An Investor’s Guide to Trump’s First 100 Days
100 days. A rather random period of time by which to judge a presidency. The metric came about thanks to Franklin D. Roosevelt’s flurry of New Deal laws in his first 100 days. Studies have indeed found that it’s legislative action tends to come in one’s first 100 days.
At the time of writing, Trump’s approval rating is 43.1 percent – a historically poor return this early in a Presidency. Despite the lack of support, Trump has signed 30 executive orders into law.
Many complaints have been lobbied against Trump’s economic actions. Trump undid a plan made under President Obama to decrease the cost of mortgage insurance for working, middle-class homebuyers. Between 750,000 to 850,000 Americans therefore face higher costs in 2018, the National Association of Realtors conjectures.
The lack of subsidy for mortgage insurers could weigh on their stock price. Private mortgage insurers include Genworth Financial, MGIC Investment Corp., Radian Group Inc., PMI Group Inc., Old Republic International Corporation. Of these, PMI group has a comparably small market capitalization ($5.1 million), thus making it a volatile option (though how much further can it fall at .03 cents?). Moreover, Genworth has already begun to decline. Currently at $4.04, down from $4.10 in the last few days, the price reached its nadir for thus far in 2017 on January 30 at $3.30. It could fall further yet if Trump pursues other, similar policies.
Trump’s Treasury Department nomination, a Goldman Sachs partner and hedge fund manager – who some have dubbed the “foreclosure machine” – could bode well for industries across the board. For instance, Steven Mnuchin has stated he is “not at all” concerned about the potential shocks to the labor market automation might create. He has posited such concerns won’t be relevant on a timeline of “50 or 100 years.”
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“If President Trump really does push companies to base more of their production in the U.S., then those that specialize in robotics and automation will probably be the winners,”
says Paul Diggle, senior economist at Aberdeen Asset Management, in a research note.
“Companies won’t automatically employ more Americans. They will rethink their strategies and some will inevitably look to automation as a way to avoid the higher costs of employing U.S. workers.”
Robotics and automation “is where the opportunity really lies for the U.S.,” Diggle says.
“The U.S. can continue to dominate the world in the development of the automation and robotics technology which all companies are scrambling to embrace.”
That bodes well for Google and Amazon. The internet search engine has been in robotics since at least 2013, and has invested in eight robotics or artificial intelligence firms. Amazon purchased the robotics company Kiva.
Trump’s billionaire Advisor on Regulatory Overhaul, Carl Icahn, could pose a conflict of interest wherein arbitrages to trade are available. He is chairman of developer, manufacturer and supplier Federal Mogul, and his advice as czar could thus benefit tied industries: automotive, commercial, aerospace, marine, rail, agricultural and power-generation applications.
For instance, Icahn has already cheered on Trump’s take on renewable fuel rules. The president nominated Oklahoma Attorney General Scott Pruitt, a staunch oil industry supporter who is likely to loosen regulations including renewable-fuel mandates, including credits linked to Renewable Identification Numbers (RINs). Icahn said Trump consulted with him to pick Mr. Pruitt. New EPA renewable fuel rules could have implications, and ultimately prove a boon, for an oil refinery in which he owns a stake, CVR Energy.
Trump’s Regulatory Overhaul, in general, could boast well for financials. Jamie Dimon thinks operational risk capital should be “significantly modified, if not eliminated”. U.S. banks hold around $200 billion in operational risk capital, the CEO says, lamenting that, should a bank withdraw from a business that created the associated risk, it will still be required to hold the capital.
The Dallas Morning News reported that Texas cattle ranchers represent the “first casualty” of Trump’s “blundering, blustering trade policy.”
Contributor Richard Parker writes:
“By threatening a trade war with Mexico within days of inauguration, the president helped trigger a slide in cattle futures. Mexico is a major export market. By sinking the Trans-Pacific Partnership, the new administration cut off long-sought access to the Japanese market. Now banks have raised the conditions for collateral for loans for ranchers.”
It’s not easy to short cattle ranchers, but you can short the stocks of Farmland Real Estate Investment Trusts, which acquire farmland and then rent that farmland to farmers. Keep an eye on Farmland Partners Inc.
The main beneficiary of Trump’s increased military spending, wealthy military contractors and Pentagon elites, could benefit from Trump’s hawkish rhetoric alone.
The commercial side of the war stock businesses dependent on war have generally sagged due to economic recession.
Biotechs create vaccines and treatments to fight in the face of biological terrorism. But tangible benefits from the research is not easy to come by.
The rebuilders are sent in after a war to reconstruct. Projects run into the billions of dollars. Measuring long-term growth is not easy.
Investors tend to watch these stocks when the vector of war crops up on the radar:
Furthermore, Boeing has developed a good relationship with the president. Lockheed Martin has been cited as a winner thanks to Trump’s defense budget, as has Haliburton. If the defense stocks are doing well, then traditional safehaven gold could hedge geopolitical instability.