In a thought-provoking piece from May 2018, I penned a commentary here titled ‹Make America Great Again›, promptly re-titled by the editor to ‹Rabobank: Trump is good for economy and stock market›. Reflecting on it now, I am mostly financially appreciative. To clarify, today’s discourse is not about Amazonian deforestation but Donald Trump once more. With the understanding that Trump stirs strong sentiments, this column aims to objectively evaluate the implications of his potential second term on the economy and the markets.
The 2018 narrative centred on the shift from non-traditional monetary policy to tripartite unorthodox strategies: fiscal, economic, and trade. Primarily, the first two facilitated the continuation of U.S. equities› superior performance. Trump’s once contentious policies now seem less so, overshadowed by COVID-19 and the Ukraine conflict, with President Biden’s China sanctions and an 8% budget deficit amidst full employment pushing boundaries further.
Post-attack support bolsters Trump
While Trump’s re-election remains speculative, recent terrorist strikes on Israel have seemingly bolstered his prospects, contributing to a schism within the Democratic ranks. President Biden’s softer stance on Iran appears misjudged in hindsight.
Biden’s standing suffers from within-party criticisms, such as those from Palestinian-American Representative Rashida Tlaib, who has rebuked him for perpetuating Palestinian oppression. This has intensified the risk of a Democratic division. Contrarily, the Republicans, previously anticipated to fracture, unified expeditiously behind Mike Johnson as house speaker, a unity perhaps hastened by the impending debt ceiling deadline of 17 November.
Polls point to Trump’s lead
Polling suggests Biden trails Trump in five key swing states. Voter concerns over Biden’s age and economic policies are noted, but it is his Middle East strategy that has significantly realigned voter support. Furthermore, financial self-interest remains a dominant factor for American voters.
A New York Times survey indicates a majority believe their financial standing would improve under Trump, with 59% favouring him over 37% for Biden. Additionally, two-thirds of Americans feel the country is veering off course under Biden.
Trump, only slightly younger than Biden, also faces age-related scrutiny. Legal challenges loom, but these take on a political hue with his polling lead. His previous term’s promises were largely fulfilled.
Yet, a significant legacy project remains elusive. Trump, known for monumental branding, may yet envisage an infrastructural legacy to rival President Eisenhower’s highways.
Introducing Agenda47
Trump’s election platform, Agenda47, suggests an ambitious tenure. He speaks of investing in flying cars and constructing regulation-free ‹freedom cities›. His foreign policy envisages relocating vagrants to offshore tent camps, continuing trade tariffs, and transformative immigration reforms. He also advocates for an end to the Ukraine war and a NATO withdrawal.
Elevating energy on his docket, Trump vows to increase oil production and reduce consumer energy costs, linking inflation to energy pricing. However, his agenda faces Congressional hurdles and, in some cases, requires constitutional amendments. Nonetheless, Trump’s capacity for rapid change through strategic appointments remains significant.
The U.S. presidential election is set for Tuesday, 5 November 2024.
Han Dieperink is the chief investment strategist at Auréus Asset Management, having previously served as the chief investment officer at Rabobank and Schretlen & Co.