Analysts at Westpac explained that President elect Trump’s first news conference since late July 2016 has left a veritable laundry list of questions unanswered for markets.
Key Quotes:
"The news conference was a far cry from the market friendly, pro-growth "presidential" comments that Trump delivered at his acceptance speech on 9 Nov. President elect Trump made a couple references to "making American great again" but there was no detail on infrastructure spending, corporate tax reform, personal income tax cuts, the prospects for deregulation or the possibility of another tax repatriation holiday. President elect Trump noted that US companies that use offshore bases to export back into the US will face a “major border tax” which may well be a reference to plans to adopt border adjusted taxation but those hoping for a clear pro-growth signal will be disappointed by today’s news conference.
All is not lost for the pro-growth Trump agenda. Trump inauguration address 20 Jan is sure to contain more references to his pro-growth agenda for the US economy – the event is by design heavily scripted and won’t incorporate any of the spontaneity and random twists that occurred in today’s news conference. Elaine Chow, Trump’s nominee for Transportation Secretary backed a "bold new" rebuilding plan in her confirmation hearing today too. The fly in the ointment however is that rather than pushing for a traditional public works program Chow instead focused on tax breaks to incentivise private sector investment, the latter of course likely to deliver a much smaller boost to the US economy.
Deregulation, tax cuts and a modest bump in infrastructure spending is almost certain to take place under a Trump administration, even though it received short shrift today. The issue is that markets arguably priced in too much reflation without any solid policy detail. Trump’s 20 Jan inauguration speech is sure to contain clear references to his pro-growth agenda for the US economy but otherwise markets need to approach future unscripted Trump events with a more balanced perspective."
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