The Trump Economy

[GG]

in two days, the book closes on the Obama economy, so makes sense to start the new thread.

 

Hard to spot a consistent point to Trump's economic proclamations, so the litmus test may as well be his cabinet and the economic environment.

 

Good timing to have Davos scheduled on the eve of his inauguration and get a sense of what the business community is thinking for the future. And most of the talk is positive, and it corresponds with what I've been hearing as well.

 

This article takes me back to the discussions with TPS about Obama's anemic economic policy, the lack of economic understanding which combined with a patronizing attitude fostered a generally negative sentiment across the business community. That's why most observers know that the growth in Obama's years was mostly a mirage.

 

Here are what the big shots are saying in advance of Trump's tenure.

Executives in Davos Optimistic Despite Surge in Antiglobal Sentiment

 

With markets improving and a pro-business administration poised to take over in Washington, the mood among global corporate and financial leaders at the annual powwow in Davos is upbeat, despite the surge of antiglobal sentiment.

In contrast to last year, when plummeting stocks imbued the mountainside gathering with gloom, this year’s World Economic Forum is set against a backdrop of surging equity prices and a jump in interest rates that many banks and others welcome.

Holed up in the Swiss mountains behind impact barricades with snipers on rooftops, many corporate executives said they were enthusiastic about the prospect that the Trump administration will roll back taxes and regulation and spur economic growth after years of lackluster activity. By and large, they brushed aside concerns that trade and other policies of the new administration may be counterproductive.

 

Edited January 18, 2017 by GG

[DC Tom]

in two days, the book closes on the Obama economy, so makes sense to start the new thread.

 

Hard to spot a consistent point to Trump's economic proclamations, so the litmus test may as well be his cabinet and the economic environment.

 

Good timing to have Davos scheduled on the eve of his inauguration and get a sense of what the business community is thinking for the future. And most of the talk is positive, and it corresponds with what I've been hearing as well.

 

This article takes me back to the discussions with TPS about Obama's anemic economic policy, the lack of economic understanding which combined with a patronizing attitude fostered a generally negative sentiment across the business community. That's why most observers know that the growth in Obama's years was mostly a mirage.

 

Here are what the big shots are saying in advance of Trump's tenure.

 

Read the other day that traders have put a massive put on the VIX, equivalent to predicting something like a 6,000 point drop in the DJIA after the inauguration.

 

Not economic, per se...but it certainly doesn't reflect optimism over the near-term economic impact of Trumpageddon.

[GG]

 

Read the other day that traders have put a massive put on the VIX, equivalent to predicting something like a 6,000 point drop in the DJIA after the inauguration.

 

Not economic, per se...but it certainly doesn't reflect optimism over the near-term economic impact of Trumpageddon.

 

Which is kind of a dumb trade strategy. What to they expect will happen in the next 2 days that will prevent a trump presidency?

[DC Tom]

 

Which is kind of a dumb trade strategy. What to they expect will happen in the next 2 days that will prevent a trump presidency?

 

I was under the impression from the story that they were more worried about a Trump presidency than preventing it.

[GG]

 

I was under the impression from the story that they were more worried about a Trump presidency than preventing it.

 

Then it would already have been priced in right after the election. The only logical thing that would tie the trade to the inauguration would be some event that would stop him from becoming President.

[B-Man]

He's helping Inauguration Day souvenir sales ...................

 

[Azalin]

 

Read the other day that traders have put a massive put on the VIX, equivalent to predicting something like a 6,000 point drop in the DJIA after the inauguration.

 

Not economic, per se...but it certainly doesn't reflect optimism over the near-term economic impact of Trumpageddon.

 

Since Trump won the election, the money in my 401K has increased by approximately 13%. My investment allocations are spread out in various funds with only a moderate risk level according to my advisor. Most of the areas of investment are in stock funds - small/mid/large caps as well as international stocks. This is by no means an area of expertise for me, but I've always assumed that stocks react on predicting the future, both short and long term. If this is the case, why would there be such a dire prediction on the VIX while I'm seeing evidence to the contrary in my own account?

[DC Tom]

 

Then it would already have been priced in right after the election. The only logical thing that would tie the trade to the inauguration would be some event that would stop him from becoming President.

 

Logic? From people trading volatility derivatives?

[DC Tom]

 

Since Trump won the election, the money in my 401K has increased by approximately 13%. My investment allocations are spread out in various funds with only a moderate risk level according to my advisor. Most of the areas of investment are in stock funds - small/mid/large caps as well as international stocks. This is by no means an area of expertise for me, but I've always assumed that stocks react on predicting the future, both short and long term. If this is the case, why would there be such a dire prediction on the VIX while I'm seeing evidence to the contrary in my own account?

