Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Stock Market Bulls Last Stand? - 18th Mar 18
Putin Flip-Flops Like A Drunken Whore On Bitcoin Cryptocurrency Legalization - 18th Mar 18
How to Legally Manipulate Interest Rates - 18th Mar 18
Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - 18th Mar 18
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18
DasCoin: A 5-Minute Guide to How It Works - 15th Mar 18
Stock Market Downward Pressure Mounting - 15th Mar 18
The Stock Market Trend is Your Friend ’til the Very End - 15th Mar 18
6 Easy Ways to Get What Women Want, for Less! - 15th Mar 18
This Isn’t Your Grandfather’s (1960s) Inflation Scare - 15th Mar 18
Eye Opening Stock Market Index, Volatility, Charts and Predictions - 15th Mar 18
Gold Cup At Cheltenham – Gold Is For Winners, Not For Gamblers - 15th Mar 18
Upcoming Turnaround in Gold - 14th Mar 18
Will the Stock Market Make Another Correction this Year? - 14th Mar 18
4 Ways To Writing An Interesting Education Research Paper - 14th Mar 18
China Toward Sustainable Economic Growth - 14th Mar 18
Stock Market Direction Is No Longer Important - 14th Mar 18
Trade Tariffs Defeat Globalists and Return Prosperity - 14th Mar 18
Stock Market Crash is Underway and Cannot be Stopped! - 14th Mar 18
Are Energy Sector Stocks Bottoming? - 14th Mar 18
Nasdaq Stocks Soars to New Record High After Strong Job Reports - 14th Mar 18
Bitcoin BTCUSD Elliott Wave View Calling for Rally toward $15,000 - 13th Mar 18
Hungary’s Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony - 13th Mar 18
Record Low Volatility in Precious Metals and What it Means - 13th Mar 18
Tips for Writing and Assembling the Classification Essay - 13th Mar 18
Gerald Celente "If Rates go up too High, the Economy goes Down, End of Story" - 13th Mar 18
Stock Market Selloff Showed Gold Can Reduce Portfolio Risk  - 13th Mar 18
Silver Does it Again! Severe Consequences - 12th Mar 18
Has the Stock Market Rally Run Out of Steam? - 12th Mar 18
S&P 500 at 2,800 Again, Stock Market Breakout or Fakeout? - 12th Mar 18
The No.1 Energy Stock To Buy Right Now - 12th Mar 18
What Happens Next When Stock Market Investor Sentiment is Neutral - 12th Mar 18
Economic Pressures To Driving Gold and Silver Prices Higher Long-Term - 12th Mar 18
Labour Sheffield City Councils Secret Plan to Fell 50% of Street Trees Exposed! - 12th Mar 18
Stock Market Uptrend Resuming? - 11th Mar 18
Bond Market Interest Rate Yields Are Rising Again… Stocks Are on Thin Ice - 11th Mar 18
Death of Europe's Greenest City, Police State Sheffield Labour Council to Fell 50% of Street Trees - 11th Mar 18
Do All Bull Stocks Markets Need to Have a Bearish Divergence? - 11th Mar 18
An Inflation Indicator to Watch, Part 3 - 11th Mar 18
Online Stock Trading Tips - Tips about Online Trading & Day Trading - 11th Mar 18
NDX makes a new high. What does that mean? - 10th Mar 18
Blue Chip Companies on Track for $800 billion Buyback Record in 2018 - 10th Mar 18
Cheap Gold Stocks Basing - 10th Mar 18
An Introduction to Online Forex Trading - 10th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

The Stock Market No Longer Cares About Trump

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

By: John_Mauldin


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 - 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