Donald Trump moved to Washington for quite some time, but he still hasn’t given any obvious hints about his plans for the economy and how and when he is going to implement them. In other words, we all face significant uncertainty. So far, we know that Trump intends to implement three major programs: raising budget spending, reducing taxes and reducing government intervention in certain sectors of the economy. But, despite this, we have not seen any serious success since the January inauguration. It seems that instead, he is more worried about replacing Obamacare with the American Health Care Act (AHCA), as well as demonstrating US military power to Syrian leader Bashar Asad and Kim Jong-un. International relations and national defense are serious tasks, no one argues with this. The US stock markets after the November elections in 2016 grew continuously against the backdrop of its economic promises and, it is worth noting that they were seriously increasing … however, the clock was ticking, and the participants were about to lose hope, and the shares would also start falling seriously. Despite Trump’s repeated assurances that he will disperse the potential of the American economy, return capital and jobs back (taking them away from Mexico and China stolen from countries?), Investors simply don’t believe it anymore. After a completely unexpected shift in international relations, sending the US military to the Korean Peninsula, hitting “the mother of all bombs” on Afghanistan or destroying the Syrian airbase, the new administration made it clear that priorities have changed. And now two scenarios are opening up before us. Rebound or fall of stock markets, a trend that can gain momentum and pose a much more serious threat than an ordinary correction. Rebound Even with all the internal and external scandals around Trump at the moment, market participants are following a bullish strategy. And it says a lot. This means that “we still trust you, Mr. Trump” or … “we are waiting for a rebound in the near future.” Want to take this side? That’s your business. Drawdown Another scenario is a drawdown of the market. With further continuation of the escalation of geopolitical tensions, or trump’s execution of economic promises, disappointment with a heavy burden will fall on the mood of traders, which could cause a serious downward trend in the market. Current issues to watch out for
• Health care reform – small chances of success. Trump must find a way to find a common language with the leadership of the Republican Party and convince everyone to unanimously take his side. Otherwise, neither health care reform, nor any other reform will be adopted by Congress.
• Tax reform – it’s not clear yet, it’s better to wait until August. However, Finance Minister Stephen Mnuchin said that it could be postponed due to health care reform.
• Measures to reduce the amount of state intervention in the economy – in this issue can move forward. It is likely that Trump will take on this task in the near future.
Review prepared by Fort Financial Services Research Department. Follow our publications!