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Short Note                                                                              24 January 2017

Sit Tight    

by Cees Bruggemans          words 370

So you thought you understood the situation? Trump was going to be big, but not mental? Well, think again. The daily White House flow is pumping up, and it looks like big change.

As Trump has been saying for 18 months, he has the ordinary bloke in mind, the one that somewhere along the line fell off the wagon. And he apparently wants to change the system of production as we know it to do so, at home and globally.

So it is the first Trump Monday in office, and we hear three things: a very major border tax, huge tax cuts for middle class and businesses down to rates of as low as 15%-20%, and cutting regulations by up to 75%.

This is so big in every direction, that his watching audiences sense overreaching. Trump won't be able to deliver all this, once Congress gets in on the act. Though Republican, and undoubtedly loving much of this, there are still many Egos that will want to get in on the act. A lot of scope for disagreement here.

Worse, Trump’s approval rating is only 37% at the start of his Presidency. A majority (54%) disapproves. Not every senator with his own re-election in mind will be able to support Trump’s wilder, disruptive, costly intentions. This could be more of a curtailment on the president than fully realised.

Yet face it. Trump is not the ribbon cutting and baby kissing type of guy. Instead, there is this air of cutting cackle instead, Gordian Knots, Big Stuff. And though his power is limited, having to go through Congress on many major domestic issues, by setting the hurdle very high he is setting up his political colleagues to match his big thinking.

It is early days. Markets have no clue what to think of all this noise. But like any good bull dog (remember Tom & Jerry?), they keep a very sharp watch out, and are ready to bite very hard once the outline of things harden.

Lots of uncertainty, as Trump sets the cat among the pigeons, something that could last a few months.

Sit tight. We need more hard info to gain better insight as to what all this means.

 

Cees Bruggemans

Bruggemans & Associates, Consulting Economists

 

Website  www.bruggemans.co.za

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