Political discord in Washington is causing the U.S. dollar to lose its value as economists question the likelihood that the Trump administration will be able to pass any tax form-related legislation. And it could get worse; this is also generating uncertainty on the stock market, which could put an end to the bull market.
The value of the U.S. dollar relative to another basket of currencies has been in freefall for 2017. Since the start of the year, the U.S. dollar index has lost more than nine percent of its value and at 93.53 is at levels not seen in 16 months. This is despite some relatively healthy economic data.
The health of the U.S. stock market is also up in the air. Stocks continue to slide as the recent sell-off gathers steam. On Thursday, August 17, the S&P 500 and Dow Jones Industrial Average both posted their second-worst session of the year. Meanwhile, the NASDAQ posted its third-worst day of the year.
Much of the blame can be attributed to the current political discord in Washington.
The U.S. dollar lost ground and stocks slid on Thursday, just one day after President Trump dissolved two of his business advisory councils. This pair includes the American Manufacturing Council, a panel made up of 28 prominent chief executives set up to advice Trump on domestic manufacturing initiatives.
This is a reflection of the current business environment in the U.S. and a reflection of how Wall Street will perceive the president in the coming months. If corporate America doesn’t have confidence in the president, they’re not going to have confidence in the U.S. economy going forward either.
Political discord in Washington is also mounting. Never mind the Democrats; even the number of Republicans opposing Trump is getting longer. Since Trump took office seven months ago, Republicans of all stripes have been repudiating everything that President Trump represents. This has created huge opposition to the president and made it virtually impossible for anything to get accomplished.
While many Republicans, including Senate Majority Leader Mitch McConnell and Speaker of the House Paul Ryan, continue to support Trump, many have split with him and are lining up to criticize his conduct.
Susan Collins of Maine, Shelley Moore Capito of West Virginia, and Lisa Murkowski of Alaska have split with Trump on healthcare.
Senators John McCain of Arizona, Lindsey Graham of South Carolina, Marco Rubio of Florida, Rand Paul of Kentucky, Mike Lee of Utah, and Ben Sasse of Nebraska have expressed doubts about Trump’s leadership.
Even political allies like Senator Bob Corker are questioning Trump’s competence.
“I do think there needs to be radical changes,” Sen. Bob Corker, a Tennessee Republican, said in a briefing with reporters. “The President has not yet been able to demonstrate the stability nor some of the competence that he needs to demonstrate in order to be successful.”
With all of the political discord and stalemate in Washington, it is likely the U.S. dollar will continue to lose its value and the sell-off in stocks will get worse.
“Corker: Trump hasn’t demonstrated the stability or competence to be successful,” CNN, August 18, 2017.