Trump Honeymoon is Over as the 100-Day Results are In

Commander-in-Chief Donald Trump, otherwise known as “The Donald” or “DJT” is our 21st Century P.T. Barnum. He seems to love being in the middle of controversy and pushing people’s buttons. Yet his ratings, along with his skin appear to be wearing thing.

The Trump honeymoon is over as he passed his 100th day in office in April with mixed reviews across the nation. Americans are now focusing more on corporate America and less on “Trump’s America.”

The Dow Jones index (DJIA) was up 12% since the elections of which half of those gains may be have been interrelated to economic fundamentals improving and the other half due to the “yuge” investor optimism ‘buy-in” on Trump being elected President #45.  A reversal of behavior by investors into a mild selloff should not be unexpected. 

In review of Trump’s “100-day report card,” he does not get much of a passing grade by most Americans – which matches up a bit with his ratings in office.

Regardless of all the talk and post-election tweets by “The Donald,” not much has been accomplished with regards to fixing Obamacare, drug pricing, immigration, deportation, trade agreements, tax reform, deregulation or the building of walls or infrastructure (bridges and roadways.)

Jon here. Lack of quick action by Trump administration should come as no surprise as our $19 Trillion-dollar economy is not like managing a casino or hotel in Atlantic City. It’s a titanic, slow moving ship with many checks and balances in place.

A good aphorism when it comes to Trumps “words vs policies”” should be taken right from the books of President Nixon’s cabinet to “Watch what we do, not what we say.”

Wall Street does not have political affiliations. To paraphrase Ben Graham, in the short term, the market is a voting machine where people vote with their dollars. In the long run the market is a weighing machine that will measure the true values and realities of businesses.

Consider that past U.S. Presidents have taken six months to a year since taking office to “deliver the goods” on their policies. A good visual on policy implementation is provided in the following 2016 illustration by LPL Research.

Trump’s policies may be more “pro-markets” and corporate America than pro-“main street” to help out the average taxpayer at home.

Investors may greatly benefit from President Trump’s “Reganomics” like fiscal policies which could fuel liquidity and significant growth on the street.

Trump’s income tax proposal indicates that the corporate tax rate would be slashed down to 15% while the number of individual income tax brackets would be reduced to three from seven (at 10%, 25% and 35%) – but no income ranges were provided. The program would also nix most itemized deductions as well as to eliminate the estate tax.

The discussed “repatriation: of money back to the U.S. at a lower rate (known as a foreign tax holiday) in the billions for major US corporations could boost corporate earnings as well as lead to increased stock valuations from buybacks, dividends, growth, mergers and acquisitions which could help to advance the bull market forward.

We remind investors of the maxim that most often people “buy on the rumors and sell on the news.”

Many of the people who bought into the “Trump Bump” may be the first ones selling their stocks this summer and buying a bigger mattress if news comes out that President Trump cannot deliver on his promised policies – or if it appears that investors patience is waning thin – like getting closer to the expiration date on a container of milk.

The Trump- Honeymoon phase is over and the “training-wheels” are off the markets from both the “Trump-bump” and from the Fed’s “easy-money” policies.

If I could draw a political cartoon, it would have a Bull on the front and Trump on the back of a tandem bicycle. While Trump is neither steering, nor putting in as much effort peddling, he will be happy to take credit for any advancement of the markets and economy, but quick to pass along blame.

Let’s hope he learns from his experiences in the White House and, over time, keeps our nation on course.

For more information on our firm or to request a complementary consultation please email [email protected] or call (561) 210-7887 to get started today.  

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

All indices are unmanaged and may not be invested into directly.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

No strategy assures a profit or protects against a loss.