US Economic Decision Making

This is all in one day: Last Tuesday October 6th:

Federal Reserve Chairman Powell called for a stimulus package as the economic recovery is pretty weak and there’s certainly no chance of inflation returning for years. He warned of “dire economic consequences” without another stimulus. That was first thing Tuesday morning.

It immediately boosted the Dow (let’s just use that one index as an example) by over 200 points.

President Trump doesn’t make speeches – he just tweets: At 12:48 pm it was that “I have instructed my representatives to stop negotiating.” In other words: Forget any stimulus. In less than a minute, the Dow dropped over 400 points to be down 200 points.

No stimulus package means no money for airlines, small businesses, or for millions of unemployed through no fault of their own.

But the bummed out market and investors weren’t done yet. And it turns out – neither was Trump: Less than seven hours and many tweets later, Trump had totally reversed himself: His tweet at 7:54 pm was that: “The House and Senate should immediately approve …(a stimulus plan)…Have this money – will sign now!”

Fast forward to the next mornings’ opening of the markets and the Dow was up 400 points in the first half hour. It finished the day up 530.

Three lessons here:

1..You may not be a fan of our Liberal government, but for all its faults, at least here in Canada we have an economic policy plan that lasts longer than 7 hours and 6 minutes at a time.

2..This is a small insight into why it’s next to impossible to actively manage your own investments in the short term.

3..The lack of another round of help to individuals (at least so far) will have an impact on the election – especially in Florida.

And with Florida in mind, I’ll give you my fearless US election  predictions next week…

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