Thursday 25 May 2017

President Trump's first 100 days in office don't really leave investors any the wiser

Mr Trump’s promises on financial deregulation were a key driver behind the recent outperformance of bank stocks. Photo: AP
Mr Trump’s promises on financial deregulation were a key driver behind the recent outperformance of bank stocks. Photo: AP

Tom McCabe

In February, US President Donald Trump scored his achievements as an 'A plus' for effort and a 'C plus' for messaging. Strong stock market gains accumulated since November suggest investors agree. But as the milestone approaches, what clues have his first 100 days really revealed about his policy priorities and how they could shape investment markets?

In relation to healthcare reform, the last few weeks saw attention centred on Mr Trump's unsuccessful effort at repealing and replacing Obamacare. Although a setback, we don't view it as a referendum on his entire reform agenda. For investors a key question is whether a 'Plan B' is being hatched and whether the failure on healthcare delays the passing of tax reform, something which investors won't like.

We're still of the view tax reform can pass in 2017 if Mr Trump turns focus to this now. The risk of failure on tax reform is much lower given Congressional Republicans seem more clearly 'onside' on the issue.

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