Adam Shell

USA TODAY

Despite swirling controversy and political messiness in the early days of his administration, Wall Street so far has shrugged off the dark side of Donald Trump, preferring to focus instead on the potential positives of the 45th president’s economic agenda.

Investors continue to propel stock prices into territory many Wall Street pros say is too high, despite President Trump's political setbacks. The market hasn't been spooked by early Trump troubles, such as the resignation of national security adviser Michael Flynn, the botched rollout of a travel ban focused on seven predominantly Muslim countries, questions over the Trump team’s ties to Russia and adviser Kellyanne Conway's public promotion of Ivanka Trump's retail brand, to name a few.

“It’s all about tax cuts and deregulation,” says Chuck Gabriel, a veteran Wall Street political forecaster and president of Capital Alpha. “And (investors) have an unshakable faith both of those will materialize. How long it lasts, we shall see."

Indeed, investors and the U.S. stock market, which hit another record high Tuesday, seem immune to any negative Trump-related political headlines. A closely watched Wall Street "fear gauge" is hovering above record lows. And in another sign of investor calm, the stock market's daily price swings — or volatility — in the past three months have shrunk to their narrowest range in 35 years, Strategas Research Partners says.

Investors are ignoring White House stories that don't pose a major roadblock to Trump pushing through his plans to cut corporate taxes, pare back business regulations and spend on infrastructure. They are also focused on economic data that is pointing in the right direction, strong corporate earnings growth and still-low (for now) interest rates.

Mexican retaliation could hurt corn farmers

But a day of reckoning for Trump and the markets could come on Feb. 28. That's when the president addresses a Joint session of Congress. If Trump doesn’t lay out in detail an economic plan the Republican-controlled Congress can rally around and instead uses the address as another campaign-like speech, Wall Street’s jitters could jump and the “Trump Rally” could be at risk.

“It’s a very important, tone-setting speech,” says Tom Block, Washington policy strategist at Fundstrat Global Advisors. “It is supposed to be a policy speech. Is Trump going to talk about the border adjustment tax? Talk about infrastructure spending? How specific will the speech be? If Wall Street still doesn’t know where we are going after the address, that could be when the market says, ‘this thing isn’t working out.’ ”

If Wall Street sniffs out a debilitating lack of discipline and focus from Trump when it comes to the economy, the stock market will be vulnerable to selling, warns Andy Laperriere, head of policy research at Cornerstone Macro.

La La Land has the world's worst traffic congestion

“This is the best opportunity in Trump’s first year to speak to a national audience and lay out an agenda, lay out principles and parameters for taxes, the Affordable Care Act, so Republicans can get on the same page with Trump," Laperriere says. "It’s a chance to bring his team together. If he can’t do that in his speech to Congress, (investors will) ask, 'Is this a White House that is on track to get things done?' ”

Wall Street might be less inclined to overlook Trump’s political travails if the missteps begin to whittle away confidence in the president’s ability to get things done. Or if Trump loses backing from the Republican party.

“If Trump's (economic) agenda suddenly collapsed — if tax cuts look unlikely — then the markets would not be happy,” says Greg Valliere, chief global strategist at Horizon Investments, adding that tax cuts are coming, “just a little later than the markets might prefer.”

Investors could run out of patience if Trump continues to stumble and gets bogged down in controversy after controversy, putting his economic plans in jeopardy.

“There are early of signs of trouble here, and investors ought to be more worried,” Laperriere says. “If you want to get legislation like tax reform passed through Congress I am not sure that chaos and controversy serves you well.”

”