Trump policy favours wealthy; strong dollar will hurt exports

The record-setting stock market rally that followed Donald Trump's election victory will soon peter out as investors realise the economic negatives in his political agenda vastly outweigh the positives, according to crisis-famed economist Nouriel Roubini.

“It is little wonder that corporations and investors have been happy ,“ the professor wrote in an opinion piece for Project Syndicate. “This traditional Republican embrace of trickledown supply-side economics will mostly favour corporations and wealthy individuals, while doing almost nothing to create jobs or raise blue-collar workers' incomes.“ He cites a study from the nonpartisan Tax Policy Center showing nearly half of Trump's proposed tax cuts would be directed at the top 1% highest-income Americans.

“Yet the corporate sector's animal spirits may soon give way to primal fear: the market rally is already running out of steam, and Trump's honeymoon with investors might be coming to an end,“ Roubini concludes.

As markets became hyped up about the possibility of a fiscal stimulus that is still undefined, they have pushed up bond yields and mortgage rates, making it more costly for firms and consumers to borrow. The dollar strength that accompanied Trump's victory is harmful to the very manufacturing export sectors the Republican president has promised to help.