Markets Respond to Trump Election

By Douglas V. Gibbs
Author, Speaker, Instructor, Radio Host

Economics are primarily based on supply and demand, which is why the Keynesian economic theory the Democrats rely on is such a foolish concept.  The experts who are saying we are in store for some problems under the Trump administration economic policies are also the folks who thought Brexit would destroy Britains economy - and like with their thinking regarding Trump, when it came to Brexit's impact on the British Economy, the experts were dead wrong.  Britain is looking at tremendous economic growth as a result of getting the heck out of the European Union. The Saudis and Chinese are nervous, dumping quite a bit of U.S. Treasuries they have been holding on to.  Bank Stocks have been rallying.  While the leftists try to pump government money into consumerism, they neglect the supply side of the equation which requires an increase in manufacturing - a mechanism that is incapable of going into full throttle mode without a retreat of government intrusion which is characterized by heavy corporate taxation, and regulations.  Donald J. Trump's economic agenda is all about reducing taxes against the producers, and removing the choking regulations that have helped in stagnating business growth.

Speculation, in today's economic climate, is also a very powerful force, and with the election of 2016 choosing Donald J. Trump as the 45th President of the United States, we've seen some interesting instantaneous responses in various sectors of the economy.

TRUMP ROCKS MARKET

Immediately after the election of Donald Trump the Dow Jones Industrial Average closed on a record high.  This is the market’s first record close in three months, and comes amid a market drawing increasingly bright lines between what it views as winners and losers in a Donald Trump presidency.

INVESTORS EXUBERANT

The rallies in major world stock markets are a response to the anticipation and speculation swirling around President-elect Donald Trump's proposed fiscal policy that, while the speculation includes fears of inflation, it also recognizes the likelihood of a prosperous economy as taxes drop, and regulations are slashed and burned.

"The Trump campaign did say it would repeal Dodd-Frank. Rates are higher and the yield curve is steeper. Those are all good things for the banks," said Warren West, principal at Greentree Brokerage Services in Philadelphia.

Bond yields continued to climb amid expectations interest rates will rise under increased spending.

Stocks on Wall Street had jumped on Wednesday, the day after Trump's stunning (stunning, at least, to the mainstream media) win, with companies expected to benefit from his reflationary policies seeing the biggest climb.

The dollar also continued to strengthen and was last up 0.36 percent at 98.856 against a basket of major currencies. The greenback was on track for its fourth straight session of gains.

The strength in the dollar weighed on gold which fell 1.6 percent to $1,257.02.60 per ounce, on track for its third decline in four days.

Copper jumped to a 16-month high of $5,714 a tonne and was last up 3.5 percent at $5,600.85 on expectations of a jump in infrastructure spending under a Trump presidency.

Oil and Gas Prices Dropping in Anticipation of Trump Presidency

The New American is reporting that along with the fact that prices for crude oil and natural gas were already declining thanks to continued overproduction by the OPEC cartel, the election of Donald J. Trump as President of the United States has encouraged prices to drop for other reasons, as well.  Trump says he is committed to domestic energy production.  As a result of a number of factors, including Trump's win, the price for crude oil for December delivery has dropped more than $2 a barrel since the election.  Evan Kelly, writing at OilPrice.com, thinks it’s going to drop further, perhaps much further.

The reasons largely surround Donald Trump’s promise to breathe new life into an industry hampered by over-regulation, mostly driven by concerns over the man-made global warming myth.

Trump, in order to follow through with his energy commitment, is considering Forrest Lucas, the founder of Lucas Oil, for the position of secretary of the Department of the Interior. As secretary, Lucas would be in a position to lift, modify, or rescind some of the more inane politically driven limitations placed on the energy industry by that department. Lucas' political position on those “inane” limitations can be measured by his decision to invest $600,000 of his own money into a non-profit organization, Protect the Harvest, which opposes “the radical animal rights movement” and which calls the Humane Society of the United States “a wealthy and successful attack group.”

Trump has already picked Myron Ebell of the Competitive Enterprise Institute to lead his EPA transition team. Ebell is also the chairman of the Cooler Heads Coalition, which is “focused on dispelling the myths of global warming by exposing flawed economic, scientific, and risk analysis.” A contrarian by nature, Ebell (and his team) could replace the present global-warming advocates currently in place who have increasingly stymied energy development with more reasonable individuals operating without a fixed political agenda. New faces at the EPA could rescind its September 2011 “Endangerment Finding” that the Obama administration has used as cover for those restrictions. That “Finding” declared “that greenhouse gas emissions endanger the public health and welfare of current and future generations." Specifically it found that “greenhouse gas pollution generated by human activity is causing climate change,” that it “will endanger public health,” and that it “will endanger public welfare."

Supply and demand is about to take over.  With domestic oil being pumped into the global market, and being sent by pipeline to major refineries on the East and Gulf coasts at a lower cost thanks to the pipelines, we could see the price of gas plummeting to a level most folks have only dreamed of.

At present the United States, despite its remarkable increase in production of crude oil, still falls short of meeting the country’s domestic demands.  An increase of domestic oil in the flow of things will not only reduce the prices worldwide, but enable the United States to divorce itself from dependency upon foreign oil, and actually make the United States a primary energy provider to the world.

Wouldn't it be nice to put OPEC out of business?  To take away the oil cash cow the Muslims use to fund their terrorism?

If true to his word, a Trump administration could fuel a magnificent American renaissance with untold benefits to every energy user and consumer on the planet, leading to higher standards of living not only for those working in the industry but for every other person using energy in their daily lives.  And yes, put Russia, Venezuela and the Middle East in a position of losing out big time economically, making them less dangerous, and more likely to hide in a corner for a while.

US housing starts surge to 9-year high in October

U.S. housing starts surged to a more than nine-year high in October as builders ramped up construction of both single and multifamily homes, offering hope that housing will contribute to economic growth in the fourth quarter.  Could this be in anticipation of a Trump victory?  Could the very thought of Obama being gone fuel such a surge?

Single-family home building, which accounts for the largest share of the residential housing market, jumped 10.7 percent to an 869,000-unit pace in October, the highest since October 2007.

According to CNBC, among the factors driving up the housing market is a tightening labor market, which is starting to drive up wages.  As speculation regarding a reduction in federal taxation and regulations begins to take hold of the market, and prosperity rises among consumers because they are able to keep more of what they earn through a reduction in taxes, we could see a healthy steady rise in housing.

Dollar at Highest Since 2003

The U.S. dollar index touched a near 14-year high on Wednesday, roughly a week after Donald Trump won the U.S. Presidency in the 2016 Election.  Wall Street also saw incredible gains, with the S&P 500 finishing at a 10-week high while the Dow industrials set a record close, fueled by a post-U.S. election rally.

U.S. President-elect Donald Trump's plans to cut taxes and increase infrastructure spending could boost economic activity.  Experts say the tax cuts will add to the deficit, but historically reducing taxes encourages growth, which fuels a rise in prosperity, which in the end increases revenue because more taxpayers are making more money during the time of bolstered economic growth.

Some reports also suggest that Trump's immigration policies and desire to impose tariffs on cheap imports will intensify inflation.  An increase in domestic manufacturing, partly driven by a return of a number of companies to American shores, may be enough to offset inflationary increases.  The halt of currency deflation will also, likely, halt the rise of inflation.

Speculation also incited a selloff in U.S. bonds, which wound up lifting yields across the board, and raised expectations that U.S. interest rates will rise faster than previously anticipated, giving support to the dollar.

-- Political Pistachio Conservative News and Commentary