by Calculated Risk on 2/10/2017 08:48:00 AM

A few excerpts from a piece by economist Ethan Harris at Merrill Lynch:

One of our key views is that some analysts are underestimating the risk of an uncertainty shock to the economy in the coming months. ... Thus far policy actions by President Trump have generally been positive for the markets and the economy. His most aggressive economic policy actions to date involve using appointments and executive orders to promote much lighter enforcement of existing regulations.

Beyond that, the likely path of policy remains very uncertain. ... It seems as though economists and investors have set aside these concerns as too hard to handicap.

We think this is a mistake. Until there is more clarity on policy we will remain in a very cautious mood. In particular, we think economic activity could slow and confidence could fade as consumers, investors and firms try to figure out whether they are net winners or losers from all of the policy changes.