Our Presidential folklore seems to have us hold that the First 100 days after inauguration day, provides an opportunity for a U.S. president to make changes and bring along some redemption of sorts, where the ills of the past, are to be relegated to the waste bin of history. I go back to the time when the Clinton administration had the same aspirations with Healthcare, only for them to be reduced to smoke. But as we all know, there is nothing magical about the first 100 days.
Well to be honest, I was surprised at the failure of the American Health Act of seeing the light of day in the Congressional chambers. With a plethora of Republican majorities in governments, it would seem that passage would be a mere formality, but then again it was not meant to be. So where do we go from here. The Republican Party, just recently has sent out indications that Healthcare remains a priority and that it is soon going to be resuscitated, this time perhaps with some abler handling.
I have thought that the recent uptick in the equity markets, since November 8 of last year was mostly due to markets listening to what they like to listen to…low taxes, massive government outlays, and controlled Healthcare costs, and of course the sheer impunity of a lower interest rate for over a decade does help. The aftermath of the failure of the American Health Care Act has had no significant effect on the market attesting to its resiliency.
Next stop, a promised colossal Tax Act which may give the 1986 Act a run for its money. I worked through early days of the 1986 Act and it was no fun. We still carry the scars today. Currently, lower tax rates both for individuals and corporations have been promised. A move to extinguish the Estate Tax has been planned, and to boot, a Border Tax’s passage is in the delivery system. The Healthcare package which just failed had some very significant tax provisions reducing tax revenue. Does this mean that we may perhaps see a much watered down version of the tax bill then what has been promised. The coming days will shed some light on this as committees will be going back to the drawing board. Will this therefore put a dent in the euphoric stint that the equity markets have enjoyed?
Overall I am of the opinion that the economy is on the right Goldilocks track. We have a reasonable growth rate. I don’t think we are going to get to the 4% growth rate promised. Inflation is in check with the Feds keeping a hawk like vigilance over the interest rate. Consumer confidence came out with some very good numbers. Housing is on a stable trajectory. We need to keep in mind that we are still catching up on a lot of the economic metrics since the devastating days of 2008.
Brexit is now a reality with Article 50 being triggered by the British Government, and some hard fisted negotiations are in the offing. Personally, I was hoping that Britain would remain in the European Union as a fractured Europe is not in Britain nor Europe’s interest, given that modern day economics seems to favor trade blocks for the most part.
However, what worries me most is the current populist talk of protectionism, trade wars, tariffs etc, etc. We have been down this road before, and the scenery has not been very pleasant. The planet is fairly integrated at this point and globalization has its virtues. Populism on the other hand is like an ill wind that blows hard, but seldom does anyone any good.