Long before the election upset of 2016, economists in the U.S. were lamenting the decreasing effectiveness of monetary stimulus and clamoring for the fiscal kind. No longer. With an acquiescent Republican Congress, the Trump administration can, realistically, effect some sweeping changes that represent fundamental shifts in the fiscal, monetary, trade, and tax regimes.
Although the actual policies and sequence of events are still unclear, a mere attempt to change the status quo has had the markets respond vigorously to the "Trump trade" in the last two months. Bonds crashed, equities broke all-time high, base metals rallied hard. Is this sustainable? If personnel is policy and personality is destiny, a theme of fiscal stimulus in the form of tax cuts and infrastructure spending, monetary tightening, trade barriers, and geopolitical conflicts is slowly emerging.
Boom Time Ahead?
Start with the tax and regulatory reform. Lighter touch regulations, lower corporate tax rate, and… Read More …