You may recall that during the week of May 19, 2017, Donald Trump’s decision to remove James Comey as head of the FBI led to some major market turbulence. Viewing Comey’s firing as an attempt by the 45th president to obstruct an ongoing investigation into possible collusion between his campaign and Russia, many critics escalated calls for Trump’s impeachment.

Despite the spectre of impeachment, I expected the market to rally given its well-known fondness for the US leader. Instead, it took a more sombre and macro posture suggesting a leadership crisis in the US could lead to unexpected financial losses.

For a painful recap, the S&P 500 plunged between May 15-19, its worst performance since Sept. 9, 2016. Needless to say, the conspiracy theorist in me thinks news of Trump’s impeachment was amplified to create trading opportunities. An end to Trump’s presidency, after all, would be celebrated by many. 

But just about one week later, the S&P 500, Nasdaq and the Dow Jones Industrial Average all rebounded over a six-day trading period. In fact, both the S&P 500 and the Nasdaq hit all-time highs. The Dow Jones look impressive, too. 

According to CNBC, this boost was led by information technology stocks or “tech stocks.” On the S&P 500, companies such as Netflix, Alphabet, Amazon and Facebook registered major gains for investors. 

Meanwhile, on the Dow, stocks such as 3M and UnitedHealth (UNH) led a 70-point surge, with UNH hitting an all-time high of $178.89 per share. 

Amazon came agonisingly close to crossing the $1,000-per-share mark, topping off at $999 at one point during intraday trading. In one week, these stock market indices fell to 8-month lows only to rebound and soar the very next week. 

Last November when Trump took office, the majority of market players held onto his campaign promises of economic stimulus, tax cuts for all, higher GDP, and more domestic jobs. 

Then Trump promised a ban on Mexican imports, a ban on Chinese imports, the best ever domestic budgets, a superior alternative to Obamacare, the dismantling of the Dodd- Frank legislation, and the Great Wall of Mexico. 

Then he dismissed climate change as an Asian hoax and forced the market and the world to ignore the rhetoric and confront reality. 

Trump’s actual impact on the markets to date? Not significant. The reality is that market bounces in recent weeks have actually been a reaction to factors other than Donald Trump. The rise in equities has been driven by traditional factors such as performance of firms, positive economic data and changes in monetary policy like the Fed’s commitment to shrink its balance sheet.

By way of quick explanation, the Fed intends to resell previously repurchased debt on its books to reduce its debt load. This figure is in the vicinity of US$4.5 trillion. 

The change in monetary policy suggests that the U.S. economy is in better shape, and that the financial forces of demand and supply in relation to interest rates are holding. 

The real price of credit of any form is now closer to what it should be under normal circumstances. Recall, accommodative monetary policy was designed to keep rates artificially low to allow for economic recovery. This means that credit was extended at much lower rates relative to the risk associated with U.S. domestic borrowers.

It appears that the market may have drunk the last of Trump Kool-Aid. Not one of his campaign promises—arguably, they were supposed to create stimulus— has materialised. So the market is, once again, leaning on good ole’ technical analysis, the mainstay of financial asset analysis and investing. 

Trump’s budget proposal could not have come at a better time. Hinged on tax cuts, it is intended to show how the economic boom he promised would manifest into growth and a balanced budget over a 10-year period. 

The only problem is that the budget asserts a US$2 trillion impact provided by tax cuts—a fall in government revenue—would be responsible for boosting economic growth while simultaneously making up for the amount required to balance the budget. 

The mathematical conflict here is what is referred to as a double counting error and another justification for President Trump staying overseas—well beyond his original return date.