The Trump Economy

[GG]

in two days, the book closes on the Obama economy, so makes sense to start the new thread.

 

Hard to spot a consistent point to Trump's economic proclamations, so the litmus test may as well be his cabinet and the economic environment.

 

Good timing to have Davos scheduled on the eve of his inauguration and get a sense of what the business community is thinking for the future. And most of the talk is positive, and it corresponds with what I've been hearing as well.

 

This article takes me back to the discussions with TPS about Obama's anemic economic policy, the lack of economic understanding which combined with a patronizing attitude fostered a generally negative sentiment across the business community. That's why most observers know that the growth in Obama's years was mostly a mirage.

 

Here are what the big shots are saying in advance of Trump's tenure.

Executives in Davos Optimistic Despite Surge in Antiglobal Sentiment

 

With markets improving and a pro-business administration poised to take over in Washington, the mood among global corporate and financial leaders at the annual powwow in Davos is upbeat, despite the surge of antiglobal sentiment.

In contrast to last year, when plummeting stocks imbued the mountainside gathering with gloom, this year’s World Economic Forum is set against a backdrop of surging equity prices and a jump in interest rates that many banks and others welcome.

Holed up in the Swiss mountains behind impact barricades with snipers on rooftops, many corporate executives said they were enthusiastic about the prospect that the Trump administration will roll back taxes and regulation and spur economic growth after years of lackluster activity. By and large, they brushed aside concerns that trade and other policies of the new administration may be counterproductive.

 

Edited January 18, 2017 by GG

[DC Tom]

in two days, the book closes on the Obama economy, so makes sense to start the new thread.

 

Hard to spot a consistent point to Trump's economic proclamations, so the litmus test may as well be his cabinet and the economic environment.

 

Good timing to have Davos scheduled on the eve of his inauguration and get a sense of what the business community is thinking for the future. And most of the talk is positive, and it corresponds with what I've been hearing as well.

 

This article takes me back to the discussions with TPS about Obama's anemic economic policy, the lack of economic understanding which combined with a patronizing attitude fostered a generally negative sentiment across the business community. That's why most observers know that the growth in Obama's years was mostly a mirage.

 

Here are what the big shots are saying in advance of Trump's tenure.

 

Read the other day that traders have put a massive put on the VIX, equivalent to predicting something like a 6,000 point drop in the DJIA after the inauguration.

 

Not economic, per se...but it certainly doesn't reflect optimism over the near-term economic impact of Trumpageddon.

[GG]

 

Read the other day that traders have put a massive put on the VIX, equivalent to predicting something like a 6,000 point drop in the DJIA after the inauguration.

 

Not economic, per se...but it certainly doesn't reflect optimism over the near-term economic impact of Trumpageddon.

 

Which is kind of a dumb trade strategy. What to they expect will happen in the next 2 days that will prevent a trump presidency?

[DC Tom]

 

Which is kind of a dumb trade strategy. What to they expect will happen in the next 2 days that will prevent a trump presidency?

 

I was under the impression from the story that they were more worried about a Trump presidency than preventing it.

[GG]

 

I was under the impression from the story that they were more worried about a Trump presidency than preventing it.

 

Then it would already have been priced in right after the election. The only logical thing that would tie the trade to the inauguration would be some event that would stop him from becoming President.

[B-Man]

He's helping Inauguration Day souvenir sales ...................

 

[Azalin]

 

Read the other day that traders have put a massive put on the VIX, equivalent to predicting something like a 6,000 point drop in the DJIA after the inauguration.

 

Not economic, per se...but it certainly doesn't reflect optimism over the near-term economic impact of Trumpageddon.

 

Since Trump won the election, the money in my 401K has increased by approximately 13%. My investment allocations are spread out in various funds with only a moderate risk level according to my advisor. Most of the areas of investment are in stock funds - small/mid/large caps as well as international stocks. This is by no means an area of expertise for me, but I've always assumed that stocks react on predicting the future, both short and long term. If this is the case, why would there be such a dire prediction on the VIX while I'm seeing evidence to the contrary in my own account?

[DC Tom]

 

Then it would already have been priced in right after the election. The only logical thing that would tie the trade to the inauguration would be some event that would stop him from becoming President.

 

Logic? From people trading volatility derivatives?

[DC Tom]

 

Since Trump won the election, the money in my 401K has increased by approximately 13%. My investment allocations are spread out in various funds with only a moderate risk level according to my advisor. Most of the areas of investment are in stock funds - small/mid/large caps as well as international stocks. This is by no means an area of expertise for me, but I've always assumed that stocks react on predicting the future, both short and long term. If this is the case, why would there be such a dire prediction on the VIX while I'm seeing evidence to the contrary in my own account?

