Trump's Stock ralley - hardly sustainable?

[ChpBstrd]

Trump is like the resurrection of Herbert Hoover, except more racist.

He just proposed a 20% tariff with Mexico - one of the US's main trading partners.
He's bullying companies for PR - e.g. Ford was forced to abandon a 1.6 billion factory. Their ROI will be lower as a result.
His trade appointments want to start a trade war with China - which would wipe out many US companies and lead to inflation in the price of goods. If not a US debt crisis.

Negotiating tactics.

His attitude toward ethnicities different than his own will eventually lead to riots and/or massacres.
His plan to expand the US national debt building a non-productive asset (the Great Wall of Mexico) could lead to a debt crisis for the US.



Repeal of Dodd Frank will reset the stage for the next bank crisis.
The combined effect of his plans scream inflation, which will cause interest rates to rise, hurting stocks.

Hyperbole!

You know, people keep making excuses about Trump. During the election, we were told his appeal among the R's would surely fade. Then we were told he would surely lose. Then we were told his racist, isolationist, and anti-trade positions were just "negotiating tactics". Then when he appointed actual racists and anti-trade activists to his cabinet, we're still told this has no bearing on actual policy. Then he makes radical executive orders and starts bullying corporations, and we're told its' just style.

At what point do we call a spade a spade? Trump has been perfectly honest about everything he's planning to do so far and by all appearances he's executing on his agenda - even with record low approval ratings that you'd think would persuade him to moderate. This guy is a true believer. It's the excuse-making media narratives that are hard to comprehend.

He's promised to restrict trade with America's main trading partners, replacing treaties with 1930's style tariffs.
He's promised to impose government control over corporations to "keep jobs".
He's promised to spend trillions of dollars on non-productive symbolic infrastructure.
With Congressional support, I think he will do it all.

[BTDretire]

Trump is like the resurrection of Herbert Hoover, except more racist.

He just proposed a 20% tariff with Mexico - one of the US's main trading partners.
He's bullying companies for PR - e.g. Ford was forced to abandon a 1.6 billion factory. Their ROI will be lower as a result.
His trade appointments want to start a trade war with China - which would wipe out many US companies and lead to inflation in the price of goods. If not a US debt crisis.

Negotiating tactics.

His attitude toward ethnicities different than his own will eventually lead to riots and/or massacres.
His plan to expand the US national debt building a non-productive asset (the Great Wall of Mexico) could lead to a debt crisis for the US.



Repeal of Dodd Frank will reset the stage for the next bank crisis.
The combined effect of his plans scream inflation, which will cause interest rates to rise, hurting stocks.

Hyperbole!

You know, people keep making excuses about Trump. During the election, we were told his appeal among the R's would surely fade. Then we were told he would surely lose. Then we were told his racist, isolationist, and anti-trade positions were just "negotiating tactics". Then when he appointed actual racists and anti-trade activists to his cabinet, we're still told this has no bearing on actual policy. Then he makes radical executive orders and starts bullying corporations, and we're told its' just style.

   I hope for the day when calling someone racist as a tactic becomes benign and useless.

At what point do we call a spade a spade? Trump has been perfectly honest about everything he's planning to do so far and by all appearances he's executing on his agenda - even with record low approval ratings that you'd think would persuade him to moderate. This guy is a true believer. It's the excuse-making media narratives that are hard to comprehend.

He's promised to restrict trade with America's main trading partners, replacing treaties with 1930's style tariffs.
He's promised to impose government control over corporations to "keep jobs".
He's promised to spend trillions of dollars on non-productive symbolic infrastructure.
With Congressional support, I think he will do it all.

  Don't worry, some of us think the pendulum swung to far under Obama*, and the the people spoke!
If it goes to far the other way, we all get to vote again in just 4 years.

*An additional $10,000,000,000,000 in debt was added in Obama's 8 years, that's is sickening.
 That's his legacy.

