I had dinner with a friend last Saturday night. I suspect she is far more conservative than I, although we don’t usually talk politics. She may even have voted for Trump. She was elated that the stock market is up since the election, which signals to her that the financial community approves of a Trump presidency.
The market is indeed up, which is a dilemma for those of us whose retirement consists of income from our investments, but who hate Trump and everything he stands for. The market rise doesn’t exactly mean, as my friend thinks, that the financial community is high on Trump. Markets are agnostic in that way; they rise when they expect more money to be flowing into the “right” coffers. The rise in the market likely signals hard going for America’s vulnerable populations, and not only because they lack stock portfolios.
Worse yet is the reason for the market’s rise. At a time when interest rates are rising, stock prices should be under pressure. Yet we’ve seen outsized gains because the market expects that corporate profits will go up under the Trump administration. And they probably will
But where will these extra profits come from? They are unlikely to be the result of improved productivity, technological innovation or increased capital investment. Trump has no coherent policies on these issues.
What seems far more likely is that the additional profits are just the extra money that corporations will be allowed to extract from the American people under the Trump administration. An extraction that is particularly objectionable since corporate profits are already at an all-time high
(as a percentage of GDP) and the money will be taken from those who can least afford it: subprime borrowers (Goldman and the banks are up), young people (for-profit education organizations are up), future generations (if corporate taxes go down now, taxes will have to go up later), those living in climate-exposed areas (oil stocks are up) and other vulnerable citizens (for-profit prisons are up).”
Ironically, if repeal of the Affordable Care Act goes through, “vulnerable populations” is going to include a lot of Trump voters. And a lot will fall into one or more of the categories described by John MacIntosh above, creating a multiple-whammy scenario.
None of us should be surprised that Trump is going to wreak havoc on the lives of the very people who supported him. He told us during the campaign that he loves “the poorly educated”. They are the people from whom he extracted 40M in his Trump University scheme. They are the small business tradesmen who do work on Trump properties, whom Trump refuses to pay and presents with the harsh choice of suing or settling for pennies on the dollar. They are the people so smitten with his reality TV persona that he could do anything — even shoot someone on 5th Avenue — and they wouldn’t turn against him.
I’m going to suffer a lot less than they will under a Trump administration, yet they continue to support him. I continue to say he will never be my president. Go figure.