There’s a lot of uncertainty about just what Trump is planning… but that’s not stopping markets from getting excited.
Things are suddenly bullish in America.
After Trump’s “shock” win a few weeks back, suddenly markets are thinking, you know what, maybe things aren’t that bad. Maybe things are actually awesome.
I’m not sure there’s all that much to hang your hat on here. Trump is still a wild-card. His campaign was rich with rhetoric but light on details. Who really knows where we go from here?
That’s not an argument for pessimism mind you. I’m only saying that the best we can do is wait and see.
But it’s not too hard to see why markets are excited. It’s 50% about where Trump is taking America, and 50% about where America is at right now.
Because the truth of it is that Trump will inherit some of the best economic conditions in a while.
Unemployment is down, job creation is up, and wages growth is accelerating. At the same time, GDP just posted its biggest quarterly gain in 2 years.
So Trump has everything going for him, economically speaking. The only question is what he goes and does with it.
On that front, as I say, there’s nothing but a whole lot of unknowns. But still, the general consensus is that President Trump will be either ‘very stimulatory’ or ‘extremely stimulatory’.
If we take some of the big ticket items that seem to be locked in – in the sense that it would be politically difficult to back out now, we can see just what kind of effect they would have.
UBS have modelled these big ticket items – including a hu-uge reduction in taxes (to 15% for corporations) and a big build up in military and infrastructure investment.
Under this scenario, where the government is ramping up its spending, while slashing its income, the government debt explodes – from a current level of 75% of GDP now, to around 105% of GDP in 2026.
Again there’s a lot of doubt about whether debt-hawks in the Republican party – like Tea Party radicals – are going to let him get away with blowing up the deficit, but for now we’ve just got to take it at face value.
But whatever happens, the direction is clear. Trump’s strategy of reducing tax and increasing spending is going to be a big shot in the arm for the economy in the short run.
In the long run it’s not so clear. A strategy of piling up massive debt is not sustainable forever.
But the markets don’t care about the long run. All they care about is the here and now.
And the here and now looks positively bullish!
Can Trump pull this kind of policy strategy off?
hmm..doubtful. trump is gonna be the ‘fallguy; i am afraid. the globalists have made the decision to go along with the change, but storm clouds will arrive. m.s.m. is headed for the trash can. nobody trusts them in america anymore. they revealed themselves as trash can material after the mess of the rigged polls. the famous criminal who bought the new york times is already wailing about massive reductions in the sales of his ‘newspapers’. alternative news sites are having a rough time of it through google, twitter and mark suckerbergs facebook. but they will thrive again soon now that trump is in. he might even close down facebook and twitter. it seems though that in the land of oz we are still in a fog about overseas ‘news’ and events mainly because our m.s.m. is still believed. . many people here still believe in h.r.c. amazing. this bitch has been responsible for the deaths of thousands of libyans, ukrainian and syrian peoples and she doesn’t give a rats arse about it. she ia apparently in hiding now and will live soon in qater where she has US$1.8bn stashed in the qatar central bank. obama is gonna scoot soon too. he has purchased as many as 5 mansions in dhubai. many billions have ‘disappeared’ from the u.s. treasury. in obamas reign national debt has gone from US$10tn to almost US$20tn..in just eight years. then there is the pedaphile scandal and child sex slave rackets involving the clintons and blessed by obama. and you call this democracy? there are a lot of hands to be played out yet in the game. but the upshot is that the rich will get richer and the poor…well its the same story folks.