Dow 22K and the ‘Trump Infamy Ecosystem’

...Donald Luskin of Trend Macrolytics thinks Mr. Trump has every right to take credit for rising markets. In a note to clients this week he acknowledges the view of many investors that “all of the pro-growth hopes and dreams that flourished right after Trump’s surprise election have now been crushed by the swamp, and Trump’s own seeming self-destructiveness.”

Mr. Luskin has a different view and writes that booming U.S. stock markets probably represent a “rational recognition that, since Trump took office, many pro-growth hopes and dreams have already become reality.” Mr. Luskin continues, “We’re not trying to be either cheerleaders or partisans here. But it’s a reality that a great deal of pro-growth progress has been made.” He ticks off a list that includes pipeline approvals, the rollback of various Obama-era rules, and the hiring of deregulators to run the EPA, the FCC and other federal agencies.

As for disturbing news out of Washington, Mr. Luskin sees Mr. Trump at the center of “an ecosystem self-perpetuated by the lust for power by politicians on both sides of the aisle, and the lust for audience by the media both liberal and conservative. The apex predator in this ecosystem is Trump, who controls it all by following Roger Stone’s rule that ‘it is better to be infamous than not to be famous at all.’ That’s not a recipe for clarity.”

Mr. Luskin observes that neither Mr. Trump nor the journalists who hate him seem to have much interest in presenting a “false image of calm and control,” as might have prevailed in some earlier administrations. Mr. Luskin writes:

"What is happening here is that the swamp hasn’t gotten drained yet, but we are seeing it more clearly than ever before. You can tell yourself that things are actually worse now, but we think the truth is that you are just seeing for the first time distasteful realities that have been there all along."

What does it mean for investors? Mr. Luskin concludes:

"Despite seeming chaos in Washington, US stocks are on track for a 2017 total return of 20.9%, twice the historical average, and risk premia are lower. Technically, a correction is overdue. But risk-tolerant markets can handle the chaos of the Trump infamy ecosystem. It is informationally efficient to reveal distasteful processes that were there all along, but concealed."

Wednesday, August 2, 2017
Wall Street Journal