Raining on 71-year-old President Donald Trump’s first State-of-the-Union Speech, Wall Street slid for the last two days, with the Dow Jones Industrials losing 362 points or 1.37% and the tech-rich Nasdaq dropping 64 points or 0.86%. Trump planned to tout the markets performance since taking office Jan. 20, 2017 with the Dow at 19,827, ending today’s session at 26,076 or nearly 24% for the year since the inauguration. While the bull markets been going gangbusters, a correction looks in the works, where market value can sometimes fall up to 10% or another 2,000 points. Taking credit for Wall Street is a risky proposition for presidents, especially when it’s difficult to anticipate market corrections or sell-offs. With Federal Reserve Board Chairwoman Janet Yellen due to retire Feb. 3, replaced by Jerome Powell, Wall Street already feels the squeeze from rising interest rates.
Trump’s main selling point is his pro-business fiscal policy, signing the biggest corporate tax cuts in the nation’s history Dec. 22, expecting Wall Street to continue to rise. Rising interests rates typically cause market corrections where the nation’s biggest funds shift bigger percentages of assets from stocks to bonds. Watching the nearly 700-point drop in two days indicates that big investors are taking profits, re-adjusting equity positions. How deep and whether the market correction continues for how long is anyone’s guess. Rising interest rates present the biggest threat to a bull market because investors retool the percentages of bonds and stocks. Trump wants to tout his tax bill but knows there are unintended consequences to an improving economy, including rising interest rates and discounted share prices. Trump’s going over his speech with a fine-toothed comb before speaking to a joint session of Congress.
With the government shutting down Jan. 20 only to reopen Jan. 23 for a brief three-week window before the next debt crisis, Trump expects to appeal to bipartisanship, the same approach he took to end the shutdown. Democrats, especially the hard left, want a fix to the Deferred Action Child Arivals [DACA], expecting Trump to show compassion to avoid another government shutdown. Giving Democrats long-term funding for the Childhood Health Insurance Program [CHIP], showed the kind of bipartisanship needed to end the shutdown. Next time around, Trump wants Democrats to agree to $25 billion in border-wall and security funding. Why Democrats object to better border security is anyone’s guess. Spending money on a border wall has been low on the priority list for House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.).
Wanting to handcuff Democrats from playing obstructionist, Trump plans to emphasize bipartisanship going forward. “We’re going to get something done, we hope bipartisan,” said Trump. “The Republicans really don’t have the votes to get it done in any other way. So it has to be bipartisan,” despite urging Senate Majority Leader Mitch McConnell (R-Ky.) to go “nuclear” to end the government shutdown. McConnell ignored Trump’s suggestion, knowing in the near feature, the GOP could be the minority next November. Trump wants to get a deal done with the “Dreamers,” whose parents brought them to the U.S. illegally. Reaching a deal on DACA won’t be easy for Schumer who received a ration of bile from the hard left for playing ball with Trump to end the government shutdown.
Fresh from the World Economic Forum at Davos, Switzerland where he received high marks, Trump will push his America First agenda, reminding foreign governments and corporations that the U.S. seeks reciprocal trade deals, not ones that disadvantage the U.S. On foreign policy, Trump expects to revisit pressing hot spots around the globe, especially North Korea and Iran. Trump’s put theU.N. Security Council and European Union on notice that time is running out to resolve the situation peacefully on the Korean Peninsula. While North Korean dictator Kim Jong-un touts peace with South Korea to get him to the Seoul Winter Olympics, Trump knows he’s refused to disarm his nukes and ballistic missiles. Trump expects to remind a joint session of Congress that he can’t let Kim get a nuclear-armed Intercontinental Ballistic Missile [ICBM] without compromises U.S. national security.
Trump’s bipartisan tone to Congress comes with a quid pro quo, especially when it comes to DACA. If Democrats want immigration reform, or at least a fix for the “Dreamers,” they’re going to have to play ball with Trump. Expecting DACA without concessions on border security, including funding for Trump’s wall, won’t get it done. Behind the scenes, Trump knows Special Counsel Robert Mueller’s Russian collusion investigation looms large. Democrats have put all their eggs in the Russian collusion theory, with Rep. Adam Schiff (D-Calif.) hoping that it will win back the House and the Senate in November. Nothing will be said about Rep. Devin Nunes’ (R-Calif.) “secret memo” that could upend Schiff’s plans to take back the House and Senate with a torpedo. If Trump finds common ground with Democrats on bipartisanship, there’s a good chance he’ll make a deal on DACA.
