Markets Stumble amid Trump’s Travel Ban

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The Dow Jones slides substantially after the President controversial executive order creates problems for tech and financial companies. Markets have hit a rather sour note, down roughly 200 points, following President Trump’s controversial executive order, restricting individual travel from seven majority-Muslim nations.

The dip in stock prices comes after a historic appreciation period, which immediately followed the President’s victory on Nov 7, as investors saw optimism in the President’s promise to lower taxes and decrease the regulatory burden on business and financial institutions. However, with this recent setback from the Trump administration, investors have been forced to reevaluate their positions and emerge from their state of complacency.

Among the hardest hit sector players were those within the tech space, more notably, giants such as Apple, Alphabet, Microsoft, Amazon, and Facebook, which lost a combined $2.4 trillion in market cap. The loss comes as investor consider the decline of labor and the potential slowdown in production, as a result of complications arising between overseas workers and visa holders.

Though the order is only temporary, lasting a total of 120 days, the swarm of public outcry and the impacts of dislocated workers are far too great to go unnoticed by the market and its alpha producing behemoths.

In response to this order, CEO’s from the largest tech companies within the United States have begun to issue memorandums in condemnation of the President’s executive order. In a memo written by Google’s CEO Sunar Pichai, and obtained by Bloomberg News, he writes that “It’s painful to see the personal cost of this executive order on our colleagues,” adding that “We’ve always made our view on immigration issues known publicly and will continue to do so.”

This sentiment was similarly uttered by top bank executives, as they too felt the brunt of the President’s travel ban. In a statement, Citigroup CEO, Michael Corbat, voiced his concerns over Trump’s Ban and the precedent it sets forth, stating:

“We are concerned about the message the executive order sends – we are proud of Citi’s diversity and the fact that we hail from over 100 countries. we encourage the leaders of the United States to find the right balance between protecting the country and its longstanding role as an open and welcoming society.” [1]

Now, it might be that tech companies and banks alike, pride themselves in being diverse, multi-cultural institutions of opportunity. But, in reality, tech companies and financial institutions are more concerned with their bottom line than the geopolitical actions of the White House. And rightfully so, as these companies are focused on appreciating their share price and increasing their return on investment (ROI), more so, considering the substantial sell-off experienced Monday.

Having said that, I don’t believe this is a benevolent sign for the months to follow. While the equity slump is significant, it does exhibit some faint signs of recovery, having had a small rally late in the trading day, finishing down 107 points after a 70-point rally in the upside. Nonetheless, if the markets are to experience sustainable growth, investors deserve clarity as to forward stimulus proposals by the Trump administration, and a push for more fiscally conservative policies geared towards job creation, rather than divisive acts of executive privilege.


Equity Movers:

(1/31/17), Apple (AAPL) is down 0.49%, Alphabet (GOOG) is down 3.22%, Microsoft (MSFT) is down 1.72%, Amazon (AMZN) is down 1.47%, Facebook (FB) is down 1.41%, Goldman Sachs (GS) is down 7.63%, Bank of America (BAC) is down 3.08%, Citigroup (C) is down 2.24%, J.P. Morgan (JPM) is down 2.65%, and Morgan Stanley (MS) is down 2.66%.

 

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