Steve Bannon's firing has sent shockwaves through Washington. Credit: Alex Brandon/ AP Photo
Steve Bannon's firing has sent shockwaves through Washington. Credit: Alex Brandon/ AP Photo
Steve Bannon's firing has sent shockwaves through Washington. Credit: Alex Brandon/ AP Photo
Steve Bannon's firing has sent shockwaves through Washington. Credit: Alex Brandon/ AP Photo

Steve Bannon firing: Winners and losers


Joyce Karam
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The ousting of Donald Trump’s chief strategist and campaign victory architect Steve Bannon has sent shockwaves across Washington, given what the former official represented in the alt-right nationalistic movement and what his exit could mean for US policy.

CNN reported on Friday that Mr Bannon was given the option “to resign” but was instead fired. White House Press Secretary Sarah Sanders confirmed his exit in a statement confirming that "White House Chief of Staff John Kelly and Steve Bannon have mutually agreed today would be Steve's last day. We are grateful for his service and wish him the best.”

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Mr Bannon is seen as one of the most controversial personas in modern US politics and his White House exit after seven months in the job is a statement to that divide around his policies. To his adversaries, he is a dangerous anti-Globalization radical who will stop at nothing to gut the system. And for his supporters, he is a champion for an America First doctrine, and a force to help undo trade agreements and shock the political system.

In that context, the winners and losers from Mr Bannon’s ouster can be categorised as following:

Winners:

1- HR McMaster:  The US National Security Adviser spared no time to get in Mr Bannon's way shortly after he assumed office last February. It was Mr McMaster's efforts that pushed Mr Bannon out of the national security principals committee last April, leading up to firing of four senior officials from the national security council who close to Mr Bannon.  In the last two weeks, Mr Bannon's allies outside the government including Mike Cernovich flooded the internet with anti-McMaster leaks and stories.

In response to being asked on Sunday if he could still work with Mr Bannon, the former General told NBC: “I am ready to work with anybody who will help advance the president's agenda and advance the security, prosperity of the American people.”

2- Chief of staff John Kelly: Mr Kelly is the only name mentioned in the White House statement announcing Mr Bannon's exit. The ousting, which comes three weeks after the retired General took over as chief of staff, is a major win for Mr Kelly, who is looking to enforce a more organised and less ideological operation in the White House. Mr Kelly according to The Daily Beast was keeping a close eye on Mr Bannon, whom many suspected to be "a major source of smears, leaks, and bitter infighting".

New Yorker Jared Kushner (R) was often at odds with Mr Bannon (L) on policy decisions. Credit: Kevin Lamarque/ Reuters
New Yorker Jared Kushner (R) was often at odds with Mr Bannon (L) on policy decisions. Credit: Kevin Lamarque/ Reuters

3- The New Yorkers and Mike Pence: The Trump family in the White House, mainly his son-in-law Jared Kushner, daughter Ivanka, as well as other New Yorkers, economic adviser Gary Cohn and deputy national security adviser Dina Powell were at odds with Mr Bannon on policy decisions and sphere of influence. Whether the topic is healthcare law, wall street, or a White Supremacist march in Charlottesville, the New Yorkers around Mr Trump were more in the moderate camp than Mr Bannon. His exit will help, and Mr Kelly's tighter operation will help their case.

Vice President Mike Pence, whom Mr Bannon tried to undermine on foreign policy and with European allies, also stands to reap the benefits from his exit. The Vice President himself is a Republican establishment figure, whom Mr Bannon had a troubled relation with.

4- Europe, Pope Francis and China: "We're at economic war with China...One of us is going to be a hegemon in 25 or 30 years and it's gonna be them if we go down this path" Mr Bannon said in an interview on Wednesday. He viewed China as a main rival for United States, and advocated more hawkish policies toward Beijing on currency and trade.

Mr Bannon also viewed the European Union as a flawed construct and threatened in February to do business with the countries only on bilateral basis.