 

The markets run on psychology as much as anything. And the perception resulting from that psychology isn't always correct. Two easy examples: airline stocks after 9/11, and banking stocks in late 2008. Airline stocks crashed badly after 9/11, for obvious reasons...but there was no earthly reason to expect the entire sector to go under, and every expectation that the government would provide airlines support. Stocks fell anyway. Then tripled in the next 12 months (aside from Southwest, which was cash-rich and didn't need a bailout, and US Air, which was headed for bankruptcy before 9/11 and wasn't going to be helped by any bailout). Same with banks - Citi fell below $10/share (split-adjusted) as their reserves dried up, but the government was never going to let a conglomerate as large as Citi go under just because of a liquidity crunch. It was up above $40/share within months.

 

The psychology doesn't always make sense. In this particular case? Maybe they're wrong. Or maybe they're looking at the capital investments announced by major companies this week, and between that and increased hiring they're anticipating an inflationary spike and higher interest rates (or both). Or maybe they're anticipating an economic shock from a wholesale repeal of the ACA. Or maybe they just think the market's over-bought, and will fall when investors realize that economic change isn't immediate.

 

I've just about doubled my money since the election. Enough that I'm taking the next three months off.

[Azalin]

 

The markets run on psychology as much as anything. And the perception resulting from that psychology isn't always correct. Two easy examples: airline stocks after 9/11, and banking stocks in late 2008. Airline stocks crashed badly after 9/11, for obvious reasons...but there was no earthly reason to expect the entire sector to go under, and every expectation that the government would provide airlines support. Stocks fell anyway. Then tripled in the next 12 months (aside from Southwest, which was cash-rich and didn't need a bailout, and US Air, which was headed for bankruptcy before 9/11 and wasn't going to be helped by any bailout). Same with banks - Citi fell below $10/share (split-adjusted) as their reserves dried up, but the government was never going to let a conglomerate as large as Citi go under just because of a liquidity crunch. It was up above $40/share within months.

 

The psychology doesn't always make sense. In this particular case? Maybe they're wrong. Or maybe they're looking at the capital investments announced by major companies this week, and between that and increased hiring they're anticipating an inflationary spike and higher interest rates (or both). Or maybe they're anticipating an economic shock from a wholesale repeal of the ACA. Or maybe they just think the market's over-bought, and will fall when investors realize that economic change isn't immediate.

 

I've just about doubled my money since the election. Enough that I'm taking the next three months off.

 

Oh, to be able to take three months off from work....

 

Like I said earlier, I there's a lot involving investment, economics, finance, etc that I don't understand. In fact I know just about enough to be dangerous. If things could somehow remain as they are for the next eight years or so, then I might actually be able to really enjoy retirement.

[DC Tom]

 

Oh, to be able to take three months off from work....

 

Like I said earlier, I there's a lot involving investment, economics, finance, etc that I don't understand. In fact I know just about enough to be dangerous. If things could somehow remain as they are for the next eight years or so, then I might actually be able to really enjoy retirement.

 

It's a good opportunity to have. I've been working with barely a break for about 15 years. I need a sabbatical bad.

 

And my company - who had the great good sense to lay me off - had to replace me with three people. Money-saving gesture...somehow...

[Azalin]

 

It's a good opportunity to have. I've been working with barely a break for about 15 years. I need a sabbatical bad.

 

And my company - who had the great good sense to lay me off - had to replace me with three people. Money-saving gesture...somehow...

 

I'd go batty working without any real break for that long. Treat yourself. Drink some beer. Build a guitar. Take a %$#@-ton of naps. If I spent that long amid Washington bureaucrats I'd have lost the last scrap of sanity I still have remaining long ago.

[Deranged Rhino]

Based on the people being assembled by Trump's team, particularly the Goldman Sachs contingent, it seems pretty clear they're setting up for either a reshoring operation or a piratization of the country the likes of which were seen before the USSR collapsed.

 

Could go either way.

[DC Tom]

Based on the people being assembled by Trump's team, particularly the Goldman Sachs contingent, it seems pretty clear they're setting up for either a reshoring operation or a piratization of the country the likes of which were seen before the USSR collapsed.

 

Could go either way.

 

I think you're reading too much in to it. Bankers have the most practical experience with the economy, and Trump's probably familiar with them from his business dealings, is all.

 

Not everything is nefarious. Very few things, in fact, as nefariousness requires everyone involved to be smart. It only takes one idiot to ruin it.

