Wall Street did a lot of celebrating after the election as the stock market demonstrated real Make Plutocracy Great optimism, adding 2000 points between Election Day and Valentine’s Day.
Since then, the romance has started to sour. And it’s not you, it’s Himself.
As reported in the Washington Post,
Wall Street grows bearish on Trump economic agenda as scandals swirl
Wall Street bankers and investors are ratcheting back their already-faded expectations for Republicans to deliver wins that turbocharge the economy after a week of turmoil in the nation’s capital that whipsawed markets.
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“With the distractions building in Washington, we’re becoming that much more convinced of the challenges to getting major policy implemented,” said Michelle Meyer, chief U.S. economist for Bank of America, adding the bank hasn’t officially changed its forecast “because events are moving so quickly.”
“The political outlook has changed considerably over the last couple of weeks,” Goldman Sachs analyst Alec Phillips wrote in a Friday note to clients. In part because the investigation into Russia’s alleged meddling in the election and Trump aides’ suspected Russia ties has “clearly escalated,” he downgraded the chances for any tax package this year.
Alerts bearing the president’s name are stopping traders in their tracks when they pop up on their Bloomberg terminals, financiers say. Stocks briefly surged Thursday after a weeks-old clip circulated that appeared to show ex-FBI director James B. Comey affirming Trump never tried to wave him off his Russia look (The Post had reportedComey’s notes said something different). Height Securities, which provides political research and analysis to investors, convened a call Friday morning to walk clients through impeachment scenarios.
(Emphasis added.)
To anyone following the markets closely, this is not surprising news. The post-election surge was built on the solid, steady improvement of the Obama economy coupled with the expectations of Tax Cut Christmas for the uber-wealthy and corporations. By March, those expected gains were pretty much baked into the market.
Now, with the prospect of Watergate II sucking the oxygen out of Washington and flim flammery like Trumpcare and the border tax getting panned in town halls around the country (“Hicks Nix Tax Tricks”), the bulls are starting to worry that their irrational exuberance may have been premature.
It remains to be seen if the dimming Trump rainbow will yield pots of gold, but traders are less and less optimistic.
Stay tuned.