this one, her time may already be up. The party will likely dump her as a leader if the exit polls are correct.

All that said, the US stock market continues to firm at all time record highs, and central banks around the world are in no hurry to reduce stimulus. The US Federal Reserve will raise rates this week, but only to the dizzying heights of 1.25%. So my view is that stock prices will continue to climb, and Australian property prices will, in general, maintain slightly lower but still high rates of growth.

There was a momentary stalling in prices recently. This is APRA to be sure, but at the same time, the constant build up of potential buyers on the sidelines suggest any hesitation will not last long.

Remember the outlook is stronger than the media will ever have you believe.

Clifford Bennett // Chief Economist