As investors have come to grips with the election of Donald Trump, they've seized on some of the reality TV star's few clearly definable policy directions and traded like crazy on 'em. Among these has been Trump's promise to launch an infrastructure investment program, which has rocked the commodities market and pushed shipping and construction stocks up by double-digits.
But Jim Chanos isn't having it. On Bloomberg, the short-seller dumped on the notion that Trump's proposed infrastructure plan will amount to more than a few toll roads.
The problem, according to the guy who saw Enron's collapse coming, is that Trump's infrastructure plan relies more on tax credits and private-public partnerships than a “classic Keynesian” model, in which the government just writes checks for new roads and bridges. A toll road between two cities isn't going to be as stimulative as a new high-speed train line.
And when it comes to commodities and construction companies, it's worth remembering that whole China thing.
“The driver for commodities and construction equipment isn’t going to be the U.S.,” Chanos said, comparing the $100 billion spending plan that has been floated to China's frenetic pace of investment. “This is small potatoes relative to the global demand.”
Of course, it's all too soon to make heads or tails of anything in the coming Trump administration – or the unpredictable events that will befall that administration. “Events conspire to change your view,” Chanos said, citing President Obama's experience with the financial crisis. “And events end up generally being greater than the White House.”
Just try telling that to the Make America Great Again prez.