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Last night’s speech by Donald Trump at a joint session of congress was his biggest and most important speech to date, but from a market point of view, it was a damp squib. Much had been made about the potential for huge moves in the US dollar as Trump was finally set to outline his fiscal policy, and this was despite Trump himself saying on Monday that he was not going to talk about tax plans.
So it should have been no surprise to see Donald Trump not go into much depth on fiscal policy. The President mentioned that there would be tax relief for millions of American households and businesses but didn’t give any detail. However, that is not to say that the speech was not a success for the President, despite the Dow finally breaking its winning streak in anticipation.
Trump’s stance was far more measured, he was far calmer than he has been in recent weeks, and he had a far softer stance on immigration than previously. All things that have led many to praise the speech, on both its content and its delivery. Trump set out an ambitious agenda for his administration, and his striking change of tone will have led many to take stock after a volatile first couple of months in power for the new President.
- Trump called for a robust, direct and meaningful engagement with the world and for real and positive immigration reform.
- He called on Congress to invest $1 trillion in an infrastructure bill.
- One of the biggest cheers of the night from the republican side of the chamber came when Trump called on Congress to repeal and replace the affordable care act (Obamacare).
- He outlined the smooth transition to a better healthcare system.
- Trump reiterated his stance on tax by stating that his team is working on a historic tax reform plan.
The be all and end all of Trump’s address was that it offered few policy details while yet again outlining the need for various plans on tax and healthcare. Sooner or later the markets will need solid plans on fiscal policy, to stop the irrational moves as market participants try and guess the next move.
The focus now moves to Janet Yellen and the Fed after the probability jumped for a March rate hike from 32% on Monday to 67% today after Fed speak overnight. With so much focus now on the Fed and the expectations of policy movement in a couple of weeks, the focus is likely to stick with the Fed for the foreseeable future.
