Trump’s Travel Ban
Last Friday President Trump issued Executive Order 13769 which prohibited the entry of certain foreign residents from several different countries. The countries restricted by Trump’s travel ban were Iraq, Iran, Libya, Somalia, Sudan, Syria and Yemen. The order also suspended the U.S. Refugee Admissions Program for 120 days and entirely suspended refugees entering from Syria. The order was issued to prevent future attacks by foreign nationals in the U.S.
The execution of Trump’s travel ban was very poor. There was a significant amount of confusion and at first the Department of Homeland Security was detaining green card holders. Green card holders are legal residents who have already undergone a significant amount of vetting. The confusion and hasty implementation added to complaints from the left which said that the travel ban was motivated by Islamophobia. This is despite the fact that the Obama administration had already labeled these nations as countries of concern.
The markets reacted negatively to the news of the Trump’s travel ban. After two and a half months of positive reactions to Trump’s election the travel ban seems to be a tipping point. The travel ban will not have an impact on the performance of the economy or any of its constituents. Despite this fact the market reacted negatively.
Some of the negative performance is due fears that Trump’s next move will be to restrict worker visa’s. This caused technology companies to decline during the week. This type of restriction would mean added cost for U.S. based companies who rely on cheaper, temporary H-1B labor. Unfortunately, the mainstream media would like to you believe that Trump is preventing the next Sergey Brin from coming to the U.S. to start the next Silicon Valley Unicorn. This is not what is really happening.
Negative Short Term Volatility
The most important impact of President Trump’s actions is the precedent that he has created. The actions of last Friday show how quickly and hastily the Trump administration makes decisions. We highlighted this risk in our special Inauguration Article. While this may be a positive long term it is likely to increase uncertainty in the short term. Healthcare investors will have a hard time evaluating businesses knowing that the Trump can issue a ground-shaking executive order at any moment. Utility companies will not be able to effectively plan capital investments because the future is unclear. Uncertainty for the economy and markets is not good and usually translates into poor investing returns.
Today the press is reporting that Trump will be issuing an executive order to dismantle Dodd-Frank. The order will reduce the regulatory costs and burden that have been building for several years. This will have a positive impact on the financial industry today. This action again proves that President Trumps term will be volatile over the short term but likely positive long term. We shall wait and what other executive orders the Trump administration has in store for us this weekend.
Article originally posted at Boom Bust Market.
via http://ift.tt/2l2URXK BoomBustMarket