[GG]

 

I think you're reading too much in to it. Bankers have the most practical experience with the economy, and Trump's probably familiar with them from his business dealings, is all.

 

Not everything is nefarious. Very few things, in fact, as nefariousness requires everyone involved to be smart. It only takes one idiot to ruin it.

 

Pretty much, and only Gary Cohn can really be counted as a Goldman Sachs guy. The rest were pitstops in their careers.

[DC Tom]

 

Pretty much, and only Gary Cohn can really be counted as a Goldman Sachs guy. The rest were pitstops in their careers.

 

It's actually rather mind-boggling, to see liberals B word that nuclear physicists aren't running the NRC, while simultaneously bitching that money people are running Treasury.

 

Which is it? Should we appoint expertise, or not?

[Tiberius]

So much to say in such a great thread! I'm sure this will be a marathon thread.

 

Ending Dodd Frank seems like a priority. I love the way it's being framed, sort of as a populist message of ending "Too Big To Fail." Ya right. Joe Republican will buy that for sure. But Its just going to recreate the situation that Obama had to bail us out of last time. I'd be interested in hearing how ending DF will help the economy.

[Deranged Rhino]

 

I think you're reading too much in to it. Bankers have the most practical experience with the economy, and Trump's probably familiar with them from his business dealings, is all.

 

Not everything is nefarious. Very few things, in fact, as nefariousness requires everyone involved to be smart. It only takes one idiot to ruin it.

 

Quite possibly I am, but I'm also not saying it's necessarily nefarious.

 

A reshoring operation would be anything but nefarious. A piratization would be more nefarious of course but it also might be necessary.

 

Which is why it's a coin flip at this point in time. But it's pretty clear it's one or the other based on these appointments.

[Nanker]

There's incessant talk from those that push commodities such as gold and silver that the equities are unjustly inflated and a major correction is long overdue. A correction actually happened on Election night in after hours. The market futures tanked a few hundred points, then it woke up the next morning, realized WTF had just happened, thought about it for a nanosecond and promptly started climbing higher and higher. It hadn't stopped climbing till the Dems reassembled two weeks ago to try to throw as much collective cold water on the incoming Trump administration as possible, and the media whores pounced like ADD petulant children on the Republican plans on burying the abortion that is the ACA.

 

For the past eight years the economy has been slogging through waist deep water of over regulation (Dodd Frank, etc), and Trump's pro-business approach is seen as a positive - roll-your-sleeves-up-and-get-back-to-work-again approach.

 

That said, we're moving sideways right now for a little bit. But I sense that will change starting this weekend. We might see riots in the streets at worse, or at least a trail of tears back to the coastlines while the majority of Americans take pride in their country and the miracle our founding fathers bestowed upon our country - the peaceful transition of power.

 

Trump's message to "Progressives" - Suck it! We're going to MAGA!

[Tiberius]

There's incessant talk from those that push commodities such as gold and silver that the equities are unjustly inflated and a major correction is long overdue. A correction actually happened on Election night in after hours. The market futures tanked a few hundred points, then it woke up the next morning, realized WTF had just happened, thought about it for a nanosecond and promptly started climbing higher and higher. It hadn't stopped climbing till the Dems reassembled two weeks ago to try to throw as much collective cold water on the incoming Trump administration as possible, and the media whores pounced like ADD petulant children on the Republican plans on burying the abortion that is the ACA.

 

For the past eight years the economy has been slogging through waist deep water of over regulation (Dodd Frank, etc), and Trump's pro-business approach is seen as a positive - roll-your-sleeves-up-and-get-back-to-work-again approach.

 

That said, we're moving sideways right now for a little bit. But I sense that will change starting this weekend. We might see riots in the streets at worse, or at least a trail of tears back to the coastlines while the majority of Americans take pride in their country and the miracle our founding fathers bestowed upon our country - the peaceful transition of power.

 

Trump's message to "Progressives" - Suck it! We're going to MAGA!

The rise in the stock market--which has been great all through the Obama years, super, in fact--was probably more a reaction to OPEC reaching a deal as anything politicians here did. Rising oil prices were good news for all sorts of banks and other institutions around the world.

 

What will be interesting to see is the unemployment rate. If I had to bet I'd go with it increasing during the Trump administration. How much lower can it go? No way he can possibly match the gains under Obama.

 

Wages are rising already, so Trump will benefit form that. But if wages start getting too good the immigration problem will come back in force as more hard working people will come seeking employment.

[grinreaper]

 

It's a good opportunity to have. I've been working with barely a break for about 15 years. I need a sabbatical bad.

