https://www.bnnbloomberg.ca/investing/2024/07/16/what-trump-told-bloomberg-businessweek-about-plans-for-his-second-term/(Please refrain from political and social commentary and more importantly please refrain from calling each other names.)
This thread is meant to discuss only Trump economic policies as pertaining to investing.
For example, if he is advocating no rate cuts prior to elections, what implications does delaying rate cuts can have on our investments? If the Fed cuts rates before the elections, and as a consequence if Trump forces Jerome Powell to resign soon after getting elected, what implications does that Trump action can have on our investments?
Comments
If it's OK with you, I'll expand a little bit for now. since the business press is crediting both candidates for crunching chips today.
Where rates are in the near term will account for near-term market behavior.
Seems to me that both sides are pushing for an end to free-market globalization as we knew it--if we were paying attention--in the 1980's. I look at funds leaning industrial.
Trump's interest in a tariff regime is certainly fascinating for this amateur student of American history. Tariff policies were something American political parties aligned themselves around from the beginning of the Republic until the end of Smoot Hawley.
Who can forget the Tariff of Abominations and the Nullification Crisis?
I don't know that the other side has even begun to think about what they want besides a more benign interest-rate environment and being in favor of green re-shoring.
Seems to me both sides are in favor of a more benign interest-rate environment come hell or high water. Since I grew up on the ass-end of the Baby Boom, color me skeptical how that will work out. I'm staying on the short side of bonds.
End of globalization (again, as @WABAC said so poignantly): would support small cap more (along with more lower interest rates).
So TL;DR…..value, both LC and SC value. The rotation is real, but for how long? Can LCV/SCV lead a market into more advances?
As an aside: as a frequent visitor (and rare poster) VERY minority Republican here at MFO, I want to express my gratitude that there was nothing posted after the Trump shooting…I cringe at some of the political threads (and am so appreciative of the OT area)…my opinion doesn’t matter other than to say I appreciate the mostly non-political tenor of the board recently. Cheers!
Last post in this thread. I’ll click on it to make it show as not new, but doubt I will read it if it’s more of the above.
Thanks @BaluBalu and @WABAC.
FridaySaturday and thankful Trump wasn’t more seriously injured. It’s sad that one of the attendees participating in our democratic process lost his life. From today’s media accounts it sounds more and more like ”the gang that couldn’t shoot straight” (no pun intended) when it comes to the Secret Service & local law enforcement agencies. A gigantic screw up. Hopefully there will be a comprehensive review and maybe a house cleaning in the upper ranks.Yeah - my last post on this thread too. Just wanted to respond to @Graust.
As I read the post again, I see it had some good meat in there also. I always enjoy your investing ideas. Apologies for “bitchin’”
@Graust, I did not know your party affiliation until you mentioned here and I always appreciate your non-denominational, non-activist posting style. I hope you will find enough non-activist posters here to be a frequent poster. If non-activists sit out, then the forum will become a non-investment forum.
P.S.: I do not see the @hank post you are referring to and he may have deleted it.
@Graust is a longtime “regular”. He may not make a lot of comments, but they are always substantive based on an obvious deep knowledge of financial matters. He has helped me on countless occasions over the years. I am grateful.
China will be put in the penalty box. But a lot of Asian businesses are run by Chinese and so our suppliers in those other countries can easily be China proxies, except in India, Korea, and Japan. Are we going to impose Tariffs on stuff imported from Philippines, Indonesia, Vietnam, Cambodia, Malaysia, Singapore, Taiwan, etc.? I will have to see how far we are willing to go to bring manufacturing back to the US.
I only see deficits till the end of the horizon, which means long end of the curve is going to stay elevated. So, again, I agree with @WABAC to sit in the short end of the curve for now.
Short end of the curve likely will be kept low artificially, which will benefit a lot of small businesses / caps and low end consumers.
Two track regulations / laws: one for Big businesses and another for small businesses.
Big businesses will be subject to a lot of regulation (I think @Graust mentioned this). Cap weighted indices can come under pressure. Active funds may take back some business lost to cap weighted passive investing.
With a good term premium, financials should do well. Big financials may be required to bear some of the burden of rebuilding America, which may dent some of the profits they would otherwise make from steeper curve.
So, all in all, Big caps likely to lose some, small caps likely to gain some - @Graust thesis! I see Lina Khan coming back and winning more cases in a Republican Govt - no respite for Big caps.
I do not see Energy producers and midstream benefitting because oil prices are likely to stay low from excessive drilling or when Nuclear comes into vogue. I would rather invest in Energy services companies.
I am surprised why defense contractors are doing well if we are less likely to engage in wars. I was going to fade defense contractors but need to watch.
I would like some discussion on what happens to inflation. I am not able to imagine ever getting back to 2% without tanking the economy.
@Graust, any thoughts? I think you invest in these.
@BaluBalu Just a case of NOT ignoring the 800-pound gorilla in the room. My post did include some strictly investment related remarks. You did not care to read them. Pity. But OK. It's your thread. My post will go to off-topic just because I'm bending over backwards to deliberately ignore that 800-pound gorilla. Jayzuz.
Second of all, I think many of us can be disappointed that the parties we have so long known no longer exist, as they have been taken over by individuals or families and dominated (Clinton’s and Obamas of Democratic Party, and Bush’s and now Trump’s of Republican Party). Most of us vote for the party that upholds the core handful of things that we believe in, with the other stuff that we DONT believe in being not enough to make us vote for “the other guy” (and hopefully, “girl” someday soon!). Last piece of politicking, I promise
I don’t know how de-globalization, stopping the mass border crossings (a supply of cheap, “pay under the table,” labor) and “making things with that beautiful ‘Made in America’ stamp” aren’t inflationary. Combined with pressure put on the Fed to lower interest rates, where will that leave our economy?
