Donald Trump Day 2
What a difference 36 hours makes. During election coverage, the stock market went from having its futures for the next day priced down 800 points (while Trump was slowly putting red up on the electoral college map) to actually closing UP over 250 points by the time trading finished on Wednesday. Start of day 2 for the markets if perpetuating the finish of day one: more optimism. It appears the stories of our country’s demise have been greatly exaggerated.
Both Trump and Obama are in nearly the exact same position going into their first term: Congress and the President are of the same party. The two big differences here are that with Obama, his party not only had control of Congress, but had a super majority (does anyone remember that?) and he was so embraced as the next President, that he could have done anything. What did we get? Obamacare shoved down our throats which gave rise to the Tea Party. With Trump, he enjoys only a simple majority in Congress but has no expectations at all. In fact, people expect to get some extension of crazy when he enters office. That could happen. Or, if over the next couple of months, between Trump, his appointments for cabinet and some Republican members of Congress, there is a realization that they could do something special, we might get one of the better Presidency’s in recent memory. We can all hope, right?
Enter the Millennial “freak out”. While the standard clichéd responses of demonstrations and “not my President” are to be expected, this population segment really has no idea what to do. They have always been told by the liberals how to think, feel and act. Since it sounded pretty good to them, they simply went along with it. That is no longer the case. Here is a little bit of advice to them: just watch. Sure, on one hand you could get something crazy. Again, that is generally what everyone (especially the liberals) expect. You could also get something a little different or actually, a LOT different.
What the Millennials need to understand is that the economic conditions that they are aware of, that they have been living under for the last 8 years is not indicative of America. That was my own biggest concern with a Hillary victory. That more people would begin to believe that this is how America operates and what it is capable of. If you guess that most people become aware (and care) about politics sometime in high school, then that puts most everyone who has been “aware” of politics in their mid-20s for the Obama administration. That means that they have likely come through undergrad or technical school, have started graduate school or are in the first few years of their career. There has been widespread reporting of how bad the job market has been. Millennials not able to make enough to move out and jobs being scarce in general. This could all change. Here’s why.
Financial Markets Forecasting Change?
There is a general consensus in the investment world that “bond people” are the smartest people in the room. That is because the amount of capital in bonds dwarfs all other investments. Yields for all long-term bonds have been skyrocketing over the last day and a half. Why? There is a belief in the market, especially capital markets, that growth is coming. Economically speaking, if you expect growth then the price for capital, which is interest, moves higher. That is what the bond market has been demonstrating. The market as well as the economy work on perception just as much as hard data. When financial markets and the political establishment get on the same page, mountains can be moved in a very short period of time. It is terribly ironic that in the last few months of his presidency, President Obama could get of taste of what could have been. There is also no better solution for social and political anxiety than economic prosperity. Don’t believe me, just ask Ireland.
(For transparency, my vote for President was not for either of the two main candidates.)