 

And my company - who had the great good sense to lay me off - had to replace me with three people. Money-saving gesture...somehow...

Just how many sites do you post on?

[TPS]

Then it would already have been priced in right after the election. The only logical thing that would tie the trade to the inauguration would be some event that would stop him from becoming President.

the bet is most likely on your main point: will optimism alone spur real economic growth? The markets' initial reaction underscores a belief, but unless real decisions are made that impact growth and employment, those beliefs will take a beating. I've heard several money managers now say they expect at least a 5% correction in the first quarter because of this.

 

I find Trumponomics very interesting. It's not just an optimism change, his tweeting is causing MNCs to make real decisions. Maybe we should call it Tweetonomics?

 

The most interesting character is Bannon. He knows that trump will fail if he doesn't support the working poor who supported him. While the republicans will and have tried already toattack SS and Medicare, what will Trump do? I think one inkling is how he responded to the republicans attempt to castrate the ethics board--just one tweet was all it took. I have no problem with rolling back Dodd-frank as long as he also moves back to glass-steagall, as he's supported. since banks are under Basel, their ability to inflate credit is constrained. I am worried about the clawback on derivatives though.

 

So, I agree with you GG, that optimism can have an impact, but it still comes down to demand for your product. If Tweetonomics can push more companies to move jobs to the US and others to stay, that is where the beef is.

Edited January 19, 2017 by TPS

[Tiberius]

Just how many sites do you post on?

[B-Man]

The Hill has a list of much of what Trump is planning on taking an ax to.

 

The cuts to the departments of Transportation, State and Justice were already expected. Several of their functions can easily be streamlined or combined into other departments. The Department of Energy under Rick Perry can have several of its more expensive functions reduced or transferred as well. (One possibility which has been under discussion this week is moving the control and maintenance of the nuclear arsenal into Defense where it would seem to make a lot more sense anyway.)

 

But it’s some of the other cuts which are probably going to draw gasps of horror from Trump’s more liberal detractors. Currently on the list is the complete elimination of the National Endowment for the Arts and National Endowment for the Humanities. Additionally, the Corporation for Public Broadcasting would be privatized. If you thought there were going to be liberal marches in the streets tomorrow, just wait until those three go into effect.

 

The total savings to the federal government’s bottom line from all of these moves? How about $10.5 trillion over 10 years.

 

 

 

As with everything else in the world of Washington, I’ll hold off on popping the champagne cork until I actually see it done, but this is the level of cutting which might eventually return us to a point beyond a balanced budget.

 

And if it does somehow come true, I’ll have to ask the same question I’ve been posing time and time again over the past couple of months, particularly with companies bringing jobs and investments back to American soil.

 

Was it really this easy all this time but nobody bothered to try?

 

http://hotair.com/archives/2017/01/19/oh-baby-dramatic-cuts-are-coming-to-federal-government/

 

 

 

Standby for the liberal wailing and gnashing of teeth......and the end of the world as we know it.

 

Big bird will be dragged out again.......(even though they are a billion dollar private industry)

 

and (of course) cutting redundant programs will be PROOF that Republicans hate children, women, al races, and all genders.

 

[Tiberius]

As with everything else in the world of Washington, I’ll hold off on popping the champagne cork until I actually see it done, but this is the level of cutting which might eventually return us to a point beyond a balanced budget.

 

And if it does somehow come true, I’ll have to ask the same question I’ve been posing time and time again over the past couple of months, particularly with companies bringing jobs and investments back to American soil.

 

Was it really this easy all this time but nobody bothered to try?

 

http://hotair.com/archives/2017/01/19/oh-baby-dramatic-cuts-are-coming-to-federal-government/

 

 

A balanced budget? With tax cuts and massive infrastructure spending? Doubt it

[GG]

the bet is most likely on your main point: will optimism alone spur real economic growth? The markets' initial reaction underscores a belief, but unless real decisions are made that impact growth and employment, those beliefs will take a beating. I've heard several money managers now say they expect at least a 5% correction in the first quarter because of this.

 

I find Trumponomics very interesting. It's not just an optimism change, his tweeting is causing MNCs to make real decisions. Maybe we should call it Tweetonomics?

 

The most interesting character is Bannon. He knows that trump will fail if he doesn't support the working poor who supported him. While the republicans will and have tried already toattack SS and Medicare, what will Trump do? I think one inkling is how he responded to the republicans attempt to castrate the ethics board--just one tweet was all it took. I have no problem with rolling back Dodd-frank as long as he also moves back to glass-steagall, as he's supported. since banks are under Basel, their ability to inflate credit is constrained. I am worried about the clawback on derivatives though.

