On the day before the inauguration of President Donald Trump, there is a sense of nervousness among investors world-wide. What we do know is that the man has protectionist and expansionist views that seem to be reduced to the simple saying, “I win; you lose”.
As a protectionist, Trump is demanding a serious reduction of auto imports and to renegotiate sovereign agreements, many of which have been in place for generations. Does he really believe he will win and the other side will lose? As Napoleon discovered the horrors suffered by his French army as well as the same he caused to the Russians at the Battle of Borodino, conflict at this level is not a TV reality show, and the players are not apprentices.
As an expansionist, Trump appears ready to incur huge national debt for his planned expenditures on infrastructure, military and energy development while at the same time drastically cutting corporate taxes. Does he really believe that the immediate beneficiaries will win and most of the American people – those who are in debt — will not lose?
In both cases, congressional lawmakers are going to have to be involved in these momentous decisions. In the end, though, it is the President who must lead.
Interesting to some as it may be, I find no fault in Trump’s intended mission or his passion. Of course, it goes without saying that extreme caution is needed when implementing strategy and tactics. The world is hopeful, I believe, that the President understands the law of unintended consequences.
The one matter that does trouble me greatly is that the President appears to now want to lay the legal and regulatory framework for Wall Street bankers to operate with few restraints, which is contrary to his campaign platform, and that such actions might be personally motivated.
I hope Inauguration Day goes well in DC tomorrow; but, I fear it may not. There will be too many organizations with close to one million participants in the streets many of whom are extremely pro-Trump and con-Trump to not expect conflict. For the protesters, their message to the world will be “We win; he loses.”
Anxiety is not a good thing for capital markets. A quiet day tomorrow would be most encouraging.
/Bill
