President Trump’s speech to congress has the market buzzing. They liked it.
We don’t yet know if the C-corp rate is coming down. We don’t yet know if the Republicans and Democrats can agree on an infrastructure bill. And we know that Obamacare is getting either repealed and replaced or, at the very least, fixed. But what we do know is that the S&P 500 is a riptide and Donald Trump is the wave. Ride it?
“President Trump’s joint address had, in general terms, a Reagan-esque optimistic tone,” says Nigel Green, CEO of financial advisory, The deVere Group in London. “It was by far his best and most presidential speech to date. It was almost as if tonight Trump became the President of the United States. The markets might not have been given the details they wanted, but investors should react positively to Trump’s address.”
The S&P 500 opened nearly 1% higher on Wednesday.
Green is looking closely at the banking sector in the U.S. Any cuts in regulation, like the Dodd-Frank Act, will be supportive of financial stocks. Mining and oil should also get a boost with the repeal of some environmental rules. The Keystone Pipeline is back on the table, for instance.
Investors were hoping for more timelines out of Trump last night, particularly on the tax front and on the border adjustment tax. Trump said his economic team is working on a “historic tax reform”, but clarity on this is not expected until August.
Green says investors need to be patient, and stay invested in sectors likely to benefit from Trump-o-nomics.
“The lack of detail craved by the markets should not represent a major, longer-term obstacle to investors,” he says.