 

[Metric Mouse]

The combined effect of his plans scream inflation, which will cause interest rates to rise

And the effects of higher interest rates would be a stronger dollar vis a vis other currencies around the world. Now US manufacturers / US Farms, will have a hard time competing on the world market for their exports because of the stronger dollar. This will cause manufacturing employment to further decline -  there go all the jobs for the working class whites in the Rust Belt states who voted for Trump.

And don't forget all the tech jobs on the coasts. If inflation hits, it'll be even cheaper to hire skilled foreigners to replace the code monkeys in the Bay Area. That'll really sink us.

But seriously, I feel you are grossly underestimate how resilient the US is to economic flucuations. We are the second largest manufacturing base in the world, and by far the biggest consumer. The vast majority of our trade is conducted with Canada and Mexico - a little inflation is not going to cause a death spiral in the US economy. The higher costs of goods from the US would hurt other countries at least as much, and probably much more, than it would hurt the US.

[DavidAnnArbor]

*An additional $10,000,000,000,000 in debt was added in Obama's 8 years, that's is sickening.
 That's his legacy.

 

The numbers are always scary big because the US GDP is north of 18 trillion dollars. The more important metric is the Debt to GDP ratio. In an environment where we have negative real interest rates ( interest rate gov't pays for debts owed minus inflation = negative ) the debt to GDP ratio can decline over time.  If the national debt grows slower than the GDP then the national debt will decline as a % of GDP

Infrastructure spending to make the economy more efficient to help boost GDP would help. So far Trumps plans involve cronyism towards friends, rather than a real program of infrastructure support.

[ChpBstrd]

*An additional $10,000,000,000,000 in debt was added in Obama's 8 years, that's is sickening.
 That's his legacy.

Actually, the Constitution specifies it is Congress who passes the government's budget each year - the president just proposes something, which is technically something any one of us could do. It's Congress' legacy.

And that Congress was Republican-controlled for most of Obama's term. And the Obama administration coincided with the effects of the Bush administration's deficit-causing tax cuts. And the federal workforce grew more slowly under Obama than under any of his Republican predecessors.

[BTDretire]

*An additional $10,000,000,000,000 in debt was added in Obama's 8 years, that's is sickening.
 That's his legacy.

 

The numbers are always scary big because the US GDP is north of 18 trillion dollars. The more important metric is the Debt to GDP ratio. In an environment where we have negative real interest rates ( interest rate gov't pays for debts owed minus inflation = negative ) the debt to GDP ratio can decline over time.  If the national debt grows slower than the GDP then the national debt will decline as a % of GDP

Infrastructure spending to make the economy more efficient to help boost GDP would help. So far Trumps plans involve cronyism towards friends, rather than a real program of infrastructure support.

 In 2009 when Obama took office the Debt to GDP ratio was 87.1, it grew every year and in 2015, (the latest data I see) it was 104.17. As you know, growth was anemic under Obama and Debt grew faster than the GDP.

[DavidAnnArbor]

*An additional $10,000,000,000,000 in debt was added in Obama's 8 years, that's is sickening.
 That's his legacy.

 

The numbers are always scary big because the US GDP is north of 18 trillion dollars. The more important metric is the Debt to GDP ratio. In an environment where we have negative real interest rates ( interest rate gov't pays for debts owed minus inflation = negative ) the debt to GDP ratio can decline over time.  If the national debt grows slower than the GDP then the national debt will decline as a % of GDP

Infrastructure spending to make the economy more efficient to help boost GDP would help. So far Trumps plans involve cronyism towards friends, rather than a real program of infrastructure support.

 In 2009 when Obama took office the Debt to GDP ratio was 87.1, it grew every year and in 2015, (the latest data I see) it was 104.17. As you know, growth was anemic under Obama and Debt grew faster than the GDP.

Yes that did happen, but I also think you're including the year 2008, which was included an increase of the national debt by over $1 trillion, and this was under the Bush administration, and included a bank bailout, as well as war on terror spending, etc.

