What to watch

Trump backlash puts his agenda at risk

Measuring the market fallout due to the nation’s top CEOs backing away from President Trump is a difficult exercise. Still, Daniel Clifton, a policy strategist at Strategas Research Partners, ticks off a few scenarios to watch.

The headline of his report, “Republicans Likely To Lose Control of Congress” — published after Wednesday’s news that two CEO councils created by the White House were being disbanded in protest of Trump’s failure to denounce hate groups forcefully enough — suggests investors in 2018 might have to contend with a different political order than the current Republican-controlled power structure.

But the more immediate threat is Trump’s economic stimulus plan. “Investors,” Clifton says, “continue to downgrade Trump’s ability to get his agenda passed.” Concerns are also “building about senior-level administration officials leaving,” he adds. Those worries pushed the Dow down 274 points Thursday.

Signs the Trump rally remains stalled are plentiful. A “Trump Portfolio” made up of stocks expected to do well if the president’s agenda got passed is badly underperforming the broad market. A basket of infrastructure stocks and a portfolio of companies with high tax rates that were supposed to benefit from Trump tax cuts also have swooned.

No one thinks Trump’s economic agenda will get passed anytime soon. So if anything does get done, it will be a positive surprise and stocks likely will get a lift.