Opponents of President Trump have seized on the recent “Trump dump” as evidence that markets are at last waking up to the folly of his political and economic vision.
Miners in particular suffered on the realisation that some measures, it seems, will end up being mired in Congress, and that the hoped-for heavy spending on infrastructure may be seriously delayed. Accordingly, the S&P 500 dipped by 1.4% and the iron ore price dropped 4%.
But the seriousness of this correction, at least as far as mining is concerned, remains open to question.
For a start, the catalyst wasn’t actually infrastructure spending at all. Rather, a looming showdown with Congress over the rollback of Obamacare has underlined to investors that the Trump administration may not be able to move as fast as it likes on a whole host of measures.
To be sure, serious heads in the mining world are taking note.
The manager of renowned mining investment fund US Global Investors, Frank Holmes, highlighted in his blog this week that Janet Yellen’s prediction of 2% growth in the US economy over the next couple of years is at odds with Donald Trump’s promise to deliver 4%.
More than that, Holmes also highlighted that US engineers aren’t even convinced that Trump’s plans are the best way forward for fixing what no-one denies is very dilapidated infrastructure.
If support for Trump was wide at election time, just how deep it was remains to be seen.
And, if Congress shows itself minded to be obstreperous in relation to the Trump administration’s plans for Obamacare, then its infrastructure and fiscal policy may be in doubt too.
But Trump won’t take that lying down, even allowing that Congress is currently dominated by members of his own Republican party.
Because perhaps even more spectacular than his election defeat of Hillary Clinton was the defeat Trump inflicted on his own party in order to get onto the podium. During the course of the 2016 primaries Trump scattered the Republican old school to the winds, from war-veteran John McCain to ultimate soccer-mom and Fox News lynchpin Megyn Kelly.
This is a man who is making a new politics for a new age, and Congress better be sure of its social media and fake news ground if it’s to stand in Trump’s way.
Not all will do it with the panache and hometown fervour of Jimmy Stewart, but most will defend their right to do so if they wish.
But if it’s true that the best generals choose their battles and their battlegrounds, then Trump now has the advantage. Plenty of interest groups may end up lining up against him, but all are reluctant to do be first. It may be that his mandate isn’t the largest ever, but his proven ability to steamroller opponents clearly gives pause for thought.
So will he get his policies through? In spite of the recent jitters, the market’s still saying yes.
Because it’s worth reflecting that the recent adjustments have been small compared to the gains that have been booked over the past 18 months.
In London, Anglo American (LON:AAL) remains more than 500% to the good since the start of 2016. Rio Tinto (LON:RIO) is up by more than 100%, BHP Billiton by just less than 100%, and Antofagasta (LON:ANTO) is better off by 140%.
And anyone tempted to attribute those gains solely to the effects of weaker sterling need only cast their eyes back over the Atlantic, where Freeport McMoRan (NYSE:FCX) is up by just under 200%, Lundin Mining (TSE:LUN) is up by more than 100% and Barrick Gold (NYSE:ABX) is up by almost 200%.
The trend predates the advent of Trump, but be that as it may, if there is to be a true “Trump dump” rather than just a couple of skittish days in the markets it’s going to have to cut a lot, lot deeper.