A major setback for the Trump trade - ANZ

Analysts at ANZ explained that the failure of Donald Trump’s replacement healthcare bill to make it through congress will be viewed by the market as a major setback for the ‘Trump trade’ (although market moves late on Friday were a little surprising). 

Key Quotes:

"But perhaps a far more important question is how this failure (and what it means for the passage of other policy proposals) will affect wider economic (business and consumer) sentiment. 

In theory, policy gridlock such as this was meant to be far harder to occur at a time when one party controlled the Presidency and both houses. But it clearly highlights that divides remain, and it means that the policy paralysis that was often evident over recent years (when no party had outright control) could linger. 

Some have even proposed that that paralysis is a reason why businesses have been reluctant to go out and invest given the uncertainty that a lack of fiscal policy direction created. With fiscal policy uncertainty rising again the risk is that business and consumer sentiment reverse recent gains, which would have growth consequences. 

For markets, that doesn’t sound like an ideal situation. Not only would they then be grappling with unwinding some of the euphoria priced in by Trump’s fiscal plans, but also dealing with the possibility of a softening tone in some of the underlying economic data."