Trump made tall promises in his election speeches and the Wall Street seemed to believe it. This was precisely the reason why all major indices were making record highs since November 2016. During his inaugural speech on 20th January, he said, “We must think big and dream even bigger. America will start winning again, winning like never before. We will bring back our jobs, we will bring back our borders, we will bring back our wealth and we will bring back our dreams.”
The markets zoomed like anything post such statements from the President of the United States with Dow Jones closing at record highs for straight 12 sessions. The investors were really optimistic that the President will soon deliver on his promises.
The very first address of Trump at the Congress was observed with great interest at the Wall Street. The markets wanted to take cues from it, but Trump mellowed his tone. He moved from the “American carnage” inauguration day speech to “a new surge of optimism” and “national pride.”
Contrary to his nature he said – “The time for trivial fights is behind us.” He urged the Congress to support his ambitious $1 trillion infrastructure bill.
Markets wanted to hear when and how he will bring about the much talked about tax reform, but he concentrated more on the replacement of Obamacare. He did touch the topics that the markets wanted to hear, but there was no elaboration that gave any definite direction to the markets.
Still, the market’s euphoria continued as there was Fed meeting due on 14th March and as expected by the markets the Central bank raised the interest rates.
The first litmus test of the Trump government came yesterday when the healthcare bill was due for voting. The Republicans postponed it by a day since they were not sure they have the numbers required to get it through. This has shaken the investor’s confidence in the new regime.
The managing partner for Harris Financial Group, Jamie Cox said, “If the Republicans are having such a difficult time making changes to something they universally agree upon, how on earth they are going to agree on the more complicated tax cut that is coming through later in the year?“
Now it looks like ‘Trump bump” is finally coming to end. The investors seem to look through the executive incompetence of the new government.