Viewed from Wall Street, Donald Trump's presidency is going perfectly.
Forget about the travel ban woes, Russian revelations, or the president angrily tweeting about FBI leaks. Stocks shrug it all off as Beltway noise and continue to rocket higher on the assumption of big corporate tax cuts and slashed regulation.
Wall Street may turn out to be right in the long term, but it could also be in for a big reality check from Washington in the short term.
On corporate taxes, there is a very long way to go. The White House has not even come out with its plan yet with everyone reading the tea leaves on whether Trump will ultimately back the border adjustable tax (BAT) that is the critical lynchpin of House Speaker Paul Ryan's plan to get the top corporate rate down to 20 percent. Trump wants to knock it all the way down to 15 percent.
The BAT tax — loved by many manufacturers and hated by retail and other groups — would generate more than $1 trillion in revenue over 10 years and make the price tag of the rate cut palatable to deficit hawks who still hold power in the House. The problem is most Republican senators hate the BAT. And while Trump wants some kind of a border tax, he's not sold on the BAT as the way to do it, people close to him say.
Treasury Secretary Steven Mnuchin said in an interview on CNBC this week that the White House could deliver a corporate tax cut by August. Even those most hopeful about getting it done consider that a very ambitious timetable.
Before even getting to taxes, Congress has to figure out how to repeal and replace Obamacare, an enormous political and legislative headache to which there is no clear answer. Republicans are getting hammered on the issue back home and when they return to Washington next week they will begin the long and painful process of figuring out how to escape from a vexing political trap. They campaigned on getting rid of Obamacare, but now risk blowback from taking away its coverage and popular provisions.
So the stock market, trading at fairly high valuations with the Standard & Poor's 500-stock index at around 27 times earnings, appears ripe for a pullback if it looks like the repeal of Obamacare will take a long time and slow the timetable for tax reform.
There already is some grumbling about the lack of a plan on Obamacare.
"Republicans in Congress have been complaining about Obamacare for seven years. Now all of a sudden they are in control and don't have a plan," Art Cashin, the veteran director of floor operations for UBS at the New York Stock Exchange, said. "For all the people saying this rally isn't about Trump, it really is very much about him and hope for what he can deliver. And if over the next several weeks we don't get details, or there is a backlash against the tax plan, then the market will show significant disappointment."
That backlash, should it come, will be especially troubling for the White House because the administration has tied itself to the rally in a way that most administration's avoid given the daily gyrations of the market.
Trump regularly trumpets the market rally as a vote of confidence in his policies, and Mnuchin did the same on CNBC. "You can see the stock market's up, you can see the dollar's up," he said. "There's a lot of confidence in the Trump administration."
That's true for the moment, but it may not last.
"The market is looking for reasons to go higher, and the administration has provided it," said Scott Clemons of Brown Brothers Harriman. "Right now a lot of that is projection, hopes, and intentions, which when it collides with the reality of having to deal with Congress, even held by the president's own party, that leads to disappointment down the road."
— Ben White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.