Morning comment - UBS 1/3/2017

Summary

• US President Trump set out his vision of America last night, which included quite a lot of spin and no substance that could be readily discerned. The lack of details may start to worry investors.
• Trump promised millions of jobs will return to America, and will be created by building gleaming railways across the beautiful land (presumably those jobs will not be EPA positions). Trump hinted that he will create millions of jobs by expelling millions of migrants. Who exactly will fill those jobs, with the US at full employment, was not specified.
• Trump referenced lots of spending, but the deficit was not mentioned. There was a vague allusion to a trade protection consumer tax, but as Trump has reneged on explicit protectionist pledges (China as a currency manipulator), it would be unwise to read too much into a vague allusion.
• German consumer price inflation numbers are an important focus – Italian data yesterday showed surprising gains, but the French data fell a little. US personal income and spending data will offer some guidance to Federal Reserve policy in the wake of some more forceful comments from Fed members.