Even as stock markets climb higher and the Dow Jones industrial average flirts with the 20,000 mark, some of our wisest critics have continued to doubt the substance of the Donald Trump rally.
Rational analysts assumed that last week's hike in interest rates from the U.S. Federal Reserve, with hints of more to come, would knock the stuffing out of the market surge.
But in a world where rationality has repeatedly failed to guide us, maybe it's time to revisit the idea that irrationality — namely president-elect Donald Trump as the embodiment of animal spirits — has a far greater effect on markets than rational analysts might have us think.
The fact is, economics contains more voodoo than many of its exponents admit.
Trump's role is as cheerleader, appointing cabinet members who seem to favour business success, promoting policy that seems to support new investment and growth.
Research conducted for the Globe and Mail's Report on Business shows that even in Canada Trump is spurring executive optimism. Studies in the U.S. also show business leaders have been energized by the election results.
For many critics, economic optimism requires a certain amount of nose-holding and ear plugging.
Trump's outrageous stance on many issues, such as yesterday's comment about "Islamists who slaughter Christians," could lead to outcomes disruptive to the economy.
And the rationalists could be right. An overpriced dollar could kill off U.S. exports. A shortage of labour could block growth. Trouble in Europe or Japan could be contagious. Growing inequality or environmental outrage could lead to a political backlash.
But if the new U.S. president can concentrate on being the economic orchestra leader, convincing Americans that now is the time to succeed and invest, urging on the sections at the back and getting everyone to play in concert, maybe the great performer will have found his best role.
Read more: Dow 20,000 and Donald Trump as the embodiment of animal spirits: Don Pittis - Business - CBC News
Rational analysts assumed that last week's hike in interest rates from the U.S. Federal Reserve, with hints of more to come, would knock the stuffing out of the market surge.
But in a world where rationality has repeatedly failed to guide us, maybe it's time to revisit the idea that irrationality — namely president-elect Donald Trump as the embodiment of animal spirits — has a far greater effect on markets than rational analysts might have us think.
The fact is, economics contains more voodoo than many of its exponents admit.
Trump's role is as cheerleader, appointing cabinet members who seem to favour business success, promoting policy that seems to support new investment and growth.
Research conducted for the Globe and Mail's Report on Business shows that even in Canada Trump is spurring executive optimism. Studies in the U.S. also show business leaders have been energized by the election results.
For many critics, economic optimism requires a certain amount of nose-holding and ear plugging.
Trump's outrageous stance on many issues, such as yesterday's comment about "Islamists who slaughter Christians," could lead to outcomes disruptive to the economy.
And the rationalists could be right. An overpriced dollar could kill off U.S. exports. A shortage of labour could block growth. Trouble in Europe or Japan could be contagious. Growing inequality or environmental outrage could lead to a political backlash.
But if the new U.S. president can concentrate on being the economic orchestra leader, convincing Americans that now is the time to succeed and invest, urging on the sections at the back and getting everyone to play in concert, maybe the great performer will have found his best role.
Read more: Dow 20,000 and Donald Trump as the embodiment of animal spirits: Don Pittis - Business - CBC News
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