The so-called Trump Effect has been utilized by some in the media to describe the implied ‘rise of intolerance’ — the alleged growth of ‘racist’, ‘misogynistic’, ‘fascist’ tendencies reportedly now espoused by millions of ‘deplorable’ Americans.
But it’s not the content of the Huffington Post’s editorial pages — the left-of-centre anti-Trump rhetoric of the Left, and Right, for that matter — that, repurposed, reflects the real-world impact that a change of administration can have — it’s the markets, the state of the financial world, amongst other things.
And guess what: records are being broken.
The Dow Jones Industrial Average, on Wednesday, ended trading above 20,000 points for the first time, rising 0.8% to just over 20,068.
The Standard & Poor 500 and tech-heavy Nasdaq also rose to new heights, with the former advancing 0.8 percent to an all-time high of 2,298, and the latter growing 1% to 5,656.
Even Germany’s DAX stormed to its highest level since May 2015.
But what is propelling this growth, this potentially-rosy financial future?
Well, numerous analysts are indeed pointing to the ‘Trump Effect’.
Jasper Lawler, senior market analyst at London Capital Group, spoke of the series of executive orders announced by the Trump administration since January 20 as the firing pistol for the rally.
Lawler told the Guardian:
“Dow20K came on the same day President Trump was preparing to sign an executive order to build a wall on the US-Mexican border. The big industrial giants including Caterpillar and General Electric led the gains on the expectation of an increase in infrastructure spending under Trump. A lot of diggers will be needed to build the wall!”
Indeed, if Donald Trump will build a wall — something Lawler calls the president’s “most famous and probably most controversial campaign promise” — “there’s every reason”, he says, “to believe he will cut taxes, increase spending and cut regulation — all good things for U.S. companies.”
Tim Ghriskey, chief investment officer of financial management firm Solaris Group in New York, told the BBC:
"There is a real belief that [Mr] Trump is real, he has been extremely active these first couple of days of the presidency and a change may happen faster than people had thought."
Conor Campbell, financial analyst at Spreadex — whilst referring to Trump as “thin-skinned” — maintained this narrative, speaking of the ‘excitement’ investors are feeling with regards to the new president.
Now, all of this may simply amount to a massive bubble, skeptics have argued, with former U.S. Labour Secretary Robert Reich projecting that the rally won’t last — however, as Neil Wilson of London group Capital, told the BBC:
“[…] There is still a huge amount of cash piled up that could yet pour into equities and power further gains through 2017. It might not be long before 21,000 is in sight.”
And that can only be a good thing.
Follow Alex on Twitter at @RealAlexanderJ