Bloomberg thinks it is time for markets to accept reality. Despite a lot of effort, the president has overpromised and under delivered when it comes to repealing Obamacare, tax cuts, and infrastructure spending, and at some point soon the market is going to react to that, says Bloomberg. The failure over the Obamacare repeal is not a big deal for markets, but it does signal that Trump will likely not be successful in his other efforts, a troubling realization for investors. This may mean that markets react with stocks moving lower as current valuations cannot be justified, and that yields also move downward as the Treasury would need much less debt than has been anticipated.
FINSUM: The fissure of the Republican party has already been laid bare, so we do not think markets are suddenly going to react. We think a lack of action on taxes and infrastructure are already priced in.