Impeachment, Network, and the Fed is all that remains
Congress has made it official. Their collective narcissism is now probing historical depths of dysfunction not seen in a long while. As objective observers it is maddening, and we feel like screaming the famous line from the movie Network. President Trump is an unorthodox President, he’s megalomaniacal, and seems to take great pleasure in provoking the fragile egos of Congressional leadership. Both entities have put their egos ahead of the interests of the United States. What is ahead is pure political theater. Twitter will be on fire as Trump let’s loose and the media will react in kind. Perhaps this will be entertaining for some but none of it will help the economy. And from our perspective that’s the most important take away. What does all of this mean for global economic growth?
Productive fiscal legislation is officially dead through 2020. Politicians have taken their proverbial ball and gone home. It seems that we are back to executive orders. By putting into place draconian regulations, the previous administration materially altered the economic trajectory. The current administration has unwound many of these using the same process. That is the problem with this approach. They are short-lived and often have fleeting impact. Sustainable pro-growth policies can’t have an expiration or be at the mercy of political capriciousness. None of this is good for economic growth.
The only game remaining seems to be the Fed. We have shared our thoughts on the effectiveness of monetary policy in past commentary. It is severely limited in the current environment. Our elected leaders have literally placed the viability of our economy second to what boils down to vanity. All parties are guilty. The extraordinary opportunity costs being incurred by the country are immeasurable. From a portfolio management perspective, it means once again that risk will be the primary dimension to manage as the capital markets begin to incorporate the legislative reality of the impeachment process. We remain steadfast and will monitor our portfolios with great attention to detail. God Bless America.