Tuesday, February 14, 2017

Valuing Trump

        On November 7, 2016, Bloomberg reported that the value of all United States equities was $23.742 trillion.  By the close on February 14, 2017, the value had risen more than $2.375 trillion dollars.  Quite a specular dividend for the American people.  The increase, furthermore, was based on little fundamental economic news other than the election of a new President.
        Needless to say, there has been a good deal of speculation as to why Donald Trump appears to have created $2.375 billion in new stock market wealth.  One hypothesis is that the run-up is due to the expected passage of tax reforms and a cutback in costly regulation.
        Another theory, not so flattering to Mr. Trump, is that his administration is sufficinetly disorganized that little will be accomplished but that slowing things down in Washington is bullish for American business.
         Whatever view you take to explain the Trump value creation it should give Democratic leaders pause.  They have pillored Trump as incompetent, uninformed, dishonest, and on and on.  But if they are right, and Trump is the disaster they say he is, then how do they explain the wealth creation?  It seems to suggests that even a disaster like Trump is good for American business if he gets the country off the regulatory road the Democrats were following.  It might be a good time Deomcratic leaders to rethink some of those policies before another election rolls around.

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