November 12, 2016

Barrons thinks the Trump Presidency will make America Spend Again

Barrons is the leading weekly financial newspapers. They have a video and articles covering what the financial people are thinking will happen with a Trump presidency

Initially markets were negative to the Trump win with index futures down their maximum overnight 5% limit. Then recovering to up 2% by the end of normal trading hours.

Initially they assumed that a Trump presidency would augur a deflationary global downturn in a Smoot Hawley 2.0 package of trade barriers and tariffs or at least a blackhole of uncertainty. But after a few hours the markets decided the Trump presidency would be Reaganomics 2.0 with a surge in government spending and tighter money.

They think there will be shift from easy money to a focus on fiscal stimulus.

JP Morgan economist Michael Feroli thinks the fiscal program will boost GDP by 1.5% over two years while doubling the federal budget deficit. But import curbs could cripple US businesses dependent on global supply chains.

Global equities are up $1.3 trillion but global bonds are down $1 trillion.

Barrons also thinks the Gun rally (stocks of makers of guns) is over.

Arun Daniel thinks the biotech and drug companies have more increases. The good news is not baked into the stocks fully.

UPDATE - Nextbigfuture looks at the 31 page Trump Economic Plan by his two senior academic policy advisors and what Barrons and Wharton think of it


Winners and losers by sector

Winners

  • Steel
  • Construction materials
  • Financials
  • Pharma
  • Independent Refiners

Losers
  • Hospitals
  • Utilities
  • Telecom







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