In one of the most significant developments of the campaign, Donald Trump has dropped his Wall Street bashing and has pivoted on key issues. He obviously has gotten an earful, and now promises to dismantle Dodd-Frank, and has dramatically toned down his criticism of the Federal Reserve.
“I’m not a person who thinks Janet Yellen has done a bad job,” Trump told Reuters Tuesday.

The irony is that Hillary Clinton was supposed to pivot by mid-May, but her increasingly ugly fight with Bernie Sanders has boxed her in – maybe for weeks to come. Trump has the luxury of pivoting, especially as he ramps up fundraising appeals to conservative fat cats. And they’re telling him – ease up on Wall Street.
We still think that the markets have to worry about the uncertainty factor – Trump shifts positions daily – but Wall Street’s anxiety over him may begin to recede. For months, we have listed four economic worries that Trump would bring – but suddenly three of those worries have lessened:
1. Trade war with China. Trump has not relented on this one, and the markets have to worry about the prospect of a major rift between the world’s two biggest economies.
2. A nasty spat with Yellen. This looks far less likely; Trump almost surely has been told to tone it down by his Wall Street friends. Will he align with anti-Fed zealots who want to curb the central bank’s power? Maybe not.

ABOUT LAST NIGHT: Hillary Clinton’s delegate lead hardly budged, but the take-away from last night was Bernie Sanders’ absurd – almost delusional – claim that he can arrive in Philadelphia on July 25 with enough delegates to win the nomination. Bernie, Bernie – it cannot happen !! All he’s doing is stoking resentment among young people against the Democratic Party (which Sanders never really joined). Like we wrote yesterday, he’s inflicting enormous damage on Clinton.
RATE HIKE ALERT: After yesterday’s inflation uptick and comments from Fed officials that a rate hike is on the table, starting in June, we reiterate: the best bet is for a fed funds increase is July, with the Fed then making it clear that another move might not come until year-end. Janet Yellen has work to do – she needs to prepare the markets for this – and we think she will set the table in a major speech on June 6.