Market’s ‘Trump Irrational Exuberance’ Begins to Fade
Don’t get me wrong. Scott Sumner at Money Illusion is always saying that the President is not as important as people think s/he is. And if this is true, it’s no more true than regarding the economy-and the market.
Many on CNBC make it sound as if the market has rallied because Trump won whereas I think it’s pretty plausible the market would have won with a Hillary win as well. To an extent the market rallied on November 9 not because Trump won particularly but because someone won.
The market hates uncertainty. And why would the market be expected to do worse under President Hillary Clinton than under Obama where it had performed very well?
Now it’s arguable that certain sectors-the bank stocks-rallied so sharply because of Trump specifically. After all, he had vowed to end Dodd-Frank. No matter what he clearly plans a lot more deregulation-already is doing it in fact by putting people in charge of agencies that don’t believe in those agencies.
So I can buy the banks shot up like a rocket with the prospect that they will face a much more lax regulatory environment.
Of course, now it’s beginning to dawn on the market what I had suspected all along: Trump and the GOP won’t be nearly as effective as the market assumed. The Street really seemed to think that Trump and the GOP were going to easily ram through their whole agenda in a matter of days.
Now they’r getting the picture that Trump is not nearly as strong as they assumed. Indeed, everything we’ve seen suggests he’s a weak and ineffective leader-as far as getting things through Congress.
This brings us to the fight over Trumpcare. A Trump Tantrum could be coming if this fails today.
“The Trump Trade could start looking more like a Trump Tantrum if the new U.S. administration’s health-care bill stalls in Congress, prompting worries on Wall Street about tax cuts and other measures aimed at promoting economic growth.”
“Investors are dialing back hopes that U.S. President Donald Trump will swiftly enact his agenda, with a Thursday vote on a health-care bill a litmus test which could give stock investors another reason to sell.”
“If the vote doesn’t pass, or is postponed, it will cast a lot of doubt on the Trump trades,” said the influential bond investor Jeffrey Gundlach, chief executive at DoubleLine Capital.
That’s the key. The market had previously priced in Trump would swiftly enact his agenda. The market has been slow but they’re starting to see now this may not be the case.
He has though very swiftly become the object of a counterintelligence investigation of whether or not he coordinated with Russian subversion of our elections. So somethings are going quickly.
As for the healthcare bill, there has been no sign it has the votes-this is just in the House! Yet Ryan is just going to go out on the floor today and hope for the best, apparently.
Ryan bring bill to the floor— even if he isn’t sure it has the votes https://t.co/rhWewQZWG2 Gotta say it — Pelosi would NEVER do this
— Jennifer Rubin (@JRubinBlogger) March 22, 2017
If it goes down, Trump will have a tantrum. Talk about ‘feature not a bug.’
P.S. As we saw in my poll out last week, the long awaited poll results are in, and right now I’m just 11 points down vs. Peter King (GOP-NY-District 2). And the voters don’t even know who I am yet.
There is nothing more important in getting answers to Trump-Russia collusion than a Democratic House in 2019. Please donate to help me in my part of the effort to fight for a Dem House.
Thank you. We must have a Dem House. And so, we will.