Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18
Stock Market Investing 2018 - “I Hope I’m Making a Bad Buy” - 11th Jan 18
S&P 500 Fluctuates As Stock Market May Be Topping, Or Not? - 11th Jan 18
SPECTRE Microprocessor Security Flaw - Big Brother = You - 11th Jan 18
7 Market Forecasts 2018 from the Brightest Financial Minds I Know - 11th Jan 18
It’s Not Enough to Be Contrarian - 11th Jan 18
Stocks That Take One for A Roller Coaster Ride Through the Thick And Thin Of Every Single Investment Made - 11th Jan 18
Police Arrest Tree Protester on Meersbrook Park Road, Sheffield - 10th Jan 18
Stock Market Aggressive Sell Signals - 10th Jan 18
The 2018 Decline in Precious Metals - 10th Jan 18
Gold Hits All-Time Highs Priced In Emerging Market Currencies - 10th Jan 18
TMV : 3X Leveraged Short on US Treasury Bonds - 10th Jan 18
Here are the Key Levels in Gold & Gold Miners - 10th Jan 18
Investment Advice That Probably No One Gave You Before - 9th Jan 18
S&P 500 Sets Another Record, But This May Be Short-Term Top - 9th Jan 18
Failure of War Party Foreign Policy - 9th Jan 18
Buying a Land Rover Discovery Sport HSE Black - Interior Review - 9th Jan 18
More Important Than Gold’s Bottoming Price - 9th Jan 18
Getting Bullish on Gold - 9th Jan 18
Share Market Is One Of The Most Encouraging Opportunity For Young... - 9th Jan 18
Stock Market Close Call... - 8th Jan 18
If You Hold VT Or Any Other Global ETF, You’ve Put All Your Eggs In One Basket - 8th Jan 18
Blowup with China or North Korea Could Change Almost Everything Overnight - 8th Jan 18
The Real LORAX and Once-ler's of Sheffield's Street Tree Felling's - 8th Jan 18
Share Trading is an Interesting for Everyone - 8th Jan 18
The Way to the New Cold War - 8th Jan 18
A little Stock Market Euphoria? - 8th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

The Stock Market No Longer Cares About Trump

Stock-Markets / Stock Market 2017 Aug 21, 2017 - 04:32 PM GMT

By: John_Mauldin

Stock-Markets

BY JARED DILLIAN : I typically stay away from politics. Besides, you probably get enough of it on Facebook!

But I don’t stare at politics every day. I stare at markets every day, and I am pretty comfortable saying that my knowledge of markets is smarter and more incisive than most people’s.

And you know what I have noticed about markets lately?

They don’t care about Trump.


The Market Has Learned That Trump Is All Talk

When Merck CEO Ken Frazier stepped down from the President’s Manufacturing Council on account of Trump’s remarks on Charlottesville, did you see Trump’s reaction?

That sounds like a direct threat of litigation to me. You know what Merck stock did in response?

It went up.

That isn’t supposed to happen. Do you remember this tweet from Hillary Clinton during the presidential campaign?

That one tweet sent the entire biotech sector into a bear market that lasted eighteen months.

Is Hillary more powerful than Trump? That isn’t the right way to look at it. Hillary was just a candidate at the time. Trump is actually president. But the market ignored Trump and listened to Hillary.

The market believes that Hillary’s threat was more credible than Trump’s.

By a lot.

Trump Has Lost All His Credibility

The stock market just does not give a crap about what President Trump says. He tweets about the market, about individual companies, on a pretty regular basis… and the market stopped caring a while back.

The market is smart. The market knows that Trump can’t or won’t follow through on any of his statements.

Is Trump really going to go after the pharmaceutical industry? He might want to, but no other Republican is interested in doing that.

But if you told me a year ago that a sitting president would issue a direct threat to an individual company and the stock would be up on the day… madness.

Part of this is a function of the fact that this is the biggest bull market ever—every dip is bought and every vol uptick is smashed. Stocks react to things differently in a bull market than a bear market.

But there are broader implications here, too. If Trump has already lost credibility with the stock market, who might he lose credibility with next?

Tax Reform Is His Last Chance

Right now, I give tax reform a 30 delta. That’s options language for saying it has a 30% chance of happening.

Maybe less.

Tax reform is very important. I think the prospects for it passing account for virtually all of the market’s 20% gain since election night. It’s basic equity valuation—stocks are valued on after-tax cash flows. Lower tax rates equal higher stocks.

Not only does corporate reform look less likely, but there has been open discussion of higher individual tax rates. Not encouraging.

The world looks a lot less hopeful than it did in those first few days after the election, when Trump was busy assembling an economic dream team.

Let me put it this way—if the Democrats are successful in the midterms, and if they are successful in 2020, tax rates are not going down.

Sorry to be a bit of a downer, but nobody else is doing their job.

Trump’s Team Wont Last Long

If you watched Trump’s inexplicable press conference at Trump Tower on Tuesday afternoon, you probably saw Steven Mnuchin and Gary Cohn over his right shoulder, looking a bit uncomfortable.

Remember the halcyon days post-election, when everyone said Trump was fine because he was going to surround himself with good people?

(In my experience, it never works that way.)

What happens if those good people leave?

Since the press conference, Cohn has already expressed dismay about Trump’s remarks. I suspect he is trying to hold on for 1) tax reform and 2) a Fed chair nomination. We’ll see how much longer he can last.

Between Kelly, McMaster, Mattis, Cohn, and Mnuchin, Trump really does have some safe hands in the administration. If they leave—and they probably will, at some point—smell you later, stock market.

My Prediction

Here is my prediction: In a few years’ time, maybe sooner, people will have figured out that Trump is a lot of talk and not much else. About everything.

That is not good.

It has implications for legislation we might want to pass, like tax reform.

It has implications for foreign policy. Like, what if there is no actual fire and fury? Just a lot of hot air?

The biggest risk for Trump isn’t that people successfully oppose him—

It’s that people ignore him.

The prediction that Trump would cause volatility so far has been wrong. It might be one of those predictions that ends up being right in the long run.

Get Thought-Provoking Contrarian Insights from Jared Dillian

Meet Jared Dillian, former Wall Street trader, fearless contrarian, and maybe the most original investment analyst and writer today. His weekly newsletter, The 10th Man, will not just make you a better investor—it’s also truly addictive. Get it free in your inbox every Thursday.

John Mauldin Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules