I hadn’t read the latest from RBC when I wrote “Too Much Of A Bad Thing,” so you can imagine my amusement when, upon skimming the bank’s take on Monday’s action, it was remarkably similar to my own assessment.
Here’s what I said earlier:
That would seem to suggest that if Trump was a “good thing” for equities (which he clearly was for a few months), you can always have “too much of a good thing.” In this case “too much” meant the institution of a de facto Muslim ban and effectively shutting out the Joint Chiefs in favor of a right-wing propagandist on the National Security Council.
And you know, I’m really not trying to be partisan there. That’s actually what happened. He pushed the envelope too hard and people freaked the f*ck out.
I’m not generally enamored with commenting on the reflation narrative today. I don’t think that’s all that material for Monday. Risk just sold off. Plain and simple.
So consider that (especially the bolded passages) and then consider the following from RBC:
Stocks—much more so than FX or rates—are the asset-class bearing the majority brunt of this weekend’s chief geopolitical consternation. It ‘seems’ that the discombobulated implementation of Trump’s immigration orders has ‘furthered’ the market concerns on protectionism and the potential for Trump’s usage of “executive orders” to have “jumped the shark” just a few weeks into his tenure. The growing list of fellow-Republicans lashing-out at the immigration order—as well as the obvious lack of cohesion with the messaging even with the Trump administration–are raising concerns on ‘lost momentum’ with regards to what the stock market really wants from POTUS: tax policy clarity. As stocks have been the area “quickest” to discount expectations of lower corp tax rates, they “wear it” when markets now begin to reprice Trump’s ability to “get deals done.”
Basically the exact same message. I’m just disappointed in myself for not using the Fonzie analogy in my original post…
We’d better hear more about tax cuts and/or fiscal stimulus soon, lest the market’s “happy days” should go on a four year hiatus.