Pope Francis will be glad to see the back of Mr Bannon. Credit: Franco Origlia / Getty Images
Pope Francis will be glad to see the back of Mr Bannon. Credit: Franco Origlia / Getty Images

Pope Francis and the Vatican were also at odds with Mr Bannon, and accused him of promoting “apocalyptic geopolitics” and trying to align with hardliners in the Catholic church against the reformist Pope.

Losers from Bannon’s exit:

1-The Alt-Right movement in the US: They view Mr Bannon as a hero and someone who champions their ideas on immigration, anti-trade policies, and more rigid border control. His ascension in the Trump campaign and into the White House might be the closest the movement will ever get to the Oval office.

2-Bannon's allies in White House: West Wing officials as Sebastian Gorka or Michael Anton who are closely ideologically aligned with Mr Bannon could be feeling the heat after his departure. An empowered John Kelly could continue the reshuffle and bring a more coherent team to place especially if the leaks continue after Mr Bannon's departure.

Far-right leader Marine le Pen was admired by Mr Bannon. Credit: Michel Euler / AP
Far-right leader Marine le Pen was admired by Mr Bannon. Credit: Michel Euler / AP

3-The Anti-Globalist movement: Represented today by Nigel Farage and Marine Le Pen, who have lost an ally in the White House with Mr Bannon's exit. According to Politico, Mr Bannon admired "the anti-immigrant policies and economic nationalism of National Front leader Marine Le Pen" who lost the election in a landslide to Emmanuel Macron last May.

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What should do investors do now?

What does the S&P 500's new all-time high mean for the average investor? 

Should I be euphoric?

No. It's fine to be pleased about hearty returns on your investments. But it's not a good idea to tie your emotions closely to the ups and downs of the stock market. You'll get tired fast. This market moment comes on the heels of last year's nosedive. And it's not the first or last time the stock market will make a dramatic move.

So what happened?

It's more about what happened last year. Many of the concerns that triggered that plunge towards the end of last have largely been quelled. The US and China are slowly moving toward a trade agreement. The Federal Reserve has indicated it likely will not raise rates at all in 2019 after seven recent increases. And those changes, along with some strong earnings reports and broader healthy economic indicators, have fueled some optimism in stock markets.

"The panic in the fourth quarter was based mostly on fears," says Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company. "The fundamentals have mostly held up, while the fears have gone away and the fears were based mostly on emotion."

Should I buy? Should I sell?

Maybe. It depends on what your long-term investment plan is. The best advice is usually the same no matter the day — determine your financial goals, make a plan to reach them and stick to it.

"I would encourage (investors) not to overreact to highs, just as I would encourage them not to overreact to the lows of December," Mr Schutte says.

All the same, there are some situations in which you should consider taking action. If you think you can't live through another low like last year, the time to get out is now. If the balance of assets in your portfolio is out of whack thanks to the rise of the stock market, make adjustments. And if you need your money in the next five to 10 years, it shouldn't be in stocks anyhow. But for most people, it's also a good time to just leave things be.

Resist the urge to abandon the diversification of your portfolio, Mr Schutte cautions. It may be tempting to shed other investments that aren't performing as well, such as some international stocks, but diversification is designed to help steady your performance over time.

Will the rally last?

No one knows for sure. But David Bailin, chief investment officer at Citi Private Bank, expects the US market could move up 5 per cent to 7 per cent more over the next nine to 12 months, provided the Fed doesn't raise rates and earnings growth exceeds current expectations. We are in a late cycle market, a period when US equities have historically done very well, but volatility also rises, he says.

"This phase can last six months to several years, but it's important clients remain invested and not try to prematurely position for a contraction of the market," Mr Bailin says. "Doing so would risk missing out on important portfolio returns."

The biog

Born: Kuwait in 1986
Family: She is the youngest of seven siblings
Time in the UAE: 10 years
Hobbies: audiobooks and fitness: she works out every day, enjoying kickboxing and basketball