FX MACROECONOMICS by Stewart Richardson


Reality Check on the Trump Reflation Trade


After the recent extraordinary events in US politics,


let’s take a step back and try


and assess what’s going on. At the recent peak in the S&P 500, the index had risen about 15% from the low point before the US election. So not only were forecasts of looming disaster in the event of a Trump victory proved completely wrong, the equity market has risen in expectation of widespread positive changes to the US economy ranging from deregulation, tax reform and infrastructure spending. After the healthcare debacle, is it time to rethink the efficacy of the Trump reflation trade?


We are by no means experts on the US healthcare industry. Our simple view about Obamacare was that; yes, it’s great in that it increased the number of insured, however, this came at a large cost to many US taxpayers. Insurance premiums had risen way too fast in recent years and the out of


18 FX TRADER MAGAZINE April - June 2017


pocket expenses were prohibitive for many. From our distant, disinterested vantage point, Obamacare needed significant reform.


With the Republicans controlling all branches of Government, and having been fierce critics of Obamacare for


years, surely they would be able to cobble together a reasonable plan that would improve Obamacare. Te fact that the plan seemed to harm many of the people who probably voted for Trump, and was viewed by so many in the GOP as not worth voting for, leaves us a bit dumbfounded. Frankly


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