This post The Method to Trump's Madness appeared first on Daily Reckoning. Much ink has been spilled trying to make sense of President Trump. His every tweet, decision, or action is scrutinized by political pundits and media around the globe. He has created such confusion with his record of shifting positions and use of ?alternative facts? that it's mentally exhausting to keep up. Many flatly think the president is a fool who doesn't know what the hell he's doing. Trump is, quite literally, the most mocked man in the world. But a wealth of information creates a poverty of attention. It is important to filter out the noise and the nonsense. This gives us the ability to maintain the presence of mind we need to keep sight of the larger picture. Hence, we think it is worth devoting our time to understanding President Trump's psychology and decision-making. Maybe then we can understand him, and where we're headed, better. Trump is a Master of ImprovPresident Trump is crafty, but not your traditional politician. He only has a loose grasp of policy and is thus not bound by ideology. This makes him much more improvisational than people might think. But there's still a method to the madness. Trump understands how our modern discourse has fundamentally changed. In our new social paradigm, in which facts and truth don't matter, you attract attention, rouse emotions, and then move on. His friend and Colony Capital founder Tom Barrack calls him the ?titanium man.? The drama doesn't bother him. We believe President Trump has a singular policy goal: to be popular! That's it, nothing less, nothing more. His every move will be focused on making himself look good, to ?flatter his sense of self.? The Trump brand is now inextricably linked with America's fortunes so there are really only two ways for him to move up the popularity ranks: - At home, he must blow out the budget deficit (with massive tax cuts and stimulus), and
- Abroad, he must close the trade deficit (bring production, jobs, and money back to America).
This is the proper context to interpret President Trump's policy choices and decisions. But this won't come easy. Trump is not only the most unpopular president in US history but also the most disruptive politician the world has seen in decades. Since he took the Oval Office, Trump has demonstrated no respect for norms of presidential magnanimity. America's political establishment has effectively been toppled and we are witnessing the full range and weight of democracy's oppositional capability unleashed against the president. Investors are thus starting to question whether an embattled president has enough political capital to pursue his pro-growth agenda. Where Trump Goes From Here - You'll Be Surprised!The market has largely priced out tax reform and meaningful fiscal stimulus. Infrastructure stocks and high tax-rate companies have surrendered all of their post-election gains as the Trump trade has fizzled. In the absence of monetary stimulus, we believe a further leg-up in risk assets depends on fresh economic policy initiatives. But it seems that the political maelstrom in Washington and uncertainty over the trajectory of US policy is likely to continue for at least the next several months. The considerable gap between Trump's low popularity and high opposition is the main reason behind the legislative delays. Contrary to widespread belief, we think President Trump's popularity will rise steadily over the course of his term while opposition against him will fall. Our work suggests that investors are greatly exaggerating the constraints the new administration faces in pursuing its objectives. Once tax cuts are finally passed, economic growth picks up pace, and the focus moves to infrastructure stimulus, will President Trump's popularity be higher or lower? And if Trump's fiery political brand is successful in the midterms and Democrats fail to retake control of the House and the Senate, will more or fewer Republicans stand in direct opposition to him in the future? We believe these visible victories will change how people feel about Trump for the remainder of his term. Jawad Man for The Daily Reckoning The post The Method to Trump's Madness appeared first on Daily Reckoning. |