 

The markets run on psychology as much as anything. And the perception resulting from that psychology isn't always correct. Two easy examples: airline stocks after 9/11, and banking stocks in late 2008. Airline stocks crashed badly after 9/11, for obvious reasons...but there was no earthly reason to expect the entire sector to go under, and every expectation that the government would provide airlines support. Stocks fell anyway. Then tripled in the next 12 months (aside from Southwest, which was cash-rich and didn't need a bailout, and US Air, which was headed for bankruptcy before 9/11 and wasn't going to be helped by any bailout). Same with banks - Citi fell below $10/share (split-adjusted) as their reserves dried up, but the government was never going to let a conglomerate as large as Citi go under just because of a liquidity crunch. It was up above $40/share within months.

 

The psychology doesn't always make sense. In this particular case? Maybe they're wrong. Or maybe they're looking at the capital investments announced by major companies this week, and between that and increased hiring they're anticipating an inflationary spike and higher interest rates (or both). Or maybe they're anticipating an economic shock from a wholesale repeal of the ACA. Or maybe they just think the market's over-bought, and will fall when investors realize that economic change isn't immediate.

 

I've just about doubled my money since the election. Enough that I'm taking the next three months off.

[Azalin]

 

The markets run on psychology as much as anything. And the perception resulting from that psychology isn't always correct. Two easy examples: airline stocks after 9/11, and banking stocks in late 2008. Airline stocks crashed badly after 9/11, for obvious reasons...but there was no earthly reason to expect the entire sector to go under, and every expectation that the government would provide airlines support. Stocks fell anyway. Then tripled in the next 12 months (aside from Southwest, which was cash-rich and didn't need a bailout, and US Air, which was headed for bankruptcy before 9/11 and wasn't going to be helped by any bailout). Same with banks - Citi fell below $10/share (split-adjusted) as their reserves dried up, but the government was never going to let a conglomerate as large as Citi go under just because of a liquidity crunch. It was up above $40/share within months.

 

The psychology doesn't always make sense. In this particular case? Maybe they're wrong. Or maybe they're looking at the capital investments announced by major companies this week, and between that and increased hiring they're anticipating an inflationary spike and higher interest rates (or both). Or maybe they're anticipating an economic shock from a wholesale repeal of the ACA. Or maybe they just think the market's over-bought, and will fall when investors realize that economic change isn't immediate.

 

I've just about doubled my money since the election. Enough that I'm taking the next three months off.

 

Oh, to be able to take three months off from work....

 

Like I said earlier, I there's a lot involving investment, economics, finance, etc that I don't understand. In fact I know just about enough to be dangerous. If things could somehow remain as they are for the next eight years or so, then I might actually be able to really enjoy retirement.

[DC Tom]

 

Oh, to be able to take three months off from work....

 

Like I said earlier, I there's a lot involving investment, economics, finance, etc that I don't understand. In fact I know just about enough to be dangerous. If things could somehow remain as they are for the next eight years or so, then I might actually be able to really enjoy retirement.

 

It's a good opportunity to have. I've been working with barely a break for about 15 years. I need a sabbatical bad.

 

And my company - who had the great good sense to lay me off - had to replace me with three people. Money-saving gesture...somehow...

[Azalin]

 

It's a good opportunity to have. I've been working with barely a break for about 15 years. I need a sabbatical bad.

 

And my company - who had the great good sense to lay me off - had to replace me with three people. Money-saving gesture...somehow...

 

I'd go batty working without any real break for that long. Treat yourself. Drink some beer. Build a guitar. Take a %$#@-ton of naps. If I spent that long amid Washington bureaucrats I'd have lost the last scrap of sanity I still have remaining long ago.

[Deranged Rhino]

Based on the people being assembled by Trump's team, particularly the Goldman Sachs contingent, it seems pretty clear they're setting up for either a reshoring operation or a piratization of the country the likes of which were seen before the USSR collapsed.

 

Could go either way.

[DC Tom]

Based on the people being assembled by Trump's team, particularly the Goldman Sachs contingent, it seems pretty clear they're setting up for either a reshoring operation or a piratization of the country the likes of which were seen before the USSR collapsed.

 

Could go either way.

 

I think you're reading too much in to it. Bankers have the most practical experience with the economy, and Trump's probably familiar with them from his business dealings, is all.

