Wall Street loves Trump now, but will he really bring change?
The S&P 500 has surged around 10 per cent since Donald Trump’s election last November, boosted by expectations he would lower company tax, ease bank regulations and raise infrastructure spending. Which is why his inaugural Speech to Congress earlier this week was so eagerly awaited by investors. But will his talk be translated into action?
Here’s a little of what the Donald had to say…
What does US Congress have to do with the current wave of enthusiasm on Wall Street and ultimately your investment returns? Read on…
“I will not allow the mistakes of recent decades past to define the course of our future. For too long, we have watched our middle class shrink as we have exported jobs and wealth to foreign countries. We financed and built one global project after another but ignored the face of our children. The inner cities of Chicago, Baltimore, Detroit, and so many other places throughout our land.
“We tended the borders of other nations while leaving our own borders wide open for anyone to cross and for drugs to pour in at a now unprecedented rate. Infrastructure has so badly crumbled.
“In 2016, the earth shifted. The rebellion started as a quiet protest, spoken by families of all colors and creeds — families who just wanted a fair shot for their children and a fair hearing for their concerns.
“But then the quiet voices became a loud chorus, as thousands of citizens now spoke out together from cities small and large all across our country.
“Finally, the chorus became an earthquake, and the people turned out, by the tens of millions, and they were all united by one very simple but crucial demand: that America must put its own citizens first.
“Dying industries will come roaring back to life; heroic veterans will get the care they so desperately need. Our military will be given the resources its brave warriors so richly deserve.
“Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports, and railways, gleaming across our very beautiful land. Our terrible drug epidemic will slow down and ultimately stop, and our neglected inner cities will see a rebirth of hope, safety, and opportunity.
“Above all else, we will keep our promises to the American people. It has been a little over a month since my inauguration, and I want to take this moment to update the nation on the progress I have made in keeping those promises.
“Since my election, Ford, Chrysler, General Motors, Sprint, Softbank, Lockheed, Intel, Walmart, and many others have announced they will invest billions and billions of dollars in the United States, and will create tens of thousands of new American jobs.
“The stock market has gained almost $3 trillion in value since the election on November 8 — a record. We have saved taxpayers hundreds of millions of dollars by bringing down the price of the fantastic — and it is a fantastic — new F-35 jet fighter, and we will be saving billions more on contracts all across our government.
“We have placed a hiring freeze on nonmilitary and nonessential federal workers. We have begun to drain the swamp of government corruption by imposing a five-year ban on lobbying by executive branch officials and a lifetime ban on becoming a lobbyist for a foreign government.”
Here at Montgomery we watched the speech delivered live, hoping to see some detail on changes to corporate taxes or the Border Adjustment Tax – which could have significant implications for companies and currencies globally.
It’s hard not to have some sympathy for Trump’s intent. Shoring up the US economy is to everyone’s benefit but what we saw was a house that remains trenchantly divided.
“When the eyes say one thing, and the tongue another, a practiced man relies on the language of the first.” Ralph Waldo Emerson
There were many statements that received standing ovations, but those that stood were primarily republicans. Democrats remained stubbornly affixed to their seats, their hatred of Trump alienating them from the Middle Americans that elected him in a protest against the establishment and self interest.
One analysis of the protest observed ahead of the speech: “The sore losers of the Left, after refusing to attend Trump’s inauguration, have apparently decided to double down on their childish behavior by plotting a number of protests at Trump’s upcoming address to Congress. According to The Hill, House Democrats are rallying behind a plan to make the newly-elected President’s first address to Congress as uncomfortable as possible by inviting guests they say will be harmed by his policies, including ethnic minorities, LGBT people, undocumented immigrants and the disabled.”
There’s a lot of work to do, and judging by the immovable posteriors of the democrats, as well as the democrat response to the speech* it seems the market’s enthusiasm for the potential benefits of Trump’s proposed changes may end up giving way to a disillusioned realisation that little will change.