 

So, I agree with you GG, that optimism can have an impact, but it still comes down to demand for your product. If Tweetonomics can push more companies to move jobs to the US and others to stay, that is where the beef is.

 

That will be the big question. The informal feedback I've been getting from the C-suites is generally positive, and that usually translates well to the rank and file. I've insisted that a big part of Obama's problem is that he didn't realize how much negativity infected his term. Employees pick up their cues when they see their bosses bitching and worrying about the bad business environment, and any confidence goes into the crapper.

 

The attitude about Trump is that most think he's a clown, but a smart clown who should know when to step out of the way when it comes to driving economic growth.

[DC Tom]

[This is an automated response.]

 

 

Created by DC Tom-bot, beta version 0.5.

[Tiberius]

This will be hard to improve on

 

http://www.forbes.com/sites/timworstall/2017/01/19/us-jobless-claims-down-to-1970s-levels-at-234000/#685032bd2480

[DC Tom]

This will be hard to improve on

 

http://www.forbes.com/sites/timworstall/2017/01/19/us-jobless-claims-down-to-1970s-levels-at-234000/#685032bd2480

[This is an automated response.]

 

You're not trying to make a point, you're just a jerk.

 

Created by DC Tom-bot, beta version 0.5.

[/dev/null]

[This is an automated response.]

 

You're not trying to make a point, you're just a jerk.

 

Created by DC Tom-bot, beta version 0.5.

Undocumented feature of 0.5 or did you forget to update the version ID?

[Tiberius]

Undocumented feature of 0.5 or did you forget to update the version ID?

He just craves my attention

[DC Tom]

He just craves my attention

[This is an automated response.]

 

You're not trying to make a point, you're just a jerk.

 

Created by DC Tom-bot, beta version 0.5.

[Tiberius]

http://nbr.com/2017/01/18/farming-challenges-in-the-u-s/

 

Nightly Business Report handles this pretty well. Shows both sides on farming issues

[Tiberius]

 

That will be the big question. The informal feedback I've been getting from the C-suites is generally positive, and that usually translates well to the rank and file. I've insisted that a big part of Obama's problem is that he didn't realize how much negativity infected his term. Employees pick up their cues when they see their bosses bitching and worrying about the bad business environment, and any confidence goes into the crapper.

 

The attitude about Trump is that most think he's a clown, but a smart clown who should know when to step out of the way when it comes to driving economic growth.

So the guys with money are the ones we should follow? Where has that argument been put forward?

[Benjamin Franklin]

 

I think you're reading too much in to it.

They walked off he stage after a guy whispered in their ear Tom! They walked off the stage!!!??!!

[DC Tom]

So the guys with money are the ones we should follow? Where has that argument been put forward?

 

The Clinton campaign.

[Tiberius]

President Donald Trump’s quick suspension of new federal regulations has triggered some unintended consequences: sudden pain and deeper uncertainty for a broad array of U.S. businesses.

Oil and gas companies, ethanol producers, real estate agents and small farmers are among those that could be hurt by the regulatory freeze. Some are lobbying to preserve regulations that Trump put on hold.

 

http://www.politico.com/story/2017/01/trump-regulation-freeze-businesses-234250

 

Does this clown think through anything? Everything he does is to get the evil media report a headline he likes and sounds nice to the deplorables

[B-Man]

Trump signs “one-in, two-out” EO to reduce federal regulations

 

 

 

 

WELL, WE CAN HOPE:

 

Congress might be able to axe a lot more Obama regulations than you thought.

[Taro T]

Trump signs “one-in, two-out” EO to reduce federal regulations

 

 

 

 

WELL, WE CAN HOPE:

 

Congress might be able to axe a lot more Obama regulations than you thought.

Saw the original Strassel article in Friday's WSJ.

 

If the author of the law is in fact correct on what it states and how it operates there could be a lot of regulations to potentially rollback. And implementing that would go miles towards restoring checks & balances. One definite potential plus in the Trump v Clinton Donald column.

[Tiberius]

Obama leaves Trump a growing economy

http://www.cnbc.com/2017/02/01/private-payrolls-grew-246k-in-january-vs-165k-est-adp.html

Private companies kicked off the new year with a hiring spree, according to the latest report from ADP and Moody's Analytics.

Amid an explosive month surrounding President Donald Trump's inauguration and the flurry of activity that followed, firms added 246,000 new workers to their payrolls, the report showed.

That compared to expectations of 165,000 from economists surveyed by Reuters and marked a substantial jump from the downwardly revised 151,000 — initially reported as 153,000 — in December. January also turned in the best single-month performance since June.