Market Review: The Butterfly Effect

The swishing of the President’s pen on paper to sign protectionist measures into law or executive orders could unwittingly cause a financial storm. So far, investors seemed to have shrugged off the risk of protectionism. Markets also do not seem to expect the proposed border adjusted tax to get enough support in the Senate. However, policy uncertainties over trade, tax code, Obamacare replacement, and even immigration issues could start to weigh on business sentiment and decision making. Judging by the controversies in just the first ten days of the Trump presidency, one should not underestimate the odds of negative market moving events, and how a small change—the Butterfly Effect—can have large consequences.