Trump’s Momentum Matters To Investors
My sense is that Trump is finally in a position to drive his agenda.
Early in the year he seemed in trouble. The first blow was the inability to drive a repeal of Obamacare.
Coupled with staff turnover and the rise of the Russia investigation, the administration was clearly taking punches.
But then things changed.
First, the strong macroeconomic and stock market performance is directly tied to Trump.
Second, the tax cut. This proves the ability to rally troops to pass significant bills.
Third, the Russia investigation is clearly without merit. There is no collusion. Politically speaking, some in power have withheld support on the premise that Trump would be removed. Now they have to play ball.
Fourth, he keeps winning the fights. He put someone on the Supreme Court. He blacklisted travelers from some countries… and it actually stuck. His push against undocumented immigrants has led to a plunge in illegal border crossings.
It means Trump will have an easier time of pushing the next stage of his agenda: infrastructure.
Trump is a builder and he gets how building drives the economy.
The Fed actually likes this – the entire U.S. economy is a hollow shell dependent on low interest rates, easy credit and other monetary policies. If the economy can pivot to more fiscal driven growth, then rates can be normalized.
Also note he is auditing the Pentagon.
Think about that for a moment. The U.S. Federal budget essentially goes to the military and a series of social welfare benefits.
The military has usually been a hands-off segment. Instead, reducing the Federal deficit has traditionally focused on cutting the social benefit side of the equation.
Suddenly, we may be able to have our cake and eat it too. The goal of the Pentagon audit is to reduce the budget but not affect the deliverables.
Even approaching this Holy Cow is a big win.
KEY TAKEAWAY: Going back to the Trump agenda, the word is that next month he announces a spending plan that emphasizes infrastructure. Building and repairs.
I need to look at the companies that play in that space, but watch some big moves. I’ll keep an eye out for you on how to best play this industry.
His impact on equity markets are undeniable.
Editor of Moneyball Economics