By Denny Gulino
WASHINGTON (MaceNews) – The S&P 500 is at record levels, all the tariffs so far have hardly bitten the U.S. economy, retail sales in a consumer dominated framework are strong and the U.S. unemployment rate is only 3.6%. And yet the markets are 100% certain of a rate cut next month.
Interest rates are historically low and in fact eased after the Fed this week decided not to mandate an ease. The next NAFTA is moving slowly toward ratification, ensuring the biggest trading mechanism for the U.S. will likely continue to function at least as well as it has in the past.
The FOMC, no longer “patient,” says it is ready to “act as appropriate to sustain the expansion.”
“As appropriate” are words that cover a lot of territory. Rate cuts this year, believe it or not, are not actually a certainty regardless of market sentiment.
Yet across the Atlantic, Mario Draghi readies new stimulus. What’s going on? Perhaps Draghi’s closing remarks in his news conference about two weeks ago hint at the answer both in the U.S. and Europe.
Markets seem to see “something bigger than simply trade disputes,” Draghi said June 6. So we “have to take this reading seriously and be prepared.”
Market participants say “geopolitical” uncertainties now are preeminent. They are referring to the potential reverses in China trade, the potential effect of a war with Iran on oil prices, the potential effect of new tariffs on European countries, on Japan, on autos.
What is this source of this “potential,” this latent energy that plausibly, possibly, easily imaginably could plunge the outlook into darkness and grievous uncertainty? An approaching asteroid? The sudden spread of Ebola?
Of course much of the uncertainty is being generated by a single human being, Donald J. Trump.
Saying that is not the prelude to still another anti-Trump polemic. It is not raising the questions whether Trump is equipped for his job, whether he is impervious to learning or dangerously impulsive. It simply means that a certain percentage of the uncertainty is rooted in the entity that is Trump. Just as a certain, probably much smaller, percentage of uncertainty is rooted in the fiscal practices of a country that amasses debt in trillion-dollar- a-year chunks.
Many would argue that Trump is not afraid of being decisive. Even when pulling back Thursday night from retaliatory strikes on Iran as not “proportionate” and asking whether he can demote the head of the central bank and prepare to lay off the staff of the Office of Personnel Management in October and go against the Republican grain to say he is thinking about a $15-an-hour federal minimum wage, Trump has demonstrated he is more than capable of making decisions, which can be a sorely needed trait in a leader.
However, as so many business executives have found, decisiveness can be corroded by impulsiveness and that distinction appears at the core of the now pervasive potential for uncertainty. So beyond tariffs, beyond initiatives that have both good and negative components, there is an underlying unease that things that are going so well could also go badly quickly.
Reagan speechwriter of some of his most memorable remarks, best-selling author five times over and Pulitzer Prize winning columnist Peggy Noonan in March of last year pinpointed the uncertainty factor that has only grown since to color everything having to do with the future.
“Crazy doesn’t last,” she wrote in the Wall Street Journal. “Crazy doesn’t go the distance. Crazy is an unstable element that, when let loose in an unstable environment, explodes.”
In this week’s column to appear in Saturday’s Journal, after 15 months of consideration, she hasn’t changed her mind.
“It is a weakness of Trump supporters now that they still cannot take seriously the unreadiness of the White House for a sudden, immediate and high-stakes crisis,” she writes. “They do not see the chaos and the lack of professionalism of the unstaffed government as a danger. It is, a dreadful one.”
How to both recognize the disorder in the White House obvious to those who have reported on many administrations while admiring the decisiveness, the reformative value of against-the-grain moves that crack the ossification of government, that force fresh thinking and debate?
It’s that confusion among business and civic leadership that creates some portion of that gap in confidence, that background concern for the future, even among many of those who are applauding – perhaps hunger for – the “no-b— s—“approach from a president who can and does question precedent, is skeptical of assumed excellence and is averse to deeply ingrained behavior in government.
At the heart of it are the similarities and drastic distances between unbridled decisiveness and impulsiveness, between hubris and humility, between boldness and recklessness, even between prudence and momentum.
No one knows what will be written in the months and years to come of the Trump administration. Few, of whatever opinion, might even hazard a guess whether the optimists or pessimists will prevail. Still, there is no denying the centrality of Donald Trump around whom it all now revolves.
Meanwhile apathy – perhaps the most corrosive curse of a very rich nation – appears to begin to give way to a societal wakefulness – heightened hope – and fear.