Tuesday, February 6, 2018


Another day (2-6-18), another volatile mix for Wall Street, and America. The sudden and large dips in the stock market this past week, however, should not be our primary concern (for the moment). We've always known that Trump's policies would kick the legs out from the Obama economy at some point. It's the other stuff in the economy that nobody's paying attention to at the moment that we should be worrying about.

Specifically, our trade deficit, government borrowing, threats of domestic inflation, and nervous global stock markets are not looking good.

* The U.S. trade deficit in Donald Trump's first year soared to a 9-year high of $566 billion (Market Watch). 
* The U.S. government is set to borrow nearly $1 trillion this year, an 84 percent jump from last year (Chicago Tribune). 
* Missing for a decade, inflation fears in the U.S. are infecting world stock markets (Bloomberg). 
European stocks, Japan's Nikkei (- 4.7%), Hong Kong's Hang Seng (- 5.02%) and most Asian markets finished in the red today (CNN-MoneyMarket Watch). 
* Don't worry, machines are driving Wall Street's wild ride, not humans (CNN-Money). 

Yeah, there's not much winning on the horizon now.

Here's the real fun part. What's happening today is no surprise, and it's not just a blip in the market. Moody's Analytics predicted this would happen if we implemented Donald Trump's policies over a year and a half ago. Specifically, Moody's predicted that lowering the tax rate, deporting undocumented immigrants, and raising tariffs on foreign trade under a Trump administration would lead to:

1. A "less global U.S. economy." 
2. Larger government deficits. 
3. Very high-income household benefiting disproportionately. 
4. A weaker U.S. economy, with fewer jobs and higher unemployment.

As Business Insider pointed out back in 2016, nearly "every proposal Trump has made ... led to a lower estimate of gross domestic product in Moody's model." They even had a nice chart predicting what would happen. Check it out ...

So, yeah, while we were supposed to get a quick economic hit with some of the policies, it pretty much is supposed to go down hill after the sudden economic adrenaline rush. This isn't rocket science. We saw this with the Bush administration too.

Grab some popcorn. We're in for a real show. Unfortunately, we've seen it before.

And, no, there's not going to be very much winning when everything is said and done.

- Mark

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