I watch way too much CNBC (it’s usually on as background noise), but Cramer was saying how the Russell 2K can’t handle billions and trillions rotating out of tech/growth because the market cap of the entire index is a mere percentage of a single Mag 7 stock. So they cannot be market leaders by themselves. LC value could be….maybe betting on the next trillion dollar market cap stock? LLY, BRK, JPM are close (above $500 billion).
@BaluBalu, what do you mean “Energy Services” stocks? SLB and HAL (sorry for the ignorance), or pipelines/drilling stocks? Good point that increased supply will mean lower prices (good for consumer, arguably, but less good for energy stocks). Maybe energy transportation stocks, as the US would likely be exporting more energy (especially LNG). I have held in the past OKE (but sold about $20 lower price! *face palm*), ENB, WMB, KMI. Pipeline companies trade more correlated to oil than they probably should. But these are NOT K-1 issuing companies.
I think defense stocks would do ok, even with the ending of war, as munition stocks would be replenished from the drawdowns from supplying Ukraine, and continued high military spending; maybe an increase in supplying Israel with military “stuff.”
Utilities have been a mixed bag the last week or so, as the winners of the AI-linked energy supply, such as VST or CEG (and NEE, but that’s more green energy) have gone down as much or more than big tech. And I believe these are some of the more nuclear utility companies; you would think the new administration would be ok with nuclear power (maybe it’s “down with everything that’s considered alternative energy”).
As far as fixed income, I’m not playing a drop in rates yet (as the market moves interest rates more than the Fed does anyways), other than potentially getting out of money markets. I continue to use preferreds (several that are floating rate, such as mREIT preferreds) and baby bonds, CLO ETFs (JAAA, JBBB, CLOZ…..thanks to multiple posters here for teaching me about them), and the low volatility mutual funds that @junkster and @FD1000 and others like (RSIVX, RCRFX/RCRIX, and a few others) that either don’t move or go up a penny every 5-10 days or so. I have been burned by income CEFs too many times to count; their yield is great, and if they traded like their NAV, then they would be amazing investments, but alas, their prices swing wildly. If I want to lose money, I would be better off swing trading the 3x tech ETPs hahaha. So I’m staying mostly away from bond CEFs and core/core-plus/multisector bond OEFs too.
For my wife’s 401(a) she DCAs into once a month, her two biggest holdings are DODGX and HACAX (Harbor’s LCG). They’re about an equal allocation, and they take turns going up (or down) more than the other. I got her out of her small cap value holding there about 2 weeks before the meteoric rise over the last 7-10 days (“I’m an excellent market timer”), and I also have a workplace retirement account from my current employer that I cant add to, and is limited to OEFs only. In that account I am WAY overweight LC growth and tech (I am 47, though so I can be, hopefully?) and only hold a tracking amount of @stillers favorite AUERX as my only SC holding. I WILL talk up a fund that MFO has talked about in the past: FAMEX, a MC blend/value fund that is a long term winner, and is the number 2 holding in that account (a distant 2nd to PRWCX; can’t believe my good fortune that I got into that fund before it closed!).
Apologies for the last paragraph: it went off topic for this thread.
I will continue to favor big tech for longer term returns, and the high quality of the companies. Most even pay a dividend now (even if a pittance). Maybe an equal weight in both LC growth and LC value would be a good way to play the next several months, rather than holding the S&P 500 index (which is basically LCG)? Or a quality fund, like @davidrmoran and several others like (including me; I own GQEPX and some accounts I manage have QLTY).
Apologies for the length of my post….sheesh. And apologies for the kerfluffle from my earlier post (AND FOR MISTAKEN IDENTITY!)!!
our equity investments are pieces of businesses. when public, we can see the outcome for management and shareholders, and incentives for the former.
one candidate has a long track record of running businesses. many have faced legal and ethical issues. some of those businesses have reached final conclusion, i.e., there is no more 'give it time to outshine'. so in this case, a more business-like approach to running the u.s. appears a ridiculous desire.
both parties\teams have a track record for the u.s. economy. how the teams work together (how much 'team' is really there) is a matter of style and influence of incentives. the more that individual incentives can flop actions taken, the lesser the predictability on the economy. on net, public investments hate unpredictability. very few that think they can front-run specific incentives can actually do so.
(to simplify the analogy, i would not care how famous a failed surgeon is, nor how long his waitlist. i dont want him near anything affecting my health.)
If you have noticed, I have been trying not to say factually negative things about companies because forum members take offense to it. Whether those members are justified or not in their reaction does not matter. I routinely used to skewer / roast companies I invest in e.g., BA. So, I do not think forum members are likely to take kindly if you repeat what you may consider are factually negative things about people (e.g., political leaders). If something is news, yes, post it but I am not sure repeating widely known negative facts about people serves any usefulness in an investment thread - may be mention it in a tangent if you can not help it. Just my two cents.
Just to bring this thread back to investing …
M* link to FAIL
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I own:
TS which actually MAKES the pipes suitable for deepwater drilling and other very specialized uses. SEAMLESS pipes, in particular. It's been running hot and cold for me.
ET is oil/gas midstream LP. So, K-1 tax form. It's been a winner for me, and is still undervalued.
https://www.tenaris.com/en
https://www.energytransfer.com/
https://www.bnnbloomberg.ca/investing/2024/07/14/kuwait-announces-huge-oil-and-gas-discovery-in-offshore-field/
fwiw