In the 2009 fiscal year we had so many unemployed people that needed the unemployment insurance program to tide them over. The fiscal stimulus also was crucial toward helping to stabilize the economy.

Those countries in Europe, namely the northern Europeans, that forced austerity on Europe, just caused Europe to sink into a double dip/triple dip recession. In fact Europe followed your prescription of budget austerity, and their economies hardly grew at all over the last several years - basically a 10 year period of zero economic growth. Measure that against US GDP growth and you see that the US outpaced the Eurozone considerably, even against Germany alone.

But yes the debt burden really needs to be reigned in at some point soon - tax cuts as proposed by Trump will increase the national debt by another $10 trillion over the next ten years, and tax cuts for the wealthy aren't GDP boosters.

[Metric Mouse]

Yes that did happen, but I also think you're including the year 2008, which was included an increase of the national debt by over $1 trillion, and this was under the Bush administration, and included a bank bailout, as well as war on terror spending, etc.

In the 2009 fiscal year we had so many unemployed people that needed the unemployment insurance program to tide them over. The fiscal stimulus also was crucial toward helping to stabilize the economy.

Those countries in Europe, namely the northern Europeans, that forced austerity on Europe, just caused Europe to sink into a double dip/triple dip recession. In fact Europe followed your prescription of budget austerity, and their economies hardly grew at all over the last several years - basically a 10 year period of zero economic growth. Measure that against US GDP growth and you see that the US outpaced the Eurozone considerably, even against Germany alone.

But yes the debt burden really needs to be reigned in at some point soon - tax cuts as proposed by Trump will increase the national debt by another $10 trillion over the next ten years, and tax cuts for the wealthy aren't GDP boosters.

Yes, the Bush era tax cuts that Obama made permanent haven't helped any. A meager economic growth through the past administration didn't help mush.  Looking forward I think we can clearly do better.

[DavidAnnArbor]

Yes, the Bush era tax cuts that Obama made permanent haven't helped any. A meager economic growth through the past administration didn't help mush.  Looking forward I think we can clearly do better.

That's incorrect, the Bush tax cuts were not made permanent. That's why the tax rates increased.

[Metric Mouse]

Yes, the Bush era tax cuts that Obama made permanent haven't helped any. A meager economic growth through the past administration didn't help mush.  Looking forward I think we can clearly do better.

That's incorrect, the Bush tax cuts were not made permanent. That's why the tax rates increased.

That is an incorrect reading of the American Taxpayer Relief Act signed by Barack Obama.

Unless you are saying "they aren't Bush tax cuts" they are "Obama tax cuts", then I guess you could be correct.

[nugget]

So, as a summary for the already 50 posts i personally conclude

• the topic adds so much unpredictability to the system such that forecasts are now even more erratic than they had been already in terms of stock market
• one more time there is some reasoning why this might have influences on the stock market. 
• one more time the mustachian answer is to not bother and stick with already made investment plans. Regardless.

apart from this, even the mustachians seem to be split / polarized about the Trump thing.

any more?

[marty998]

*An additional $10,000,000,000,000 in debt was added in Obama's 8 years, that's is sickening.
 That's his legacy.

 

The numbers are always scary big because the US GDP is north of 18 trillion dollars. The more important metric is the Debt to GDP ratio. In an environment where we have negative real interest rates ( interest rate gov't pays for debts owed minus inflation = negative ) the debt to GDP ratio can decline over time.  If the national debt grows slower than the GDP then the national debt will decline as a % of GDP

Infrastructure spending to make the economy more efficient to help boost GDP would help. So far Trumps plans involve cronyism towards friends, rather than a real program of infrastructure support.

 In 2009 when Obama took office the Debt to GDP ratio was 87.1, it grew every year and in 2015, (the latest data I see) it was 104.17. As you know, growth was anemic under Obama and Debt grew faster than the GDP.

I suppose you would prefer the roaring growth under Bush. Remind me again how that party ended for you guys?

