Today is the day.
It’s inauguration day for Donald Trump as the 45th President of the United States.
For half of you – it is the beginning of an economic resurgence last seen during the Reagan administration. It is the “best of times.”
For the other half – it is the beginning of the “dark ages.”
So goes politics. But politics and investing are poor bedfellows.
As investors, it is in our best interest that Trump is successful in his plans to “Make America Great Again.” After all, if you have been enjoying the rally that began in November, that lift has come specifically based on expectations of lower taxes, fewer regulations and increased infrastructure spending.
But this is also the day “it gets real.”
While the markets have lifted on “expectations,” the market will now start to focus on actual “actions.” Of course, what was talked about during “campaign mode” and what actually comes to fruition are always two very different things. This is not only because proposals and promises will be met by stiff opposition from the opposite side of the aisle, but push-back will come from Trump’s own party as well.
Increases in the national debt, the deficit and reforms to health care, taxes, immigration and social welfare programs are not going to be easy negotiations. In many cases, the promises made will never come to fruition, and in others, the end result could be very different than currently envisioned.
Then there are simply the headwinds that currently face the economy from demographics to structural issues as well as the age of the current economic cycle. Economics and political policies don’t exist in a vacuum. While Trump has many ideas to promote growth in the economy, the debt, tighter monetary policies, and budget constraints will provide some offsets.
While there are many hopes from Wall Street, economists and analysts the current bull market is only in the midst of a long-term run higher, there are many conditions which currently suggest caution; particularly if you are close to retirement.
I can only surmise how this eventually turns out.
In them meantime, here is what I am reading this weekend.
- Trump, South China Sea & Potential For War by James Rickards via Daily Reckoning
- Yellen: We Are Close To Goals & Set To Hike by Akin Oyedele via BI
- Gundlach: Trump, Fed & Stocks by Bob Bryan via Business Insider
- Trump FAQ For Davos by Rob Cox via Reuters
- America’s Growth Depends On The Trump We Get by Alexis Christoforous via Yahoo
- Hayek Warning For Trump by Cass Sunstein via Bloomberg
- No, The Dollar Isn’t Too Strong by John Tamny via RCM
- Trump Vs. The U.S. Dollar by Anthony Mirhaydari via Fiscal Times
- Will Trump’s Hiring Freeze Test Regulators Independence by Aaron Klein via RCM
- Trump, Corporatism & Dearth Of Innovation by Edmund Phelps via Project Syndicate
- Will Trump Be Pro-Monopoly? by Justin Talbot-Zorn via RCM
- The Coming Corporate Tax Reform by Milton Ezrati via City Journal
- Economists Are The Barrier To An America That Is Great by Jeffrey Snider via RCM
- Mapping Trumps 100-Day Executive Action by Clyde Crews via Forbes
Markets / Fed
- Yellen Explains Monetary Policy – Seriously by Tyler Durden via ZeroHedge
- What Happens To Stocks After Inauguration by Greg Guenthner via Daily Reckoning
- Illusions Driving Up U.S. Asset Prices by Robert Shiller via Project Syndicate
- Dimon: Like The Trump Rally, Just Wait by Matthew Belvedere via CNBC
- Hedge Funds Making Extreme Bets On Trump by Matt Turner via BI
- Bond Bear Already Looks Shaky by Scott Dorf via Bloomberg
- Trump Will Volatility Great Again by Doug Kass via Real Clear Markets
- U.S. Markets: Alarm Bells Are Ringing by Pater Tenebrarum via Acting-Man blog
- 4-Risks For 2017 by Jeffrey Kleintop via Charles Schwab
- Here’s How To Play The Trump Presidency by Rachael Levy via BI
- Why Goldman Is Pessimistic On Stocks In 2017 by Sara Sjolin via MarketWatch
- How The Trump Rally Stacks Up by William Watts via MarketWatch
- Retailing In America: Bricks & Torture by Danielle DiMartino-Booth via Money Strong
- Davos Thinks It Runs The World by Caroline Baum via MarketWatch
- 25-34 Year Olds – Now & Then by Linette Lopez via BI
- Why Is the Pre & Post-Market Trading by Neil Irwin via NYT
- Student Debt Walloping Mom & Grandma by Abha Bhattarai via Washington Post
- Presidents Have Less Economic Power Than You Think by Neil Irwin via NYT
- Deci: Relationship Between Need & Motivation by Shane Parrish via Farnam Street
- 4-Words You Are Supposed To Hate by Richard Rosso via RIA
- Student Debt Payback Far Worse Than Believed by Andrea Fuller via WSJ
- These Are The Top 10 Infrastructure Projects For Trump by Tyler Durden via ZeroHedge
- 14 Experts Give Their Best Advice by R.J. Weiss, CFP via The Ways To Wealth
- Why I Sing Cassandra’s Song by John Hussman via Hussman Funds
- Potential Tailwind For Bonds by Dana Lyons via Tumblr
- Single Greatest Mistake Investors Make by Jesse Felder via The Felder Report
““In this present crisis, government is not the solution to our problem; government is the problem.” – Ronald Reagan, First Inaugural Address, Jan. 20, 1981
Questions, comments, suggestions – please email me.
Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube