Americans beware: markets can be out of sync with reality

By Robert E. Rubin for The Financial Times

Writing in the Financial Times, Robert Rubin writes that recent stock market gains coexist with potentially adverse actions by the Trump administration, including destabilization of energy markets from the war in Iran and attacks on the independence of the Federal Reserve. Rubin notes that markets may now seem inured to such conditions, making some observers feel that Trump policies are not resulting in the economic damage many feared.

Rubin disagrees. The U.S. economy has suffered harm that, he says, will become clear over the longer term. Citing the example of Greek sovereign bonds, he argues that markets can react harshly after being out of sync with conditions for a long time. Amid instability in U.S. economic and foreign policies, Rubin says, markets are taking comfort that the Trump administration sometimes walks back its most extreme steps. However, he contends that disruptions and uncertainty can inflict longer-term harm. Americans must engage in debate and support candidates serious about grappling with economic challenges—not indulge in complacency by an economy that, for now, continues to perform reasonably well.