Oh.

Our debt levels are going up here pretty much in lock step with yours, and we had the opposite flavour political party in power for the last 4 years.

It hasn't mattered who is in charge, most Western governments have lost the ability to rein in spending, because they will get voted out of office for taking away benefits (a.k.a. free money).

Trump, for all his faults (and they are many), doesn't give a flying fuck about anyone. For that reason alone I reckon he will have the best chance at reining in your deficit.

Sure there will be pain, and lots of screaming and hollering by the Left. But, as I said, he doesn't give a fuck.

I don't like him. However from my vantage point he is the first politician I've seen in a very long time implement exactly what he has promised.

The media have bleated on for months about uncertainty and chaos and whatnot. It really is all crap. DT has telegraphed every single move right from the start.

Perversely, he has given absolute certainty to everyone. You are not in any doubt what he is going to do, and I am actually not surprised when he goes and does what he promised (putting aside my general disagreement with his economic policies, which is another argument).

Suggest we all go back and look at the rest of his policies. I'm happy to predict that (a) they will be implemented, and (b) there will be unusual consequences, because you won't find the outcomes to these policies in orthodox economic theory.

It's a brave new world! You can either bitch about it for the next 4 years, or you can be flexible enough to adapt to it.

[Livewell]

Trump, for all his faults (and they are many), doesn't give a flying fuck about anyone. For that reason alone I reckon he will have the best chance at reining in your deficit.

Trump is unpredictable, but on budgets and deficits he's completely predictable.  Remember he's "running the government like a business" which for him means running up debt and walking away with someone else holding the bag when things go wrong.  The only question is whether Ryan and Mitchell go along with him after all their fake deficit hawkery during Obama.  I bet they do, as long as it doesn't involve funding social programs (vouchers anyone?).  It looks like the best we'll get from this new spending is real infrastructure (roads and bridges, not walls).

[bacchi]

Trump is unpredictable, but on budgets and deficits he's completely predictable. 

He is definitely unpredictable and the market likes predictability. It's gonna be a wild ride.

[Laserjet3051]

*An additional $10,000,000,000,000 in debt was added in Obama's 8 years, that's is sickening.
 That's his legacy.

 

Trump, for all his faults (and they are many), doesn't give a flying fuck about anyone. For that reason alone I reckon he will have the best chance at reining in your deficit.

Sure there will be pain, and lots of screaming and hollering by the Left. But, as I said, he doesn't give a fuck.

I don't like him. However from my vantage point he is the first politician I've seen in a very long time implement exactly what he has promised.

The media have bleated on for months about uncertainty and chaos and whatnot. It really is all crap. DT has telegraphed every single move right from the start.

Perversely, he has given absolute certainty to everyone. You are not in any doubt what he is going to do, and I am actually not surprised when he goes and does what he promised (putting aside my general disagreement with his economic policies, which is another argument).

Suggest we all go back and look at the rest of his policies. I'm happy to predict that (a) they will be implemented, and (b) there will be unusual consequences, because you won't find the outcomes to these policies in orthodox economic theory.

It's a brave new world! You can either bitch about it for the next 4 years, or you can be flexible enough to adapt to it.

Absolutely concur.

[marty998]

Trump, for all his faults (and they are many), doesn't give a flying fuck about anyone. For that reason alone I reckon he will have the best chance at reining in your deficit.

Trump is unpredictable, but on budgets and deficits he's completely predictable.  Remember he's "running the government like a business" which for him means running up debt and walking away with someone else holding the bag when things go wrong.  The only question is whether Ryan and Mitchell go along with him after all their fake deficit hawkery during Obama.  I bet they do, as long as it doesn't involve funding social programs (vouchers anyone?).  It looks like the best we'll get from this new spending is real infrastructure (roads and bridges, not walls).

I said he has the best chance of fixing the deficit (i.e. the opportunity, means and gumption). Whether it actually works is another matter :D

Nobody really can know for sure.