As the Dow Jones looks to recover from an eight-day slump it seems that all of the anti-Trump analysts are coming out of the woodwork. Many of them were forced to take a backseat as the US stock market went from strength to strength when Donald Trump took up the role as president of the USA. Even before he took office the doom and gloom merchants were talking down markets, speculating on how long he would stay in the White House and whether he would be able to push through his more controversial policies. Initially investors ignored the downbeat comments and the US stock market went on a bull market run the likes of which we have not seen for some time.
“I told you so”
It will be interesting to see how the US markets react in the short to medium term especially when you bear in mind the difficulties that Donald Trump has had trying to push through his medical care reforms. Even though he has majorities in both US political chambers he was not able to gain enough support to push through his initial bill. This prompted concerns that Donald Trump’s key tax reforms and additional investment in infrastructure may also struggle to be put into practice.
Do not write him off
Donald Trump has been written off time and time again but he continues to bounce back from everything which is thrown at him. In times of concern and confusion some investors turn to gold but the fact the gold price has not really increased dramatically suggests this recent slump in US markets may only be short-term. It is a little ironic that Donald Trump has not been able to push through his reforms with the backing of his own party. But what does this say about US politics today?
Consolidation helpful in the medium term
Over the last few weeks markets in the US have gone from strength to strength with many investors factoring in the best possible outcome for the economy. The fact is that Donald Trump has made many enemies in recent times, inside and outside of his own party, and there was always going to be a bedding down period. He put himself forward as the King of negotiations so now is the time for Donald Trump to step up to the plate and negotiate with other politicians.
When you also take into account the fact Donald Trump was targeting economic growth of 4% per annum when the Federal Reserve is targeting a figure less than half of that, there was always going to be friction. The US electorate voted Donald Trump in because of his intention to reform medical care, the tax system and also increase investment in infrastructure. Is it really down to US politicians to go against the will of the people? When you consider how much criticism Obama’s medical care reforms received, can politicians really justify maintaining the current status quo?
Conclusion
As expected, all of the doom and gloom merchants have come out of the woodwork to criticise Donald Trump and suggest that they “told us so”. While an eight-day slump in US markets is obviously a concern, it is neither here nor there when you bear in mind the recent “Trump rally”. Those who write off Donald Trump do so at their own risk because this is a man to whom nothing sticks and who eventually seems to get his own way.