Dennis Gartman : Trump Will Out-Keynes Keynes
Good, bad or indifferent as to our embrace or non-embrace of Mr. Trump, the fact of the matter is that his acceptance speech was brilliant and worth watching at least once more, for this was Mr. Trump at his best. He was conciliatory to those who opposed him; he stayed on script and hit all the right “buttons.” He thanked the right people in a courteous manner. We were really quite impressed.
However what really caught our ear was his call for infrastructure spending. He intends to call for spending on roads, bridges, hospitals, airports, port facilities et al, and he intends to do so right from the very start of his Administration. We believe him and in so doing Mr. Trump will “out-Keynes, Keynes.” That is, his spending programs will run into the hundreds of billions of dollars and will take years. The deficit will be exploded; interest rates will rise… sharply and quickly.
A Democrat President could never have made such a speech and expected to follow through with legislative success, for the Republicans would have objected openly, actively and vehemently. So, rather like the thesis that “only Nixon could go to China;” that is, only an archly anti-Communist Republican could open up diplomatic relations with China so that his flank would be protected, only a Republican can promote what is essentially an archly Democrat program, hoping to stave off the attacks upon that spending by those to his right while garnering support for his programs from those to his immediate and even far left. Trump’s spending plans will be embraced by Bernie Sanders, who will bring others on the Left along with him to support infrastructure spending, and will be embraced by the Republicans en masse, save for an arch conservative or two, whose importance within the party will be diminished but who will find their share of hard-right/hard money supporters despite their banishment.
Our point here is that Trump is a builder and builders build. He will say, “Deficits be damned” and can be worried about later. He will posit that it is far more important to create jobs that earn wages that pay taxes rather than take a dose of fiscal austerity… and he’ll have “protection” on his Left and from the middle. He’s gon’a out-Keynes Keynes; believe us on this.
More insights on what the election results mean for the market: www.hvst.com