 

Not everything is nefarious. Very few things, in fact, as nefariousness requires everyone involved to be smart. It only takes one idiot to ruin it.

[GG]

 

I think you're reading too much in to it. Bankers have the most practical experience with the economy, and Trump's probably familiar with them from his business dealings, is all.

 

Not everything is nefarious. Very few things, in fact, as nefariousness requires everyone involved to be smart. It only takes one idiot to ruin it.

 

Pretty much, and only Gary Cohn can really be counted as a Goldman Sachs guy. The rest were pitstops in their careers.

[DC Tom]

 

Pretty much, and only Gary Cohn can really be counted as a Goldman Sachs guy. The rest were pitstops in their careers.

 

It's actually rather mind-boggling, to see liberals B word that nuclear physicists aren't running the NRC, while simultaneously bitching that money people are running Treasury.

 

Which is it? Should we appoint expertise, or not?

[Tiberius]

So much to say in such a great thread! I'm sure this will be a marathon thread.

 

Ending Dodd Frank seems like a priority. I love the way it's being framed, sort of as a populist message of ending "Too Big To Fail." Ya right. Joe Republican will buy that for sure. But Its just going to recreate the situation that Obama had to bail us out of last time. I'd be interested in hearing how ending DF will help the economy.

[Deranged Rhino]

 

I think you're reading too much in to it. Bankers have the most practical experience with the economy, and Trump's probably familiar with them from his business dealings, is all.

 

Not everything is nefarious. Very few things, in fact, as nefariousness requires everyone involved to be smart. It only takes one idiot to ruin it.

 

Quite possibly I am, but I'm also not saying it's necessarily nefarious.

 

A reshoring operation would be anything but nefarious. A piratization would be more nefarious of course but it also might be necessary.

 

Which is why it's a coin flip at this point in time. But it's pretty clear it's one or the other based on these appointments.

[Nanker]

There's incessant talk from those that push commodities such as gold and silver that the equities are unjustly inflated and a major correction is long overdue. A correction actually happened on Election night in after hours. The market futures tanked a few hundred points, then it woke up the next morning, realized WTF had just happened, thought about it for a nanosecond and promptly started climbing higher and higher. It hadn't stopped climbing till the Dems reassembled two weeks ago to try to throw as much collective cold water on the incoming Trump administration as possible, and the media whores pounced like ADD petulant children on the Republican plans on burying the abortion that is the ACA.

 

For the past eight years the economy has been slogging through waist deep water of over regulation (Dodd Frank, etc), and Trump's pro-business approach is seen as a positive - roll-your-sleeves-up-and-get-back-to-work-again approach.

 

That said, we're moving sideways right now for a little bit. But I sense that will change starting this weekend. We might see riots in the streets at worse, or at least a trail of tears back to the coastlines while the majority of Americans take pride in their country and the miracle our founding fathers bestowed upon our country - the peaceful transition of power.

 

Trump's message to "Progressives" - Suck it! We're going to MAGA!

[Tiberius]

There's incessant talk from those that push commodities such as gold and silver that the equities are unjustly inflated and a major correction is long overdue. A correction actually happened on Election night in after hours. The market futures tanked a few hundred points, then it woke up the next morning, realized WTF had just happened, thought about it for a nanosecond and promptly started climbing higher and higher. It hadn't stopped climbing till the Dems reassembled two weeks ago to try to throw as much collective cold water on the incoming Trump administration as possible, and the media whores pounced like ADD petulant children on the Republican plans on burying the abortion that is the ACA.

 

For the past eight years the economy has been slogging through waist deep water of over regulation (Dodd Frank, etc), and Trump's pro-business approach is seen as a positive - roll-your-sleeves-up-and-get-back-to-work-again approach.

 

That said, we're moving sideways right now for a little bit. But I sense that will change starting this weekend. We might see riots in the streets at worse, or at least a trail of tears back to the coastlines while the majority of Americans take pride in their country and the miracle our founding fathers bestowed upon our country - the peaceful transition of power.

 

Trump's message to "Progressives" - Suck it! We're going to MAGA!

The rise in the stock market--which has been great all through the Obama years, super, in fact--was probably more a reaction to OPEC reaching a deal as anything politicians here did. Rising oil prices were good news for all sorts of banks and other institutions around the world.

 

What will be interesting to see is the unemployment rate. If I had to bet I'd go with it increasing during the Trump administration. How much lower can it go? No way he can possibly match the gains under Obama.

 

Wages are rising already, so Trump will benefit form that. But if wages start getting too good the immigration problem will come back in force as more hard working people will come seeking employment.