Trader Warns: Forget The Healthcare Bill, “The Psychological Damage Has Been Done”

Thursday, March 23, 2017
By Paul Martin

by Tyler Durden
Mar 23, 2017

“The psychological damage done to U.S. equities and the dollar should not be underestimated,” warns Bloomberg’s Mark Cudmore, adding that “the good times for both won’t be returning soon.”

I originally thought today was all about the fate of the health care bill, but I now think that’s a red herring. It’s helping the market consolidate. Macro investors are right to pause until the outcome is known, but it’s just delaying the inevitable.

As outlined yesterday, I’m neither worried about the long-term global economic outlook nor about a major new bear market in the U.S. However, there’s certainly room for a healthy correction stateside.

The latest news reports suggest the bill will struggle to pass. If it does get through, the short-term relief rally may be powerful as it should mean that Trump can finally focus on real economic stimulus.

But the gloss of the new administration is already fading for investors. It’s clear that, rather than revolutionize the U.S., Trump will in fact need to struggle for every little change.

This isn’t to say he won’t fundamentally change things, but just that it won’t be happening soon enough to be a reason to hold expensive equities that are heavily owned and no longer trading consistently higher.

This means that any relief rally will be used as an opportunity for longs to take profit, not a catalyst to build positions further.

If the bill fails, then this dynamic just kicks in much sooner. Either way, I stand by my column from March 8 that U.S. equities topped out at the start of this month.

The Rest…HERE

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