first majestic silver

President Trump’s First 100 Days Lift Financial Markets, but Underlying Risks Remain

April 29, 2017

Washington (April 29)  Since President Trump took the Oval Office on January 20, U.S. stocks have gained 5%, building off a post-election rally that reignited the bull market. Despite strong equity gains, the U.S. president has not actually passed any legislation and may have inherited an economy that’s on its way down.

The large-cap S&P 500 Index set multiple record highs through Trump’s first 50 days in office. The index approached a new record last week on favorable geopolitical tailwinds from abroad.

For the Nasdaq, record highs continue to be the norm. The technology-heavy average is up nearly 9% since inauguration day, including a string of record closes over the past two weeks.

Underpinning Wall Street’s enthusiasm is Trump himself, who has vowed to boost economic growth through tax cuts, deregulation and fiscal stimulus. Trump’s lofty presidential objectives included growing the economy by up to 4% per year and creating at least 25 million new jobs over the next decade.

Trump signed more than a dozen executive orders immediately after entering the White House. Among his executive decrees were pulling the United States out of the Trans-Pacific Partnership, ordering a review of the North American Free Trade Agreement (NAFTA) and implementing a travel ban on visitors from seven Muslim-majority countries.

Implementing these and other policies hasn’t been easy for the Trump administration. Despite controlling the White House and both houses of Congress, the Republican Party is divided on issues ranging from healthcare to tax reform. The divide from within emerged when Trump failed to pass its repeal of Obamacare, setting the stage for a bigger clash between moderates and conservatives within the GOP ranks.

This past week, Trump unveiled a preliminary tax-cut plan that could offer the GOP a much-needed political lifeline. The plan, dubbed the “biggest tax cut” in U.S. history, suggests a radical rethinking of the national tax system that mirrors Trump’s campaign promises. But once again, the implementation of the tax code will largely depend on buy-in from congressional lawmakers.

In an executive position that often relies on momentum to get things done, achieving tax reform could be a herald Trump’s remaining 1,361 days in office. It would certainly lessen the blow of last month’s health bill flop.

Although investors appear to have tempered their expectations for Trump’s presidency, optimism is still reflected in equity valuations and underlying business confidence. This suggests market participants are willing to grant the administration more time before passing judgment on the regime.

The first 100 days of the Trump administration have also offered up sobering thoughts on the future of U.S. intervention in the Middle East and Asia. During his first meeting with Chinese President Xi Yingping earlier this month, Trump ordered a military strike on a Syrian airbase over an alleged chemical weapons attack. The strike contributed to the further undermining of U.S.-Russia relations and drew deep criticism from Trump supporters who backed the president over his non-interventionist policies.

Geopolitical fires have also erupted on the Korean peninsula, with Trump pressuring China to contain a defiant North Korea. Pyongyang has responded to Trump’s rhetoric with ballistic missile tests and military parades.

In response to another failed North Korean ballistic missile test, Trump recently warned of “major conflict” with the Communist dictatorship.

Trump’s 100-day benchmark sets the tone for a tumultuous four-year term. For the president, the experience has been far more difficult than anything he’s ever done before.

“I loved my previous life. I had so many things going,” Trump told Reuters in a recent interview. “This is more work than in my previous life. I thought it would be easier.”

Source: EconomicCalendar

Gold Eagle twitter                Like Gold Eagle on Facebook