In a little over a month, Donald Trump will be inaugurated and take control of the White House. As an exuberant stock market and new record highs reveal, investor expectations are very high for our new president. For example, since Election Day, the Russell 2000 has rallied almost 15%.
Can Trump deliver? He has promised to make a number of significant changes -- from tax policy to rolling back Obamacare -- but a lot can happen in between Trump's tweets today and when a bill ultimately gets passed. Here's what all investors should keep a close eye on.
CORPORATE TAX CONUNDRUM
While the main post-election tax focus has centered mostly around cutting the corporate tax rate, corporations are now pushing back against talk of a proposal to tax imports. The argument is that the border tax adjustment tax will hurt global supply chains and affect U.S. companies that import everything from oil to coffee.
And, corporations feel the tax will distort markets and increase consumer prices creating an uneven playing field between companies with overseas supply chains and those that only use American made inputs. It isn’t all bad for U.S. companies though as export revenues would be excluded from company tax bases essentially giving exporters a subsidy.
REX T BRINGS OUT T REX
Despite pressure from Democrats and some Republicans, Trump named ExxonMobil CEO Rex Tillerson as the nation’s chief diplomat in a shot across the Senate’s bow reminding them that he won’t be denied. Some Senators who initially cast doubt over the pick are starting to soften their rhetoric saying they will keep an open mind. We’ll soon see if Republican Senators continue to talk a big game, but buckle when faced with the threat of the towering Trump.
DEALING WITH DEADLINES
The Trump Team is looking to take on a Herculean task in his first 100 days with goals to move a budget (FY 2017), reverse course on a number of Obama-era regulations and repeal the ACA with their first “performance review” on April 30th. Don't forget Senate confirmation of Trump's cabinet and potential SCOTUS picks. On top of that both the president-elect and Congress will face more daunting deadlines than those that are just self-imposed.
Following a year with very few legislative milestones, the 2017 calendar will be jam-packed with other deadlines continuing with raising the debt-limit -March, a second budget (FY 2018) and don’t forget that in the fall, Children’s Healthcare Insurance Plan, FAA, and National Flood Insurance Program all expire. After coasting for most of 2016, Congress will have their work cut out for them and Republicans are scheduling more days in session than in any years since their 2011 takeover.
EAST WING SWING
While Melania Trump may technically be the first lady-in-waiting, the president-elect’s daughter, Ivanka, will hold the role in all but name. Ivanka is expected to occupy the office historically reserved for the First Lady in a move that shows just how much power she will wield in the Trump presidency allowing her to advance her pet policies - climate change and gender equality.
Moveover, Majority Leader McConnell and wife/Transportation Secretary-designate Elaine Chao, it’s looking more and more like Ivanka and husband Jared Kushner will be the first power couple in DC come January 20.
BEST FRENEMIES FOREVER
Trump took his victory tour to Wisconsin, home of his biggest steal of the Election 2016. With him were former rival and Governor Scott Walker as well as Wisconsin native and Speaker Paul Ryan. The Trump/Ryan relationship was on full display and gave us a preview of how their newfound alliance will play out given that they need one another to succeed. Trump praised Ryan comparing him to a fine glass of wine, but then sheepishly warned the comparison only lasts as long as Ryan doesn’t play against him.