There will no doubt be many pages will still be written on the presidential years of Donald J. Trump. The forty-fifth occupant of the Oval Office certainly divided opinion and governed in a way the world has not seen previously.
From his use of Twitter to his two impeachments, things have rarely been dull in Washington. But the world and financial markets will move on swiftly and look to Joe Biden for his vision of a post-pandemic world.
For sure, Donald Trump’s ascent to the highest office in the US was particularly due to his detection of real faults in the status quo of 2016. America’s deindustrialised towns had been left behind for many years, while globalisation had further fuelled the divide felt in numerous states in the heartlands. These social fractures were certainly not invented by Trump, least of all the racial ones that are as old as the republic.
More important for us is the financial system and the former President has claimed that he built ‘the greatest ever US economy’ prior to the coronavirus crisis. While regulations and taxes were cut, some promises like an infrastructure binge were harder to enact.
Intriguingly, during his first three years of office, annual US growth averaged 2.5 percent, which is only modestly higher than the last three years in the Obama administration which grew 2.3 percent.
Prior to the pandemic, unemployment hit levels not seen in half a century. In February of last year, the rate stood at 3.5 percent, the lowest for more than 50 years and real wages which are adjusted for inflation reached 2.1 percent. Under Trump in the three years preceding the pandemic, 6.4 million jobs were created, compared to seven million under Obama.
According to the US Census Bureau, in 2019, 4.2 million fewer Americans were living in poverty, the biggest reduction since the Johnson administration in 1966. In fact, the poverty rate hit an all-time low in 2019, although some will highlight the variations across regions and ethnic groups.
Perhaps Trump’s favourite gauge that he liked to use as a measure of success was the rising value of the US stock market. Since his inauguration in January 2017, the Dow Jones Industrial Average rallied more than 50 percent in part due to the president’s landmark corporate tax cut that led to a surge in profits and a record in share buybacks.
Trump stands out as the only president to inherit an already expensive stock market and leave with valuations even higher
The easing of many regulations also established a market-friendly environment for many heavy industries. But Trump stands out as the only president to inherit an already expensive stock market and leave with valuations even higher.
And the rupture in the economy since the pandemic has been seismic as the country has been hit by the biggest contraction ever recorded.
It is now down to the Biden administration to deal with the ructions in both the economy and society. Interestingly, Wall Street has been still strongly optimistic that the blue-chip Dow would reach new highs in the next twelve months.
Two-thirds of respondents of a CNBC quarterly survey of money managers conducted in mid-December said the blue-chip Dow will most likely finish 2021 at 35,000, which represents around a 14 percent gain for the year.
Since that time, we note of course a blue sweep has taken hold of markets with a $900 billion new stimulus package and the start of vaccine rollouts.
It is now down to the Biden administration to deal with the ructions in both the economy and society
Although financial markets usually prefer gridlock in Washington, that is so far not the case this time around. More centrist policies aimed at bolstering the economic recovery and ending the pandemic are expected to push the classic Democratic policies of higher taxes and increased regulation further down the agenda.
Additional stimulus may also come from the new Treasury Secretary who is hoping to ‘act big’ while interest rates are historically so low.
If the economic recovery remains on a secure footing, traders are forecasting rising inflation and a softer Dollar. For stock market investors, this means chopping out of expensive megacap tech stocks into smaller cyclical names.
The lean towards value stocks and away from the growth sectors of the economy as the new investment cycle evolves will be a key challenge.
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by Staff Writer
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What can we say about the Trump Presidency?
It is now down to the Biden administration to deal with the ructions in both the economy and society, says Hussein Sayed
Hussein Sayed is chief market strategist at FXTM
There will no doubt be many pages will still be written on the presidential years of Donald J. Trump. The forty-fifth occupant of the Oval Office certainly divided opinion and governed in a way the world has not seen previously.
From his use of Twitter to his two impeachments, things have rarely been dull in Washington. But the world and financial markets will move on swiftly and look to Joe Biden for his vision of a post-pandemic world.
For sure, Donald Trump’s ascent to the highest office in the US was particularly due to his detection of real faults in the status quo of 2016. America’s deindustrialised towns had been left behind for many years, while globalisation had further fuelled the divide felt in numerous states in the heartlands. These social fractures were certainly not invented by Trump, least of all the racial ones that are as old as the republic.
More important for us is the financial system and the former President has claimed that he built ‘the greatest ever US economy’ prior to the coronavirus crisis. While regulations and taxes were cut, some promises like an infrastructure binge were harder to enact.
Intriguingly, during his first three years of office, annual US growth averaged 2.5 percent, which is only modestly higher than the last three years in the Obama administration which grew 2.3 percent.
Prior to the pandemic, unemployment hit levels not seen in half a century. In February of last year, the rate stood at 3.5 percent, the lowest for more than 50 years and real wages which are adjusted for inflation reached 2.1 percent. Under Trump in the three years preceding the pandemic, 6.4 million jobs were created, compared to seven million under Obama.
According to the US Census Bureau, in 2019, 4.2 million fewer Americans were living in poverty, the biggest reduction since the Johnson administration in 1966. In fact, the poverty rate hit an all-time low in 2019, although some will highlight the variations across regions and ethnic groups.
Perhaps Trump’s favourite gauge that he liked to use as a measure of success was the rising value of the US stock market. Since his inauguration in January 2017, the Dow Jones Industrial Average rallied more than 50 percent in part due to the president’s landmark corporate tax cut that led to a surge in profits and a record in share buybacks.
The easing of many regulations also established a market-friendly environment for many heavy industries. But Trump stands out as the only president to inherit an already expensive stock market and leave with valuations even higher.
And the rupture in the economy since the pandemic has been seismic as the country has been hit by the biggest contraction ever recorded.
It is now down to the Biden administration to deal with the ructions in both the economy and society. Interestingly, Wall Street has been still strongly optimistic that the blue-chip Dow would reach new highs in the next twelve months.
Two-thirds of respondents of a CNBC quarterly survey of money managers conducted in mid-December said the blue-chip Dow will most likely finish 2021 at 35,000, which represents around a 14 percent gain for the year.
Since that time, we note of course a blue sweep has taken hold of markets with a $900 billion new stimulus package and the start of vaccine rollouts.
Although financial markets usually prefer gridlock in Washington, that is so far not the case this time around. More centrist policies aimed at bolstering the economic recovery and ending the pandemic are expected to push the classic Democratic policies of higher taxes and increased regulation further down the agenda.
Additional stimulus may also come from the new Treasury Secretary who is hoping to ‘act big’ while interest rates are historically so low.
If the economic recovery remains on a secure footing, traders are forecasting rising inflation and a softer Dollar. For stock market investors, this means chopping out of expensive megacap tech stocks into smaller cyclical names.
The lean towards value stocks and away from the growth sectors of the economy as the new investment cycle evolves will be a key challenge.
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