Whenever President Donald Trump has something to say, it’s safe to say that the public pays attention. Even if he’s tweeting in the wee hours of the morning, investors are willing to listen and markets react whenever he takes an industry or company to task.
So given his track record so far, it leaves many analyzing how his presidency has effected the stock market and what could be on the forecast in the coming months.
Trump’s First 100 Days
Since Trump was elected, the stock market has been up at least 10% and his pro-business philosophy deserves much of the credit for that. He did claim that the stock market was trapped in a “big, fat, ugly bubble” prior to his election, but he had no problem taking credit when the Dow Jones Industrial Average closed above 20,000 for the first time in history.
Contradictory statements as such have caused major concern for many, and led to much uncertainty for investors in the market. He has already shown that he can utilize his office as a bully pulpit in order to negotiate deals, but many are still wondering if his way of dealing with business matters can transition throughout his presidency.
This issue only gets more complicated when taking into account what Trump has said on Twitter (or in his interviews) that determining where he stands on an issue has been incredibly difficult.
Some even believe that Trump’s presidency represents the rise of nationalism and the decline of globalization. Considering the fact that his campaign was fueled by anti-globalism, it left question marks above the heads of several international investors involved in the stock market.
Historical Parallels
Considering Trump’s pro-business policies, it’s safe to say that investors were initially euphoric after his win. However, current investors are beginning to understand the reality that gridlock is a default position in Washington.
In order for one to see where the market could be heading, it’s important to see the parallels between Trump and another disruptor of the past, Ronald Reagan. For example: Reagan faced delays in his tax cuts. Although the 40th president planned on offering a 30 percent tax cut in 1981, the cuts weren’t completed until the beginning of 1983. To make matters worse for those looking to utilize these cuts, the constant talk of suspending them hurt investors since they couldn’t bank on when the cuts would be available.
Donald Versus the Dollar
After Trump won the election, the dollar hit its highest level in almost 13 years. Being widely viewed as a sign of American growth for investors, there was hope that the United States would grow faster than its competitors.
However, President Trump feared that our currency was getting too strong, and manufacturers wouldn’t be able to compete.
The reasoning for this is due to the fact that when the USD worth is too much, it makes American goods more expensive. So when the dollar made a major move by dropping 0.7 percent, Trump assured it would help American companies compete with foreign enterprises more effectively.
The Impeachment Threat
Believe it or not, the U.S. stock market assumes that Trump’s presidency is a limited run. Considering the constant political turmoil surrounding the president and the looming Russia-related accusations, many investors have written off the likelihood of Trump making it to re-election.
As some claim that a Trump impeachment would cause severe damage to the stock market, many have remained muted in their reaction as they assume it is on the horizon and have already found financial replacements with the stable Mike Pence.
However, sensible investors understand that the pragmatism behind impeachment talk simply isn’t there. Aside from the fact that there is no political will in the Republican-controlled Congress to move forward with such a motion, the president has yet to be implicated in a serious crime.
The Trump administration has definitely had a unique influence on how the stock market operates.
Whether it be bashing Nordstrom for dropping his daughter’s clothing line, or turning up the pressure on Boeing and Lockheed Martin to build better planes, investors are becoming keen on the fact that this is definitely a hands-on administration when it comes to the nation’s finances.
Regards,
Ethan Warrick
Editor
Wealth Authority
