President Trump may find the thrill of his electoral victory giving way to the perils of governance, Morgan Stanley wrote on Sunday, adding that "execution risks" may make it difficult for Trump's policies to have their intended effect.
Fresh from his inauguration, Trump now faces the task every president now faces: Marshaling political support for his priorities, and making sure they stick. In a research note to clients on Sunday, Morgan Stanley warned that "lingering disagreements" between Trump and GOP political leaders may have unintended policy consequences.
Congressional Republicans "embraced Trump despite their criticism of his conduct and lack of conservative orthodoxy. Hence, while our base case remains that Republicans can execute a tax reform-driven fiscal stimulus on or around [the third quarter of 2017], we concede that execution risks are rising," the bank wrote.
"This high-risk, high-reward path is another sign that investors may find it increasingly difficult to believe that their faith in US policy will be rewarded as the year progresses," it added.