Why Trumponomics will take years to implement: trader

2017 … should be interesting

We closed the books on 2016, which definitely had its ups and downs, but overall was a pretty good year, though it didn’t get off to a good start. This time last year, we were off to the worst start in 80 years —followed, rather quickly, by the best intra-quarter rally in 83 years.

We were told Brexit was going to be Armageddon for the markets. Well, that drama lasted about 10 days before the markets digested the event, shook it off and returned to its upward momentum. Next, came the Darth Vader event: The Donald. The markets around the world were supposed to collapse. On Election Night, the futures were down about 1000 points, but that lasted about as long as you could say “Hillary.”

The markets not only reversed, they also added over 1200 points to the Dow (DJIA) at a record-breaking pace, coming within 13 points of Dow 20,000. All three major indexes closed out the year up from where we started: Dow +13%, S&P 500  (SPX) +9.5% and Nasdaq (NAS) +7.5%.

Now comes the interesting part. The Dow finished the year at 19,762. We will soon see how much confidence investors really have in the market and the Trump rally. It’s easy to make decisions to buy when the markets are making new highs on a weekly basis. Let’s now see how fast the “sell orders” hit the floor with the markets down about 250 points from their highs. Should the Dow break down below 19,000, the masses, who took the stock market to an all-time high, are a fickle bunch and could just as quickly lose their confidence.

It could take years to implement Trumponomics

For the president-elect, the first 100 days in office will become a major test of not only his ability to govern but also set the tone for the markets. The Trump rally, which posted gains in the Dow of 7.8% since the election, is all based on his plans to reduce taxes, cut back regulations, repeal and replace Obamacare, as well as create jobs in America—all of which are very business-friendly.

Senator Chuck Schumer (D-NY) has indicated that he will work with both the new administration and Congress to get legislation by late summer this year to implement tax cuts.

Lessening regulations could be a little tougher. It could take months or years for some to be rolled back. Changing and/or dismantling Obamacare will be difficult and could take even longer. Jobs are, by far, one area that could take years. We live in a new age—one in which technology is here to stay. Competition from foreign nations, where the living standards are below ours, may make pricing difficult if not nearly impossible to compete with.

It will most certainly be an interesting year, as the new president takes the reins of the most powerful economy in the world. US home net worth now totals $90 trillion, an all-time high. Could we see Dow at 23,000 this time next year ? Lets first get to 20,000!

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