11/09/2016
A Trump Presidency
It is hard to imagine that after 18 months of watching our Presidential candidates “duke it out” this election cycle is finally over! Although we are sure some of our clients are disappointed in the results, we think we can all agree that witnessing the vitriol and acrimony has become tiring. Hopefully, we, as Americans, can unite again as citizens for the common good.
We at Locust Capital do not use our advisory role to provide you with our political opinions and ideals. Rather, we see our role as conveying pertinent information that could potentially impact your financial lives. Below please find commentary on some key issues the nation may face during a Trump Presidency.
It is widely believed that a Trump presidency with a Republican-controlled Congress will look to significantly reduce taxes, reduce regulation and increase spending. These are part of Trump’s agenda which we outlined to you in our Clinton – Trump Comparison Letter last September. However, there very well could be infighting between Trump and Congress during the first 100 days and beyond. One thing we do know is lower taxes and increased spending will lead to a higher government deficit.
What does seem concerning is the tone and language Trump consistently used during this campaign. While it seems logical to want to bring jobs back home that have fled to other countries, these trends have developed over the past decades. Additionally, there is a risk of sparking trade wars and retaliatory foreign tariffs on our existing export products. We think corporate America is going to play a large role during these discussions as the impact to them is tremendous.
Another policy worth mentioning is the Affordable Care Act (ACA). Since the ACA was passed, Republicans have wanted to revoke this law. During his presidential campaign Trump also jumped on this bandwagon and incorporated this position into his rhetoric. What has not been explained to date is a possible alternative. What we do know is the ACA is very complicated and the health care sector has spent billions of dollars to support this law. There is also the Human Factor; will our government take away health care coverage to the recently insured and those with pre-existing health conditions? It is our assessment to date that Republicans may look to modify the ACA and package it as their own which could be good for markets.
During election cycles stock markets are historically more volatile. We expect it to be no different this time around. The U.S. economy is growing after posting a positive GDP report in October. In addition, corporate earnings have been strong across most major sectors. The post-election Fed is now a toss-up with less than a 50 percent probability of a rate hike in December.
We certainly hope President-elect Trump becomes more presidential in the days and years ahead. He has been hired by us, as citizens, to represent the United States of America. We hope he takes this role as seriously as it requires and does not squander the legacy he has rightfully inherited.
We are here to serve you and answer any questions you may have.
Sincerely,
Your Friends at Locust Capital
http://www.locustcap.com/pdf/A%20Trump%20Presidency.pdf