*Former Kentucky Gov. Steve Beshear delivered the Democratic Party’s response to President Donald Trump’s address Tuesday night: “You picked a Cabinet of billionaires and Wall Street insiders,” Beshear said, from the Lexington Diner in Lexington, Kentucky. “That’s not being our champion. That’s being Wall Street’s champion.”
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
xiao fang xu
:
Santa Claus is coming to town
exactly where is all this money going to come from?
The United States is about twenty trillion dollars in debt right now.
I do not support or endorse Donald Trump, who is not a libertarian and who appears to have no clear philosophy of any kind.
He would no doubt do countless things that I would deplore.
Just like all the other candidates, in other words.
Election of Donald Trump, the demagogue, has lit a political fire by exposing Democracy as a false God, that is.
Democracies breed demagogues.
The greatest danger to democracy is a struggling population in search of easy answers.
politician who knew what the masses wanted to hear
In the end, demagoguery works when the electorate lacks the integrity and cultural imperative necessary to reject tangible and immediate gain in favor of principles that require sacrifice, effort, and personal responsibility.
Democracy, therefore, provides a fecund environment for the reproduction of demagogues.
As Shakespeare’s Cassius noted, “The fault, dear Brutus, is not in our stars, but in ourselves . . . .”
http://time.com/4375262/history-demagogues-donald-trump/
And so far, the best match we have found for Mr. Trump is former Argentine President Juan Perón. A colorful, larger-than-life rascal, Perón “took on the Establishment” south of the Río de la Plata.
Perón didn’t have Twitter. He didn’t have “fake news.” All he had were old-fashioned speeches and old-fashioned lies. He railed against the rich, the landowners and the church.
And he ranted against the newspapers, the bankers and the universities. The plain people loved it. Perón spoke for them. He stood up to the old elite. But he didn’t drain the swamp. He didn’t even drain the sink.
Instead, he took over the Establishment’s power and used it for himself. Whatever dirty deeds Perón ascribed to the old elite, his new elite committed even dirtier ones.
http://www.acting-man.com/?p=48691
Today the debt is $20 trillion. It’s 106% of GDP. . . .Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built in. Yet, he wants more defense spending, not less. He wants drastic sweeping tax cuts for corporations and individuals. He wants to spend more money on border security and law enforcement. He’s going to do more for the veterans. He wants this big trillion dollar infrastructure program. You put all that together and it’s madness. It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books.”
http://usawatchdog.com/giant-fiscal-bloodbath-coming-soon-david-stockman/
Roger Montgomery
:
I note the paragraph: “Then, Stockman drops this bomb and says, “I think what people are missing is this date, March 15th 2017. That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015. That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”
Stockman also predicts very positive price moves for gold and silver as a result of the coming budget calamity.”
Don McLennan
:
slogans can sometimes be relevant
America land of the free
America land of the WE
In God we trust
In DON we trust
An inspiring speech
If he can do one tenth of it
It will be incredible
Just hope he picks the right tenth
Kelvin Ng
:
Hi Roger, completely unrelated, this is a great talk by Andrew Ng on AI and machine learning at the Stanford Business School on 25 Jan 2017.
https://www.youtube.com/watch?v=21EiKfQYZXc&t=1921s
Kelvin
Robert Warren
:
I am from the uk and have been in oz for 36 years i have seen what happened there in London and other cities in the uk with cultural change and its not nice government have to learn that when and if another person from another country and culture is allowed to migrate and make a new start and better life in that country those people should understand the rules law and culture is the way they have to live their new life but unfortunately Australia is fast joining other countries around the world and will suffer the same consequences its very simple if you don’t want to live by the rules of your new country of choice don’t go to that country and Australia don’t let the buggers in get smart oz .i am from the eara of Enoch Powell so it goes i believe Pauline Hanson and trump are all on the right track and with all politicians not all of their policies are diejestable but i do think trump is on the right track i don’t particularly like the man but he is not there to be liked just so long as he gets the job done and i won’t forget brexit go mrs may all we can hope for is that world becomes a better place.