You can call me pal: Trump charms the stocks off the economic elite
A Sunday Telegraph correspondent finds some cautious cheer in the US president's Davos speech
I’ve long been in two minds about Donald Trump. Whatever one might think of the US president’s temperament, his tax plan and business-friendly deregulatory agenda make a lot of sense. We’ve seen nothing like it since Ronald Reagan, and it went down a storm at Davos. Animal spirits are back and Trump is right to claim some of, if not all, the credit. Even The Donald would, for instance, struggle to put the eurozone recovery down to his own brilliance, though come to think of it ...
But I do wish he would stop using the soaraway stock market as validation of his success and policies. Tony Blair used to do the same in his first years in office, only to have his conceit come back to haunt him in the dotcom crash. A similar fate awaits Trump. Those who live by the stock market die by it.The US president seems to have genuinely enjoyed himself at Davos. With such a high concentration of business leaders, he felt himself among friends. Encouragingly, the experience seems to have been a genuinely civilising one for him. “America first, but not America alone” was his scripted message.
Has Davos succeeded in converting him into a multilaterist? That might be going too far, but this was a marked change none the less.
There are two big risks to asset prices going forward. One is that central banks have misjudged inflationary pressures and will be forced to slam on the brakes. Trump will not take kindly to the Federal Reserve puncturing his bubble, but historically this is the most common cause of asset price corrections.
Yet if he means half of what he said in Davos, then a large part of the other risk — geopolitical catastrophe caused by isolationist failure in international dialogue — is defused. The language on trade too seems to have become notably softer. Consistency is not Trump’s strong point. On the evidence of his speech, however, I am somewhat reassured. I’d have been shorting the stock market ahead of Trump’s Davos visit; that may, I fear, have been the wrong call. — © The Sunday Telegraph