...is from a tweet by Paul Krugman:
In the long run, I believe that Trumpism will be an economic disaster. But cautionary tale: 2010 authoritarian takeover in Hungary, so far
I've been extremely bearish on the stock market in a Trump presidency, but so far I've been wrong. I lightened up on some of my stock position on January 9, and still feel good about my overall asset allocation, but this chart from Krugman is making me question my assumptions a little.
For my entire adult life I've been hearing about how much "uncertainty" is damaging to the stock market. (By "uncertainty," however, I've learned, many rich investors mean "higher taxes and more regulations" -- even if they're "certain" to come.) But if true "uncertainty" is bad for the markets, then what president could possibly bring more "uncertainty" than Donald Trump?
Right now I'm in the middle of reading "Chaos Candidate Becomes the Uncertainty President," by Barry Ritholtz in Bloomberg. He links to another Bloomberg piece, "Hedge Fund Investor Letters Show Managers Are Stumped by Trump," in which many high-profile money managers weigh the pros and cons of a Trump administration. (Unlike a typical Republican president like Jeb Bush, say, who would simply cut taxes and regulations, they don't know exactly what to expect.) And yesterday Bloomberg ran a piece, "Goldman Sachs Economists Are Starting to Worry About President Trump: Get ready for a wild ride," which is self-explanatory.
I still think the Trump administration will turn out to be The Gang That Couldn't Shoot Straight, although the two things they should be able to do are cut taxes and regulations -- anything else may be an uphill climb. (I actually think the story of the next four years could be the contrast in basic competence between Republicans and Democrats. Already the whole thing -- Mitch McConnell and Paul Ryan included -- has the whiff of Amateur Hour.)
But while everyone else seems to be hopping on the "uncertainty" bandwagon -- they didn't realize this about Trump before? -- I'm actually becoming a little more cautious on my bearish call after seeing that chart at the top of this post. For one, the crowd is usually wrong. Two, the American economy is a juggernaut and may prosper regardless of who is in the White House. And, three, the country may just get used to Trump's chaos and begin tuning him out. Rather than react to his latest 3:00 am tweet or every one of Trump's rants and personal grievances, businesses may just "stick to their knitting" and go on producing goods and services as before.
I'm still bearish, but that chart is giving me pause.