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Visa (V) stock has dropped by more than 6% in the last five trading days, although the overall market has remained fairly stable. The reason for this drop is not related to earnings or guidance but rather politics. Instead, President Donald Trump has renewed his attack on the swipe fees associated with credit cards.
A market is likely to move quickly when politics meets profit pools, especially when it is as visible as it is with interchange rates. The value of Visa already embeds a degree of stability and predictability, and any degree of disruption can lead to a rapid de-risking. Nevertheless, it is a historical truth that headline risk and long-term implications rarely align. This is where the debate resides.
