Well folks, it may be that the honeymoon phase of Trumponomics is over. Following a dip in Asian markets and multi-billion dollar decline in the British FTSE 100 at the open of the markets today, American markets followed suit by taking the biggest drop since election day.
“The Standard & Poor's 500 index fell 5 points, or 0.2%, to 2,338, as of 11:42 a.m. Eastern Time. It had been down as much as 0.9% earlier in the day.
The Dow Jones industrial average fell 63, or 0.3%, to 20,533, and the Nasdaq composite slipped 4 points, or 0.1%, to 5,823.
Small-company stocks fell more than the rest of the market. The Russell 2000 index fell 5 points, or 0.4%, to 1,348. They had been outpacing the market since the presidential election.” (via L.A. Times)
While the Euro, Pound, and Yen all rose, the Dollar took a dip of 0.31 against the Yen. Treasury yields fell by 0.3% and financial stocks, banks in particular, fell by 0.9%, with Morgan Stanley posting a loss of 3.3%., while U.S. crude dropped 31 cents a barrel. Overall, it is fair to say that today was not a good morning on Wall Street.
While opinions differ, the consensus appears to be that this is in response to the Republican house’s failure to repeal and replace the ACA last Friday. Moreover, its failure to even make it to a vote was seen by the international investment community as cause for concern.
The growth the market has seen since the election has been largely predicated on the belief that a Trump presidency and Republican house would be friendly to business. Trump was elected on promises to cut income taxes, to loosen restrictions on big business and to provide incentives for ‘job creators.' But now it seems he and Paul Ryan are going to have more difficulty passing legislation than they initially anticipated.
This could be very bad news for the folks who are counting on the new regime to deliver on the business incentives they promised.
Kathleen Brooks, research director at City Index wrote this morning, “The markets are having their own ‘Trump tantrum,’ as investors seriously doubt whether the president’s abrasive style will work in Washington.” She went on to characterize today's events, and the market behavior that she anticipates will follow as a ‘disappointment trade,' meaning that the President’s ability to deliver on his agenda is directly linked to the behavior of American, and consequently global, markets.
I don’t know about you, but I find that less than comforting.The President’s behavior has been less than reassuring while in office, from his declaration that “No one knew healthcare could be so complicated,” to his assertion on Friday that it would be best to watch Obamacare “explode” before turning to tax reform which, in his eloquence, he characterized as something “I’ve always liked.” That’s comforting; he likes tax reforms, imagine my relief.
Nor was I heartened by his insistence, in the same statement, that the bill failed because of a lack of support from Democrats. To be clear, the Republicans outnumber the Democrats by 44 members and only need 218 of their 237 members to vote one way on a bill for it to pass the house. This bill failed because Republicans didn’t support it. This failure has a wide ripple effect.
And so we are left with a man who can barely retain a grasp on reality, let alone the responsibilities of his office or the operational apparatus of his government, who is now expected to lead the charge on cutting taxes and slashing restrictions to pave the way for a corporate golden age. Forgive me if I don’t hold out hope for this.
If there is good news in any of this, it is the bizarre coda to the drop in markets: hospital stocks rose. Across America, healthcare providers were posting gains of as much as 7% this morning, due in large part to the reassurance that 20 million Americans were not going to lose their health insurance.
This climb in healthcare value is a good sign that despite the President’s claims that the ACA will explode, the legislation probably represents a stabilizing force for the American economy and for the growth of the healthcare sector more broadly.
While those of us who advocate for single-payer healthcare still maintain that this is but a shadow of what could be, the continued stability of the industry should be a wake-up call for conservatives who think that healthcare is a waste of money. The money distributed by the ACA is allowing hospitals to stay open, people to get care and- most importantly for the people who worry about the cost – giving thousands of Americans reliable employment.
That’s right – socialized medicine is the financial success story of the day.
If anyone needs me, I’ll just be over here looking smug.