While most of America, even highly polarized democrats, was by and far satisfied - and in the case of Trump's fervent fans, delighted - by Trump's first address to Congress as confirmed by a CNN snap poll shortly after the speech, some were outright disappointed. Chief among them were Wall Street traders who had expected Trump to provide more details about his economic policies and some insight into how he plans on achieving his lofty goals.
One such critic was Mark Cudmore, a former FX trader who writes for Bloomberg, and who wrote a note overnight titled "Still No Details as Trump Makes America Wait Again." Cudmore's point is that while the market may be surging this morning on a sugar high combination of the Trump's "presidential-sounding" address, the recent hawkish deluge by some prominent FOMC doves chief among them Bill Dudley, he believes this will not sustain as eventually the market will be forced to ask the tough questions: how does Trump get from point A to point B.
Here is his full note:
The longer the market has to process Trump’s speech, the less impressed it’ll be. It was rhetoric packed with hopes and dreams, but light on details and concrete plans.
Sadly, it feels like this outcome was all too predictable. Although, the possibility that he could have surprised us all means that the market has not yet fully priced in today’s disappointment.
Trump did manage to sound presidential and statesmanlike, and avoid getting bogged down in partisan or petty attacks. This is a positive.
It’s also supportive that infrastructure returned to the core of the agenda. Although, it seemed a resurrection of vague plans from three months ago rather than a step further along the path to implementing a program.
Financial bubbles, most notably the dotcom era, have proven that hopes and dreams can keep the market irrational longer than most of us can remain solvent.
At some point though, reality catches up. And 40 days in to Trump’s administration, there’s little sign that he’ll deliver much of a boost to the U.S. economy on any imminent horizon.
Optimistic soundbites from the speech don’t have the ability to drive the market higher on a sustainable basis. As analyst notes flow in to investors’ inboxes during the next 24 hours, asset prices may start reflecting a far more negative outcome.
Beware downside moves in the dollar, in U.S. yields, and even in equities. At some point, traders may realize the new emperor has no clothes.
While Cudmore may be proven correct ultimately, for now the first analyst note to flow in was that from Bank of America which not only did not reflect a potential negative outcome, but raised its year-end S&P price target from 2,300 to 2,450.