The totally unexpected may indeed become possible. Real Estate developer and reality show host Donald Trump could end up being President of the United States. If that happens, what will a Trump presidency do to stocks? CNBC weighs in with a suggestion that stocks will rally if the Donald sits in the oval office.
Donald Trump is bound for the White House, and when he reaches the Oval Office, stocks will “go straight up,” said Kevin O’Leary, chairman of O’Leary Financial Group.
“I think what we’re going to see happen – although it’s so remarkable and I’m not endorsing his candidacy – is Trump is going to ride his way into the White House on a populist wave of anger at our government,” O’Leary told CNBC’s “Fast Money: Halftime Report” on Monday.
“He wants to solve the problems that we really have here in terms of straightening out the tax code, which I think is a big hold-back on these equity markets right now. It doesn’t allow our companies to compete,” he said.
The Tax Foundation concluded Trump’s overall tax plan would “greatly increase the U.S. economy’s size in the long run,” but would also boost the government’s deficit by $10 trillion over the course of 10 years.
Their bottom line opinion is that Trump would work to make the tax code more favorable to business which would drive stocks up. But there are other opinions.
What History Tells Us about Elections and the Market
Kiplinger writes about how the presidential election will affect the stock market.
The stock market has, for the most part, ebbed and flowed with the four-year election cycle for the past 182 years.
Since 1833, the Dow Jones industrial average has gained an average of 10.4% in the year before a presidential election, and nearly 6%, on average, in the election year. By contrast, the first and second years of a president’s term see average gains of 2.5% and 4.2%, respectively. A notable recent exception to decent election-year returns: 2008, when the Dow sank nearly 34%.
You may feel strongly about one party or the other when it comes to your politics, but when it comes to your portfolio, it doesn’t matter much which party wins the White House.
The problem, if course is that Trump is not really a Republican or a Democrat but a maverick who knows how to voice his strong opinions effectively on today’s media.
Picking Stocks for a Trump Win
24/7 Wall Street picks which stocks could rise on a Trump presidency.
We’ll start with the obvious one: defense stocks. Trump has publicly stated his administration would take a strong militaristic approach to what’s happening in the Middle East. He’s also said he will deploy U.S. forces in the South China Sea to help leverage the nation’s bargaining position with China and strengthen the U.S. armed forces as a whole. Picking trade fights with China over their currency is sure to escalate military tensions, too. The defense industry that fills government contracts will underpin this strengthening and, just as in times of war, will draw additional capital. Look for gains in stocks like Lockheed Martin Corp. (NYSE: LMT) and General Dynamics Corp. (NYSE: GD) on a Trump election.
Other suggestions are gun manufacturers who would benefit from protection of second amendment rights. However, if a President Trump were to start a trade war with China many companies that manufacture there would be hurt but heavy equipment manufactures like Deere and Caterpillar would be helped! On the positive side, Trump talks about upgrading US infrastructure which would again help builders and heavy equipment manufacturers.
What Will a Trump Presidency Do to Stocks? PPT
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