After Friday’s fiasco on the ObamaCare vote I believe we will see the beginning of the Trump dump.
This may take equity markets down as much as 20% from the post-election highs as a “Do-Nothing” Congress stymies the White House at any move.
Congress will want tax cuts, but not this year. They want those to be set up to impact the 2018 elections, so there is plenty of time for that. Even if you assume it takes a year for lower taxes to impact Main St. there is no rush to get the tax cut bill enacted.
The White House is so far out of its league in knowing how to work the Hill that it can’t even get Republicans to fall in line.
How poorly Trump and his aides handled this will tell Wall Street everything it knows about the stonewalling that will take place on tax cuts and other initiatives push by Trump in the campaign.
Trump’s vindictiveness after the loss did him or the American people any good and showed just how outside the process he is. Trump’s actions made Democrats dig in their heels and had some Republicans flip, hardly in the mold of LBJ in getting legislation passed.
So what to expect over the next six months? No much on the legislative side or executive orders to placate equities. The debt ceiling will go down to the wire to string out the White House agenda.
I would hope Trump looks at his White House aides and finds a new chief of staff. I would thing Reince Priebus needs to fall on a sword for the ObamaCare debacle. Chief aide Steve Bannon should also find the door, since he only brings negative attention to the president without a shred of experience to how Washington works.
We have had “Do-Nothing” Congresses for the last few years under the Obama Administration and we saw how well the economy grew under that leadership.
So look for the equity trend line to move lower as Spring brings no “green shoots” and infrastructure jobs programs and other initiatives fall victim to haggling over debt limit through June.
The S&P 500 is at 2,343 on March 27, On June 27, 2017 will it be at 1,960? perhaps.