Wow, what is going on over in the US ?
While many predicted Trump would implode in office, it is unlikely they thought it would occur so soon into his presidency. Trump’s unconventional methods have drawn its fair share of supporters along with critics as he brought his own unique style of business to the oval office.
Unfortunately for Trump, it appears he has failed to grasp the true nature of his office and may well have overstepped into an area which is seeing his tenure on the presidency questioned.
Now I am not here to cast judgement on Trump. I do however believe it is important for Australian investors to weigh up the ramifications on the ASX.
Is this the end of the Trump Trade and it is time to sell?
No doubt a great many investors will be asking themselves this exact question today. While there is no simple answer (as no one knows what the market will do) I believe it is important to look at facts and historical events rather than letting emotions make the decisions for us.
History
Last year we were told by the media that two events, if they occurred, would result in financial melt down: Brexit and Trump. As we now know this was not the case and financial markets continued to head higher; in fact, just last night Britain reported its lowest unemployment figures since 1975!
Economics
Over 80% of companies last quarter in the US (Q1/2017) beat earnings forecasts while European companies are growing earnings by around 20%. GDP in Europe, the UK and America continues to grow with the federal reserve able to slow interest rate rises, if Trump’s problems flow onto the economy.
Emotions
I wrote previously on studies that show commentators who project a negative sentiment on the economy are seen as more knowledgeable than those who present a more positive view. No doubt there will be plenty of negative views floating around the markets today and over coming weeks.
What will change if the worst does occur and Trump is removed from office?
The short answer is not much. The US will still have a republican president in Mike Pence and a republican congress.
While life under Pence may not be as exciting as Trump, I believe big businesses would remain happy with such a possible combination.
Conclusion
A favourite investing quote of mine comes from Robert Arnott “In investing, what is comfortable is rarely profitable.”
While investors will no doubt be feeling uncomfortable on whether Trump survives, they need to weigh up the facts and put aside emotions to decide on whether this is finally “the end” or yet another opportunity just waiting to be taken?
Do you have an opinion on Donald Trump and what ASX investors should be doing?
I would love to hear it!
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Disclosure:
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.
Hi Alan,
Great article as usual. I’ve been guilty of being swayed by popular opinion. I’m trying to be very selective when it comes to all that noise.
We’re in debt again…but it’s good debt. We’ve invested in a house at lovely Boyne Island which is mosquito headquarters of QLD. I’ve also decided PGC is, more or less, a good investment and I’m looking to get in at around 70cents.
Hope you guys are all well.
Samantha. (MHP)
Need to be careful on listening to the left wing media. One thing they are trying to crucify him for is the alleged giving of intelligence secrets to the Russians. He is the POTUS he can do what he wants. If anyone can pass on secrets it’s him, he doesn’t need to ask anyone, advantage of being the boss. Yes the Comey thing is interesting but as others have said, if he did ask Comey to go easy on Trumps mate then why didn’t Comey report it to authorities 3 months ago as he is required to do by law. Could it be sour grapes now he has been punted.
Hi Sam
Congrats on the new home! You’ll have to send us some pics. You are right noise is one of the hardest parts of investing sometimes you just need walk away from the screen.
Hi Yaba
I hope I didn’t come across as making any judgement on Trump that was not my purpose.
Just on your point, I am not sure how good an idea it is for the president to be handing out secrets to other countries but at least that will save Russia a fortune on spying costs. 🙂
I had to laugh at Putin’s joke about lending the US tapes of the meeting. lol
No didn’t come across as a judgement on Trump, I sort of read that you thought some of things he has done may be the beginning of the end of him.
As to passing on secrets to Russia, well I could have told Putin that its possible to put bombs in laptops, I worked this all by myself when 50% of the time I travel I get the swap test on my laptop.
I am not sure what is true with Trump all I know is that he’s proven himself a goose on a number of occasions along with those he’s chosen to advice him. The US and Australia has seen their fair share of geese running the country and as I read being an idiot is not enough to get you kicked out of the job.
I disagree with you that the left wing media is after Trump. I believe the US media as whole want Trunp to succeed you just need look at the media’s reaction to his first address to congress every media outlet was saying how presidential he was. I thought he looked average at best.
In my opinion Trump has brought the problems on himself. Tweeting at 3am is asking for trouble just like texting an ex after you’ve had a big night out . You just know you’ll regret it when you wake up next morning. 🙂
What I hope is that Trump or whoever leads the Reublican party can push through the tax cuts to keep the good times rolling in the US.
The worse thing for the markets is a president stumbling from one stuff up to the next.
I just checked the Dow from Friday night and it may have already moved on. Let’s hope the ASX can do the same.