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DONALD TRUMP HAD PLENTY OF RED MEAT yesterday for his adoring base — immigration reform, re-naming the Gulf of Mexico, etc. — but it was what he didn’t say that surprised us.
FIRST TAKE-AWAY: Trump said virtually nothing on monetary and fiscal policy. He didn’t discuss a massive tax cut, and he largely ignored the soaring budget deficit — even though the deadline for a debt ceiling deal is only two months away.
SECOND TAKE-AWAY: Years from now, when historians look at this speech, a sea-change will be clear: the dominance of the tech sector is now the biggest economic story in Washington. Virtually all of the Silicon Valley superstars were at the inauguration; they have bowed to Trump and in exchange they will enjoy a gentle, laissez faire regulatory climate for the next four years.
THIRD TAKE-AWAY: TRUMP SPENT LITTLE TIME ON INFLATION, perhaps because it’s still an issue that makes Americans nervous. Interest rates have moved higher — and may stay higher if Trump prevails on tariffs and immigration. And it looks like he will get his way on tariffs against Canada and others.
FOURTH TAKE-AWAY: The lifeless Democrats: The party has no stars and no agenda. They will try to grind the House to a halt, but the most they can hope for is stalling and litigating. Hoping for gridlock and a mediocre economy isn’t much of an agenda.
BOTTOM LINE: A second term honeymoon may last for several weeks, but a government shutdown looms in March, as deep rifts become apparent among GOP House members.
INVESTORS who are counting on a huge tax cut and spending reductions may have to wait until fall for an underwhelming bill. In the meantime, the real action may be on regulatory reform.
Related: How Donald Trump Will Build Crypto-America
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