Why Are Markets Rejoicing at Trump’s Win?: New at Reason

While markets are currently rejoicing, the incoming president may not be good for the economy in the long run.

Veronique de Rugy writes in the April issue of Reason:

Andrew Hofer, the head of Taxable Fixed Income at Brown Brothers Harriman & Co., thinks markets may be overcorrecting for a bout of pessimism that started in late 2015. “Now that we seem to have passed through that period without the sky falling, sentiment may be overshooting in the other direction,” he says. “Trump’s election has been the convenient foil on which the market can project its optimism. Market multiples have increased rapidly on the same slow positive change in fundamentals, but with little attention to the greater uncertainty this administration brings around global trade, interest rates, inflation, geopolitical risk, and institutional continuity.”

In other words, there’s plenty to be nervous about, too.

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