A bi-weekly publication from Consultiva Internacional, Inc. (Registered Investment Adviser)
Now that we know the election results, what economic policies can we expect from the incoming administration? President-elect Donald Trump was quite clear during the campaign about the economic issues he wants to address during his administration, but he seemed, as a colleague put it, deliberately “opaque” about how he would go about doing things. Most likely we will have to wait for his cabinet and economic counsel to give us the specifics, but here’s what we know: Trump wants to put forward a “pro-growth” tax cut, which his supporters say will be as big as Ronald Reagan’s 1981 reform. Trump wants to simplify the tax code and reduce marginal rates that would encourage investment and economic expansion. His proposed corporate tax rate of 15 percent seeks to make it easier for domestic firms to repatriate earnings, and also make the U.S. more attractive to foreign investors. Small business would also pay 15 percent tax on income.
Another “pro-growth” measure is the adoption of an energy policy that furthers the exploitation of fossil fuel resources in the U.S. to build additional reserves that would presumably give the country greater leverage in energy markets. This would be accompanied by reversing executive action that seeks to promote clean energy production, such as the Clean Power Plan adopted in 2015 by the Environmental Protection Agency.
Finally, it will be very interesting to see just how Trump’s economic team deals with trade. During the campaign the President-elect said China is stealing and cheating the U.S. in its trade agreements and that jobs needed to be recovered from Mexico and other jurisdictions. However, in many instances it has been the U.S. based multinational themselves who have sourced from China to assemble or distribute finished products at home, and they have also moved part of their production process to countries that are less regulated and offer cheaper labor, in pursuit of increased profits along the value chain. Negotiating better trade deals could help the U.S. economy, but taking a “tougher” stance might not necessarily increase support for the Republican Party’s historic open markets discourse.
by Myrna Rivera, CIMA®
Founder & Chief Executive Officer
FURTHER READING AT CONSULTIVA INTERNATIONAL INC.
DISCLAIMER:
Consultiva is a Registered Investment Adviser. The registration with the Securities and Exchange Commission does not imply a certain level of skill or training. Consultiva has compiled the information for this report from sources Consultiva believes to be reliable. Sources include: investment manager(s); mutual fund(s); exchange traded fund(s); third party data vendors and other outside sources. Consultiva assumes no responsibility for the accuracy, reliability, completeness or timeliness of the information provided, or methodologies employed, by any information providers external to Consultiva. Conclusions reflect the judgement of Consultiva Investment Strategy Committee at this time and is subject to change without prior notice. There also can be no guarantee that using this information will lead to any particular result. Past performance results are not necessarily indicative of future performance. Diversification does not guarantee a profit or protection against loss. This document is for informational purposes only and is not intended to be an offer, solicitation, recommendation with respect to the purchase or sale of any financial investment/ security or a recommendation of the services supplied by any money management organization neither an investment advice or legal opinion. Investment advice can be provided only after the delivery of Consultiva’s Brochure and Brochure Supplement (ADV Part 2A and 2B) once a properly executed investment advisory agreement has been entered into by a client and Consultiva. This is not a solicitation to become a client of Consultiva. There are risks involved with investing including the possible loss of principal. All investments are subject to risk. Investors should make investment decisions based on their specific investment objectives, risk tolerance and financial circumstances. Global and international investments may carry additional risks that are generally not associated with U.S. investments, such as currency fluctuations, political instability, economic conditions and varying accounting standards. Annual, cumulative, and annualized total returns are calculated assuming reinvestment of dividends and income plus capital appreciation.