Manic Monday Pushes Economy, Markets to Forefront

in stock-market •  8 years ago 

We haven’t had an opener like what we experienced on Monday in quite
some time. In the late morning hours, President Trump sent the financial
markets roiling when he openly voiced support for breaking up the big banks. As a result, banking giant JPMorgan Chase & Co. (NYSE:JPM) had a choppy session, eventually closing virtually at parity against the prior trading day.

The markets aren’t sure what to make of the Trump administrations
latest waves. Also on Monday, the Commander-in-Chief stated that he
would like to meet North Korean dictator Kim Jong Un. According to a Bloomberg
report, President Trump stated “If it would be appropriate for me to
meet with him, I would absolutely, I would be honored to do it.”

Such rhetoric has more at stake than just the economy — and that’s a
fairly “yuge” deal in and of itself. Relations with North Korea are at
an absolute low, not that it was ever bright to begin with. However,
President Trump has a reputation of being a rather hotheaded leader. One
wrong move could easily bring the world towards a politically-generated
catastrophe.

Having said that, it’s helpful to separate the mainstream media drama
and what will likely occur. Leftist organizations have a vested
interest in stymieing the Trump administration whenever and wherever
possible. Therefore, we should take mainstream media reports with a
grain of salt.

In this case, the President never stated that he respected the
dictator. He’s wisely trying to diffuse the situation, but just as
wisely keeping all his options open. Members of the military industrial
complex, such as Raytheon Company (NYSE:RTN), see no problem with that.

As far as the economy is concerned, I would also question the media’s
reporting on the White House. The POTUS wanting to break up the big
banks is a typical “Trumpism.” It’s the standard, playful bombast that
we have come to expect from this administration. Donald Trump, is after
all, a media brand. He’s made a fine living entertaining folks, so why
now are people complaining of the very attribute that made him popular?

Anyone with a modicum of common sense will realize that a
big bank breakup is impossible to do without a long-term strategy and
bipartisan support. Like tax reform, it’s not going to happen —
certainly, it’s not going to happen exactly in the manner proposed.

What will happen, though, is unbalanced pressure on the broader
economy. Sure, certain sectors like technology are at record-breaking
levels, but major indices aren’t feeling much love. The problem, as I’ve
stressed before, lies in the U.S. Treasury markets.

When Donald Trump was elected President, the key 10-year Treasury
yield spiked dramatically; in fact, it was the biggest single-day spike
of 2016. But that enthusiasm has failed to carry over into the new year.
That suggests that the bullishness in certain sectors are based on
inflationary elements, and not due to intrinsic fundamentals.

The concern among the political independents is that issues such as
the economy, the markets, or the direction of Treasury yields do not
become mere partisan talking points. At some juncture, we have to stop
playing the robbing Peter to pay Paul routine. A robust economy is a
balanced economy — there’s no shortcuts involved.

Written by Joshua Enomoto for CrushTheStreet.com 2017-05-01

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