And so he did it. President Trump made his first address to Congress on Tuesday: The markets reacted by doing the financial equivalent of scratching their collective heads.
In a nut shell, the President made a speech that seemed to be on the conciliatory side – less rhetoric, more thought, certainly a lot less inflammatory than we have come to expect from the President, but the markets, who watched in eager anticipation reacted in a kind of ‘iffy’ way. ‘Detail’, they said, ‘is what the speech lacked.’
Unless, of course, you are Fox News. It headlined ‘Trump stuns media detractors with 'extraordinary' speech but Washington Post and others still go to war’.
Meanwhile, the markets were stunned into indifference.
The BBC, by contrast, an organisation that President Trump ironically referred to as ‘a real beauty’ headlined ‘a kinder, gentler Trump.’
If the school bully says that he will only hit you gently maybe that makes him gentle by his standards. It was a gentle Trump by the standards of recent weeks, like a rottweiler running after a stick. Then again, he did use his speech as something of a stick to beat China with. “We've lost more than one-fourth of our manufacturing jobs since NAFTA was approved, and we've lost 60,000 factories since China joined the World Trade Organisation in 2001.” This may be true, but correlation does not mean causation, of course.
He also barked out a tad more optimist message: “A new chapter of American Greatness is now beginning” he said, “A new national pride is sweeping across our nation. And a new surge of optimism is placing impossible dreams firmly within our grasp.”
He also talked about the US taking a leadership role: “Our allies will find that America is once again ready to lead. All the nations of the world – friend or foe – will find that America is strong, America is proud, and America is free.”
Well, those who criticised the president of being very inward looking, of not taking the responsibility that comes with the power of being the world’s biggest economy and defence spender, may have taken comfort from that.
He even drew applause from Democrats when he referred to US Navy Special Operator, Senior Chief William ‘Ryan’ Owens who was killed in action. The President said: “I just spoke to General Mattis, who reconfirmed that, and I quote, ‘Ryan was a part of a highly successful raid that generated large amounts of vital intelligence that will lead to many more victories in the future against our enemies.’ Ryan's legacy is etched into eternity. For as the Bible teaches us, there is no greater act of love than to lay down one's life for one's friends. Ryan laid down his life for his friends, for his country, and for our freedom – we will never forget him.”
The President also turned his attention to a familiar theme: “Dying industries will come roaring back to life,” he said. Maybe it would be better if new industries were nurtured into the full bloom of life.
But the markets were more interested in the economy. The President said: “Right now, American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle class.”
But this is not new, this is a repeat of what Presidential Candidate Trump said.
His bark is the same, but the markets now want to see some bite.