The “Trump Bump” had its first weekly market decline last week. Were the markets dumping the stocks that have made the Trump trade so strong the last 6 months?

The retreat this last week, which amounted to 1.44% on the S&P 500, came as the American Health Care Act (AHCA) was appearing to fall short of the votes needed to pass it later in the week. Markets continued to waffle the rest of the week and closed on a negative note Friday.

The three agenda items that have buoyed markets since the election have been; infrastructure spending, tax reform, and financial reform. Infrastructure spending should provide jobs and spending. Tax reform should increase the dollars in our pocket, providing more consumer spending and higher GDP. Lastly, financial reform should provide an avenue for increased small business lending to reinvigorate the economy.

So, if the AHCA was not a major agenda item, as viewed by the markets, why has it had such an impact? The AHCA was viewed as an initial test of the new President’s ability to bring a bill to fruition… to no avail. Now that a major campaign promise has failed, the concern becomes, will he be unlikely to get the support needed for Infrastructure, tax reform, and financial reform?

These agenda items are widely supported and should still be achievable. The risk off movement is likely a response as the Federal Reserve Board moves to raise rates. It may be a realization that they could not get as quick assistance from legislative action as was expected. The ‘Trump Bump’ is maturing into a new phase as it is merely leveling off recent expectations.

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Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.