Markets hail Trump’s economics
Subscribe to enjoy similar stories. Twenty-three Nobel laureates in economics warned two weeks ago that Donald Trump’s economic agenda would be disastrous for the U.S. Immediately after Mr.
Trump’s landslide victory, financial markets showed they vehemently disagree. Let’s hope none of the Nobel laureates adjusted their retirement portfolios; otherwise their 401(k)s may be suffering as badly as their reputations. Asset prices are fickle, and long-term economic performance is the ultimate measuring stick.
But recent days prove markets’ unambiguous embrace of the Trump 2.0 economic vision. Markets are signaling expectations of higher growth, lower volatility and inflation, and a revitalized economy for all Americans. Mr.
Trump’s election drove the largest single-day increase in the U.S. dollar in more than two years, and third largest in the last decade. This is a vote of confidence in U.S.
leadership internationally and in the dollar as the world’s reserve currency. The Russell 2000, an index of small-capitalization stocks, also rose by the most in two years due to investor expectations that the Trump economy will disproportionately benefit smaller businesses. An exchange-traded fund that tracks the Russell 2000 index saw its largest single-day inflow in 17 years.
The rally in equities was particularly unusual given that interest rates also moved higher. The combination of the steepening yield curve, stable inflation expectations and the rise in stocks indicates that markets expect the Trump agenda to foster noninflationary growth that will drive private investment. Even amid the expected pro-growth agenda and the associated increased demand for energy, the price of oil fell.
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