One thing I think is becoming patently clear these days is that markets are amoral (who knew?).
I choose that term carefully: markets are unconcerned with the rightness or wrongness of something.
When Donald Trump was elected president of the USA, major US market indexes moved forward in a highly positive manner (the “Trump Bump”).
The promise of deregulation, tax cuts and infrastructure spending (not so much ripping up trade agreements) are bullish for profits.
Markets don’t care about what Trump stands for (or if he stands for anything at all for that matter) as long as the perception is he and the Republican Congressional majority will deliver the goods.
Now that Trump appears to be lurching from one political crisis to another (Mueller investigation, failed health care repeal/replace, North Korea, Charlottesville, etc.) markets still don’t care. As long as there is a belief that deregulation, tax cuts and infrastructure spending are on the way, politics don’t appear to matter.
Major business CEOs (including Merck, Under Armour, Intel, 3M, Campbell Soup, United Technologies and Johnson & Johnson) began defecting en masse from two of Trump’s business councils due to his public remarks about events in Charlottesville since last Saturday. Today these councils were disbanded (or, perhaps disbanded themselves).
Some or all of the business leaders may have opted out for moral reasons (the prevailing reason offered). These business leaders do not want themselves and their companies to be associated, in their customers’, shareholders’ and employees’ eyes, with the increasingly widely-derided “equivalence thesis” advanced by the president about violence in Charlottesville.
Maybe many businesses are also somewhat amoral. The CEOs on these councils, and the shareholders they represent in their businesses, generally have a profit motive as their primary (but not exclusive) reason for existence.
Do these defections also suggest some of these business leaders have lost confidence that Donald Trump and his Republican Congressional majority will deliver all the promised deregulation, tax cuts and infrastructure spending?
If some of the biggest US businesses have lost confidence and concluded their profits (and reputations) may suffer under Donald Trump’s presidency at this time, what does that mean for markets?
We’ll see as this drama continues to unfold Stateside.