Surprising most observers, Donald J. Trump will be the 45th President of the United States.
As we observed in our last newsletter, we believe the market is nonpartisan. That, unless “Donald Trump wins and literally does all the outrageous things he says he will do” there will not be an unfavorable stock market reaction.
It is becoming increasingly evident that President Trump will NOT do outrageous things. First, the stock market has reacted positively (after election night fears subsided). Ray Dalio, at Bridgewater, said “markets will increasingly focus on what he is likely to do and less on how sensible he sounds.” Our point exactly. The campaign is over.
Second, after a heated campaign, Mr. Trump has already started the healing. He met with President Obama for 90 minutes (traditionally this is a formal 15 minute event) and called him “a good man.” He has already received the (implied) support of Nancy Pelosi and Chuck Schumer on an infrastructure bill. His words to the public show that he truly appears to care for all people. Dr. Ben Carson assures that Obamacare will not be dismantled immediately, that instead it will be fixed and replaced with a better version based on what Americans want. Media outlets like Morning Joe on MSNBC have started the healing for the American public.
The bond market has already started to react to the infrastructure bill (safe bonds with long maturities are falling) as we predicted.
There is much more change to come. In fact, because President Trump has the backing of Senate and the House we are likely to see more change in the next 100 days than we have seen in a very long time. At Global View, our job is to assess this change and reposition portfolios if necessary. We continue to believe the stock market is nonpartisan but we also know that policy will affect how companies earn profits. Stay tuned.