The stock market took a large hit Wednesday morning following the announcement that Gary Cohn, chief White House economic advisor to President Trump, had resigned.
Concerns which were made very public by Cohn with respect to the decision of President Trump to move forward with tariffs on a number of key raw materials sourced from around the world (steel, aluminum, and others) did not sway the president, and Cohn decided that it was the right time to move aside and let the president do his thing.
The void which has been created by the departure of Cohn should not be underestimated by those following financial markets. One of the jobs of the chief White House economic advisor to the president is to encourage the president to engage in activities which would be beneficial to the overall economy.
With the decisions made by the U.S. impacting a significant percentage of the global economy, the world took notice at this move as an indication that the Trump Administration may not be acting in the best interests of the American, or global, economy, and while tax reform is on the way, trade policies may dampen economic output in the near term, offsetting corporate gains from lower taxes.
I believe that the current economic outlook is one which is overly bullish, with much of the recent rally being based on expectations of higher corporate profits via lower taxes in the U.S.
Trade policy (and other headwinds), however remain prevalent, and investors need to be aware of the complete picture before jumping into the market at current levels.
Invest wisely, my friends.
