Economic Uncertainty Is Spiking

|
Includes: BXUB, BXUC, CRF, DDM, DIA, DOG, DUSA, DXD, EEH, EPS, EQL, FEX, FWDD, HUSV, IVV, IWL, IWM, JHML, JKD, OTPIX, PPLC, PPSC, PSQ, QID, QLD, QQEW, QQQ, QQQE, QQXT, RSP, RWL, RWM, RYARX, RYRSX, SBUS, SCAP, SCHX, SDOW, SDS, SFLA, SH, SMLL, SPDN, SPLX, SPSM, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TALL, TNA, TQQQ, TWM, TZA, UDOW, UDPIX, UPRO, URTY, USA, USSD, USWD, UWM, VFINX, VOO, VTWO, VV, ZF, ZLRG
by: Hale Stewart

Above is a chart of the economic uncertainty index. Here is a link to its components and methodology.

On one hand, it's not surprising that we're seeing a spike in this indicator. The U.S. has a new president who is very unconventional. But he also ran as an outsider who could spur the creation of 25 million jobs in 8 years. Yet, so far, it appears his actions are causing economic friction. For example, today the Washington Post reported that 97 tech companies have filed a brief against Trump's travel ban. Think about the uncertainty the travel ban injects into business decision making.

From businesses' perspective, there are several positive policy developments. Trump is gutting Dodd-Frank, which will lower the cost of complying with regulations for financial companies. And there is continued talk of a corporate tax code revamp, which, at the very least, will increase net income at the macro level.

But considering what a wild card the president is, I have to wonder if we'll continue to see this index at high levels for the foreseeable future.