USA - It is difficult not to admire the relentless optimism on Wall Street. A divided Congress is going to guarantee two years of gridlock and political turmoil in Washington, but many in the financial community are choosing to interpret the election results as a positive sign. They remember the “gridlock” during the Obama years, and they are hopeful that the next couple of years will be at least somewhat similar. The Dow Jones Industrial Average shot up 545 points on Wednesday, and that was the largest post-midterm rally that we have seen in 36 years.
But are Tuesday’s results actually good news for Wall Street?
The times that we are moving into are not going to be anything like the “gridlock” that we witnessed during the Reagan, Clinton and Obama presidencies. During the Obama era, Republican leadership got along with the White House fairly well. And even though there was often some wrangling, Republicans almost always gave Obama most of what he wanted when it came to budget deals and other critical pieces of legislation.
Sadly, the next two years are going to be much different. It will be the political equivalent of trench warfare, and the carnage is going to be off the charts. There will be an all-out attempt to take down Trump and everyone around him, and Trump will respond by going after everyone that he perceives to be an enemy. In the end, a lot of politicians are not going to make it, and our system of governance will be badly damaged.
Many had been hoping that the midterm elections would resolve much of the political tension in this country, but instead it looks like things are going to continue escalating quickly. And it isn’t going to take very much at all to unleash major civil unrest. The left already hates Trump more than any other president in American history, and one really bad move could set off an explosion of anger unlike anything we have ever seen before.