Does This Chart Show The Market Is Too Negative On Tax Reform?

Earlier today, we brought you the latest from former FX trader Mark Cudmore who, simply put, thinks maybe you’re being a little too hard on the President. Here’s what he said:

The dominant assumption is now that Trump will not soon achieve any major policy success, if at all. After many unrealistic and unfulfilled promises by the new president, it’s been forgotten that most new administrations take time to meaningfully change policy.  It might be that the narrative has become so negative that, soon, the only option will be for optimism to increase.

Yes, “it might be that the narrative has become [too] negative.”

Or it “might be,” that trotting out a double-spaced one-pager that looks like it walked out of a high school student’s Trapper Keeper and calling it the most important tax plan in the history of the country further underscores how truly inept this administration is.

But whatever. You can draw your own conclusions on that.

Well on Thursday evening, Goldman was out with telling a similar story. Here’s a quick excerpt and one chart that the bank says suggests investors have now become too negative on Trumpian tax reform…

Via Goldman

In addition to the decline in European political tail risk after the first round of the French election, we think sentiment among investors with regards to the US policy agenda has likely turned too negative, especially with regards to tax reform (Exhibit 5). Our US economists remain of the view that tax legislation is likely to become law even though the process will likely be slow.

Tax

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