Yesterday, when stocks surged at the market open following Politico’s report that Trump is unexpectedly “making strides” on tax reform, we warned that “it can all be wiped away as soon as tonight, when Trump will deliver a speech to his “base”, in which he may promptly burn any of the goodwill he created with capital markets following his far more conventional Afghanistan speech last night.” That’s precisely what happened, because on Tuesday night, in another fiery campaign rally, Trump fiercely defended his response to violence in Charlottesville, made passing remarks from a teleprompter about the need for unity and inclusion before veering off-script to attack the news media, Democrats and even Republicans in the Senate whom he accused of distorting his response and blocking his agenda.
But what spooked markets, and what has sent both US futures and European stocks lower, was Trump’s threat to bring the U. S. government to the brink of a shutdown if needed to pressure Congress into funding the border wall that was a centerpiece of his 2016 campaign, stoking renewed fears that the debt ceiling debate will be far more contentious that the market expects.
Delivering a warning to Democratic lawmakers who have objected to his plans to construct a wall along the U. S.-Mexico frontier, Trump called them ‘obstructionists’ and said that it was time for the U. S. to crack down on illegal immigration. “If we have to close down our government, we’re building that wall,’ Trump told thousands of supporters gathered in Phoenix for a campaign-style rally. ‘One way or the other, we’re going to get that wall.’ As Trump spoke, S&P500 futures reversed gains to slip as much as 0.3% as Trump spoke.
This post was published at Zero Hedge on Aug 23, 2017.
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