AND THE WINNER IS...
With Donald Trump securing the recent victory, he will become the 45th President of the United States. From an investor perspective, the question becomes, “now what?”
In our view, the stock market could be volatile. How Trump will govern is an unknown and the market doesn’t like uncertainty, and therefore we believe volatility may continue. Keep in mind that the equity markets are constantly grappling with uncertainty (sequestration, Brexit, financial bailout, etc.) and have endured. We believe this resilience will continue, albeit with fits and starts along the way.
So as a business owner you have to stop and ask, how will Trump’s presidency affect your business?
POWER SHIFT IN THE WHITE HOUSE
The balance of power has shifted to a more conservative agenda, via a Republican controlled white house, House of Representatives and Senate. A republican majority means a pro-business stance for business owners from the standpoint of reduced regulations and reduced taxes. This is generally the case as a way to accelerate economic growth. - Another positive for business owners!
Across the board tax cuts and less onerous regulations are likely to be enacted, helping most businesses.
ATT: ENTREPRENEURS
Taking a look at Trump’s campaign record, here’s what else to expect:
- Improving infrastructure. Trump has campaigned on improve the decaying US infrastructure including roads, bridges, water systems, etc. and expanding our military. Businesses that can provide the materials, labor, technology, manpower and/or know-how for these industries should see a boost in activity.
- Obamacare. If the Affordable Care Act (AKA Obamacare) is repealed, the bottom line for drug companies should improve, however hospitals could see shrinking revenues.
- Revamping trade deals. If trade deals (NAFTA and TransPacific Partnership) are revamped businesses that export could see profits shrink. Of course with any legislation the devil is in the details. Typically the legislation that does get passed is a watered down version of the campaign promises.
BOTTOM LINE
With the election in the books, and that uncertainty now passed, the markets can once again focus on fundamentals. We believe the underlying US economy will remain on the path of moderate growth for the foreseeable future.
So while businesses may be jubilant or consequently devastated over the Trump victory, it is too early to tell how Trump’s campaign promises will unfold. In general, we believe the economy will build from the current moderate pace of growth we have been experiencing the last few years.
