Byron Wien, the vice chairman of Blackstone Group Lp who has worked on Wall Street for more than 50 years, says investors need to prepare for the possibility of slower growth as President Donald Trump’s pro-business agenda hits speed bumps.
Stocks on Tuesday had their worst day since before the election as a Republican plan to overhaul Obamacare met strong opposition from a conservative wing of the party. Trump’s failure to get healthcare reform through Congress may embolden opponents to his plans to cut taxes and reduce regulation.
“My view is that the market was due for a correction. The market had gone up almost every day since the election,” Wien said on CNBC. “It was based on Trump being able to implement his pro-growth agenda.”
Before the November election, Wien was optimistic for the stock market if Democrat Hillary Clinton won the presidency and pushed for spending on roads, bridges and airports.
Trump also pledged to spend on infrastructure as part of a plan to increase U.S. economic growth to 4 percent a year from about 2 percent a year during the Obama administration.
“It now looks like he won't get to 3 percent, and 3 percent was what the market was counting on,” Wien said.
Trump is making the same mistakes as President Barack Obama by focusing on healthcare reform instead of jobs growth, Wien said.
"Trump should have focused on his economic program,” Wien said. “But maybe circumstances dictated that he couldn't set the priorities that way. I definitely think it was a mistake, but it's been made, and now he has to deal with it."
He added that he does expect Congress to enact some kind of healthcare reform, even it's delayed on its way to the president's desk for enactment.
Investors confidence will come back as Trump’s presidency takes shape and promised reforms get enacted, Wien said. He forecasts that the S&P 500 will rise 6.4 percent from current levels to 2,500 by the end of this year.
“It's on-the-job training for Donald Trump, and he's learning that he wasn't elected king, he was elected president, and he has to work with Congress to get his program through,” Wien said.
© 2024 Newsmax Finance. All rights reserved.