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Why is Wall Street Still Supporting Trump?

By on January 22, 2018 in New York

Trump Tower may be in New York City, but very few of us here have any love for Donald Trump. It’s not a dislike started by his failed presidency, having dated back quite a few years before he assumed power in the White House. Among the areas of concern that followed his victory was the stock market. Could this so-called real estate success who had gone through numerous bankruptcies actually steward the U.S. economy in such a time of uncertainty?

A number of people thought he couldn’t and greatly decreased their market activity. However, as dreadful a president as Trump has turned out to be, he has not tanked the economy. He does not really deserve any credit for Wall Street’s continued success, though.

There are several reasons why not the least of which is that Wall Street knows as well as everyone else when to ignore Trump’s bluster. Of greater import, however, is one of the only things Trump can call a victory: tax reform.

Those significant changes mean large companies will start to repatriate money they had parked overseas to avoid the higher corporate tax rate. That will likely continue to fuel the bull market that has been present for some time. The natural cycle of Wall Street will end this eventually, but it has gone on longer than many would have predicted given the rudderless leadership and regular chaos coming out of this administration.

That extra cash means that companies will continue to buy back their own stock, effectively reducing the number of shares available for trading and, in the process, increasing their value. Money can be given away as dividends and hedge funds will buy stocks to get those dividends.

To the surprise of many, market volatility has remained low under Trump. But don’t worry: the Wall Street brain trust clearly recognizes what a useless idiot Trump is. He remains a useful one. For now.

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