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The Trump Economy
by Eliseo "Jojo" Prisno
CRPC, MS Chartered Retirement Planning Counselor
It’s almost a quarter of a calendar year since President Donald J. Trump took office at the White House. His first 100 days has been mired with controversies such as claims on wire-tapping of the previous administration, and campaign promises being realized to be mere talks getting into fruition as close to impossible.
Politically, I really do not have an opinion except on the new immigration policies which is getting outrageous (obviously being an immigrant myself) but I’m not here to discuss my disgust on the issue. I’m here simply to look at the numbers where our money matters.
Let us look at the following markets performance since Mr. Trump got elected president (as of this writing): S&P 500 +11.1%, Dow Jones Industrial +14.2%, Technology (XLK) +12.7%, Industrial (XLI) +13 %, Oil +11.6%, Financial (XLF) +22.2 %, Real Estate (XLRE) +1.4%, Consumer (XLP) +4.5%, Healthcare (XLV) +10%, 10 Year Bond +15.3%, USD-Yuan (Chinese Currency) +1.5% and Gold -3.3%
All these numbers are impressive (except Gold) and a clear sign that there is this “bullish” or optimistic sentiment hovering around. Gold’s downturn in fact supports this perspective. When the market is jittery, most investors demand the precious metal however on a bullish outlook everybody looks for productive placements rather than a safety net. Since I started following the markets and correlated it to “newly” installed presidents, this is the first time I’ve seen this (from the first Bush to Obama’s, a 28-year span). In fact, according to markets’ almanac, the last time this happened goes back as far as the Nixon presidency, almost a 50-year span.
Is this too good to be true? Well, my dear investors, it is happening and if you are not invested right now, you’re missing the party. The better question really is, is this sustainable? What will it take to get this sustained?
Investors’ sentiments obviously is drummed up by the current administration’s slogan, “America First”. A battle cry to put the American agenda on top, before other concerns outside our borders. It’s like the revival of domestic “capitalism”. So far there is no tangible delivery yet of Mr. Trump’s economic plans (tax reform, healthcare revamp, policies to fuel growth, etc.), the current developments are still a continuation of the previous administration’s efforts, however everyone seems upbeat and hopeful that Mr. Trump’s agenda will reinvigorate and sustain further the previous administrations’ economic recovery program.
Other economic indicators since Mr. Trump’s election reads as follows:
GDP Growth 1.9 % (no change), Core CPI Inflation 2.2% (up 0.1 PPT), unemployment 4.7% (up 0.1 PPT), Manufacturing Jobs 12.4 Million (up 0.80%), Fiscal Deficit $583.6 Billion (up 2.9%), Hourly Earnings $26.09 (up 0.70%), US Dollar Index 101.57 (up 3.80%), Trade Deficit $505.7 Billion (up 2.1%)
A few days before this writing, Mr. Trump’s budget was put forward for congress to vote on and if you look at the line items, it’s pretty obvious that resources are rechanneled towards domestic concerns. The discretionary budget (the one presented) calls for increase in defense spending, improvement and expansion of domestic infrastructure, revitalization of the educational system, etc. all geared towards its core agenda, “America First”. Our soft dollars that aides struggling economies like the Philippines and other emerging markets had been reduced and diverted to local concerns. The new approach to foreign policy is “hard dollars” rather than “soft dollars”.
If they want our help, on defense for example, instead of receiving money to help beef up your policing, you will be receiving the “police” themselves. This means more troop deployments and physical presence. These fiscal diversions will surely help our economy domestically (more jobs mean a vibrant consumer economy) however what will happened to the outside markets where if they are weakened, the ripples back fire to us?
This is the loophole in Mr. Trump’s economic agenda, it is very exclusive. This exclusivity will have short term gains domestically, increased GDP for example, but long-term it will back fire.
Now to answer the sustainability issue, will it sustain? I’d say maybe in the next 5-7 years but I’m sure it will bite back in the next downturn, and it will bite back hard. Remember the 2nd Bush, he tried hard to sustain the Clinton economic miracles (the growth of the 90’s) just to end up in a bubble in 2008 which we now know as the great recession.
An exclusive agenda sounds patriotic and nationalistic but our world is no longer defined by borders (why build a wall?), our world is defined by the inclusion of everyone in this planet, the very reason why Facebook, Instagram and all other social media outlets are a phenomenon, everybody wants to be connected, not just in ideas but in economic activity as well. If more people are left behind (by the way of the 7.5 billion people on this planet, over 3 billion subsists on less than $2.50 a day) and isolated, the more enemies from the under developed world will be created. We need to find a good balance.
So if you’re invested right now, be vigilant, be very vigilant.
Data source: Investopedia.com/trump
ABOUT THE WRITER: Eliseo Jojo Prisno is a Chartered Retirement Planning Counselor (CRPC) and holds a master's degree in engineering For over a decade, he has managed the wealth of select families and business owners. He founded P/E Capital Investments in 2010, a State Registered Investment Advisory Firm (CRD# 172695) and is currently the firm’s Managing Director and Senior Investment Advisor.
Mr. Prisno also manages a Fund of Funds investment program with Ameritas and runs an All-Equity Growth and Income customized portfolios in separate accounts via E*Trade Securities. He is also a licensed professional on insurance products and annuities. If you have questions or desire a complimentary analysis of your investments or retirement readiness, email j.prisno@PEcapitalinvestments.com or call 1-888-929-2825. Visit our website www.pecapital.org and our Facebook Page.