Trump’s Rally: Expectations Vs. Reality

Posted by on February 9, 2017 12:31 am
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We have talked about this before. What people think or expect to happen and what actually happens are two entirely different things.

The spike in optimism is due President Trump’s election. Yet, as the chart above so clearly illustrates, businesses are not willing to open up their valets and spend or invest. At least not yet.

It is a wait and see approach.

However, there is a much larger issue associated with spending and investment at this stage. CAPEX has been borrowed from the future since 2009 bottom to the tune of 5-10 years. Due to zero interest rates. There is very little to invest in. Well, unless businesses start buying robots to replace their human workforce.

That is to say, it is just a matter of time before expectations come crushing back down to earth.  Trump or not.