Political Risks Ahead: FBI Director Testimony & Paris Climate Deal

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For the past few weeks, the political situation has been deteriorating in the US especially after the termination of the FBI Director James B. Comey.

The global equities took a hit for a few days but recovered once again, and we are now approaching new record highs across the board.

However, things are about to change and might get even worse, and traders are advised to be very careful over the coming days/weeks as political risks might overshadow any fundamental figures.

Risk #1: FBI Director Testimony

The US senators expect the former FBI director, James B. Comey, to testify next week about his conversations with President Trump.

The Congress is trying to test the White House willingness to cooperate with the investigations into Trump’s associates.

This story began when the US President decided to fire the FBI director, and the White House noted that the termination came on the back of some recommendations from many departments in the US, recommending a fresh start.

Everyone thought that this was normal, despite the fact that the FBI played a good role in the recent election.

However, few days after the termination of the FBI Director, reports started to circle, saying that Trump asked the FBI director to let go the investigation about Trump’s former national security advisor, who resigned few days after his appointment.

Risk #2: The US Drops Climate Change Accord

Trump wants his presidency to be about jobs and his decision to be viewed as an economic win for the United States.

Some reports by the oil industry-backed American Council for Capital Formation found that the deal would eliminate $3 Trillion in GDP and 6.5 million jobs by 2040.

The International Renewable Energy Agency estimated recently that the pact would make the world $19 Trillion richer by 2050 as the cost of energy is likely to drop as the world turns to green energy.

The Department of Energy also noted that 3 million Americans worked in clean energy last year,  a number that would be threatened by a Paris pullout.

If the Trump’s administration fails to show leadership on domestic climate actions and support the Paris Agreement on climate change, it will cede a competitive economic edge to nations like China and others.

In the meantime, we will have to see what would be the Congress input about such decision.

What To Watch Ahead

The biggest political risk for the US and the world is the upcoming testimony of the FBI director. They haven’t set the time as of yet, but it will be as early as next week.

The most important question that the FBI Director will be asked is a yes/no question. Did Mr. Trump ask you to stop the investigation about his former national security advisor?

The Congress is looking for a Yes or No answer and nothing more than that. The Congress need a clear answer to act accordingly.

In both cases, whether the answer is a Yes or a No, the market is expected to show a notable move ahead.

If the former FBI Director decided to say Yes, this would be considered as a nightmare for Donald Trump and the FBI director would take his revenge. A Yes means that the Trump Presidency days are numbered, as the Congress would likely start to draft a plan to impeach/depose Trump.

If the former FBI Director decided to say no, this would confirm Trump’s well-known “ Fake News” claims about the Media in the US, which likely to lead to deeper consequences.