Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

© 2005-2019 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