Are hurricanes and missiles backing Trump and Mr. Abe? TAKIZAWA Chicago Letter
The movement of gold that surpassed the 1300 level yesterday.
Today, other assets followed suit (bonds and equities/FX).
The catalyst is North Korea's missiles.
This should be the second time a missile has passed over Japan.
But is this exaggerated coverage the result of testing the J-Alert?
A boost for Abe, given the looming by-election.
As a result, the market, which should have moved yesterday (in response to gold),
appears to be chasing it today.
There is an artificial sense of dissonance, so
I don't want to follow this movement.
More importantly,
here, the political impact of the hurricane is becoming significant.
Insurance losses, said to be Katrina-level,Citi's forecast is $20B. (Katrina was over $40B)
Overall economic damage, GS expects $30B.
This time's relatively low insurance claim amounts are not good news.
Texans, who have always disliked insurance. In Houston, the city most affected,
Only less than 20% have flood insurance from the government. In other words,
the insurance payout and the subsequent economic damage are inversely related.
That is where Texas politicians began to act.
Ted Cruz, aligned with the TEA PARTY, was tough in other states as well,
and now is urging special legislation for Texas right away.
For Texas's GDP is the second largest in the US after California (New York is third)
In recent years, the Dallas economy has suffered from low oil prices, but
if the hurricane stalls Houston, the national impact will be significant.
However, depending on the response, the hurricane could be an opportunity for Trump.
Trump will use relief as leverage for Obamacare and tax-cut measures, etc.,
and the stance of fiscal conservatives who have strongly opposed them is expected to soften.
Leading conservatives are Texas lawmakers.
In other words, if Trump uses this opportunity well,
there is also a chance that bills could advance rapidly in the opposite direction.
In that case, bond prices would fall (yields rise).
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