Trump And The Markets
January 23, 2018Wall Street is booming, for which a gleeful Trump takes the credit. If the economy continues to boom Trump stands every chance of winning mid-term and again in 2020. I watch Rasmussen and he remains steady, fluctuating between 40 and 46. If there is a third party candidate at any election Trump will break through, because Trump support, while a minority of the electorate, is solid. Not all those who oppose him vote Democrat. Some stay at home, some vote for a local issue candidate and some go Green or whatever.
The two caveats are these. The US growth surge is only partly due to Trump. This is a global surge, with Europe, Asia, China and the US all growing together rather than the usual of one pulling up the others. This is unusual as it is more often either the US or China pulling. Because of the huge number of factors involved predictions are hard, as there are a lot of issues beyond national control. It is critical that Trump does his infrastructure thing otherwise he could end up with ballooning debt and slowing growth. There are some, but not all, economists fearing another 1929. The risk they see is that never before has so much invested money been first borrowed and not yet repaid. An assets crash would be devastating and a sudden rise in interest rates for a local reason somewhere could trigger a sell off which becomes a contagion.
The other caveat is political. Trump’s base will back him no matter what. But Trump haters will vote against him whatever he does and however good things are. Not all Americans work in rust belt industries. If there are no third parties and if all anti-Trumps and Democrat sympathizers vote, Trump is in trouble. This is what happened in Virginia, New Jersey and Alabama in recent months. Indeed the Republicans have lost almost every election since the inauguration. Trump has now to reverse that trend.
But one thing is for sure. International politics have rarely been so interesting.