A brief history of Trump as US President
Against all odds, Donald Trump became the 45th President of the United States of America in January 2017. Markets were nervous about his potential election prior to November 2017, and analysts predicted a huge sell-off if he won the election. No one was sure how a such a businessman and entertainer would run the largest economy in the world.
But on election day, the news of Trump’s win gave wings to markets across the globe (VEU), proving many pundits wrong and leaving investors struggling to understand the seemingly irrational exuberance. Uncertainty about the election outcome then waned, and markets embraced the certainty of a President Trump—initially, at least.
What happened to prompt such a dramatic recovery in markets after Trump’s election win? Perhaps his calm acceptance speech on the night of the results made investors think that he could actually bring about tax reforms, take up infrastructure spending (ACM) (VMC), and drive economic growth. But for our purposes here, the question is now about how markets could be influenced by the political uncertainty that Trump and his unclear policies now pose.
Why should Trump be on the risk list?
After the failed American Health Care Act, or AHCA, and after Trump’s biggest executive orders were challenged in courts, markets began to doubt Trump’s ability to continue to his anticipated tax and fiscal spending reforms.
Trump’s continuous policy flip-flops have also become causes of great concern. After his recent meeting with the Chinese President, for example, Trump reversed his previous accusation that China (NOAH) had been a currency manipulator and instead blamed strength in the US dollar and rising interest rates. Notably, this statement drove the dollar and US yields lower, and such unexpected actions will likely keep investors on their toes and leave uncertainty elevated going forward.
Trump has almost completed 100 days in office, and so far, he’s fallen far short of fueling significant hopes in markets. But there are more than 1,370 days remaining in Trump’s Presidency, which means that there’s still time—and that uncertainty (VMAX) looks to be here to stay for a long time.