Stocks Slide After Trump Threatens Government Shutdown Over Wall Funding, Killing NAFTA

Wednesday, August 23, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Aug 23, 2017

Yesterday, when stocks surged at the market open following Politico’s report that Trump is unexpectedly “making strides” on tax reform, we warned that “it can all be wiped away as soon as tonight, when Trump will deliver a speech to his “base”, in which he may promptly burn any of the goodwill he created with capital markets following his far more conventional Afghanistan speech last night.” That’s precisely what happened, because on Tuesday night, in another fiery campaign rally, Trump fiercely defended his response to violence in Charlottesville, made passing remarks from a teleprompter about the need for unity and inclusion before veering off-script to attack the news media, Democrats and even Republicans in the Senate whom he accused of distorting his response and blocking his agenda.

But what spooked markets, and what has sent both US futures and European stocks lower, was Trump’s threat to bring the U.S. government to the brink of a shutdown if needed to pressure Congress into funding the border wall that was a centerpiece of his 2016 campaign, stoking renewed fears that the debt ceiling debate will be far more contentious that the market expects.

Delivering a warning to Democratic lawmakers who have objected to his plans to construct a wall along the U.S.-Mexico frontier, Trump called them “obstructionists” and said that it was time for the U.S. to crack down on illegal immigration. “If we have to close down our government, we’re building that wall,” Trump told thousands of supporters gathered in Phoenix for a campaign-style rally. “One way or the other, we’re going to get that wall.” As Trump spoke, S&P500 futures reversed gains to slip as much as 0.3% as Trump spoke.

As Bloomberg notes, Trump has asked for $1.6 billion to begin construction of the wall, with Congress under pressure to pass some kind of spending bill to keep the government open after Sept. 30. But Republicans in Congress haven’t shown much appetite for fighting to spend potentially billions more on a border barrier either. The funding would add to the deficit at the same time Republicans are trying to figure out how to pay for tax cuts.

Separately, the yen strengthened, while the Mexican peso weakened 0.2 percent as the president also said he might terminate the North American Free Trade Agreement at some point: “Personally, I don’t think we can make a deal because we have been so badly taken advantage of. They have made such bad deals, both of the countries, but in particular Mexico, that I don’t think we can make a deal. So I think we’ll end up probably terminating Nafta at some point. I personally don’t think we can make a deal without termination, but we’ll see.”

The Rest…HERE

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