Trump’s First 100 Days

   There was a lot that went down in President Trump’s first 100 days in office, and a lot that didn’t. The market reacted well when Trump was announced the winner of the presidential election and that momentum stayed going until his inauguration. From his inauguration to the end of his first 100 days in office, the S&P 500 produced a 5.5% gain under the new president. While the market continued to climb, the administration struggled to get all the cabinet positions appointed by congress in a timely manner and you could argue that delayed the legislation and economic policies of the new Trump administration. In all fairness, the “First 100 Days” is an artificial milestone used to track how the President is doing and what may lie ahead for the remaining days of the current administration. So let’s see what has gone down so far under President Trump.

   The S&P 500 posted a 5.5% gain during Trump’s first 100 days in office and that’s pretty good, but how does it stack up against other presidents? The S&P 500 posted a 2.8% gain under President Obama’s first 100 days, a 5.5% loss under President Bush (43), and a 0.9% gain under President Clinton. Clearly, president Trump has struck investors with confidence that he will follow through with his economic policies, most importantly reforming the tax code. Below you can see a visualization of the first 100 days of Trump, Obama, and Bush.

   During the first 100 days of President Trump’s term, there were obvious winners and losers in the stock market. The leading sector was technology (XLK) with posting roughly an 8% gain since the inauguration of President Trump. Tech seems to be a safety trade in the unpredictability of the new administration, the tech sector is performing  well regardless of potential roadblocks and investors are excited for the next generation of technological innovation Technology is the sector investors are keeping their eyes on right now especially with exciting things such as quantum computing, artificial intelligence, machine learning, autonomous driving, and blockchain technology all on the rise. Some of the big winners from the Tech sector were companies such as Plug Power (PLUG) with a 96% gain, Mobileye (MBLY) with a 41% gain, and most notably Apple (APPL) with roughly a 20% gain. Mobileye is an Israeli firm focused primarily on autonomous driving technology. Mobileye caught the attention of Intel and was acquired for $15.3 billion dollars as Intel looks to become more competitive in the race for autonomous driving.  Apple (AAPL) is the stock that has been in the news the most since president Trump’s inauguration. Apple is sitting on a $257 billion cash hoard with the majority of that in holding companies across the globe. Fun fact, their holding companies are all named after different types of Apples. So why does the massive cash hoard matter? Well, one of the economic promises the Trump administration promised was a tax on US companies who hold cash overseas for tax purposes. If this is enacted, you could see millions from Apple and trillions in total pour back into the US if the incentives are in place. This usually promotes overall economic growth, but investors usually act negatively to someone taxing their company. So, almost counterintuitively, Apple is up almost 20% since the beginning of the year. This is somewhat unprecedented for such a large company such as Apple to react in this fashion.

   Besides the market climbing higher during Trump’s first 100 days, what did he actually accomplish in this artificial milestone? The first and most obvious accomplishment of President Trump so far was not only appointing Neil Gorsuch to replace the vacant seat left by the late Antonin Scalia but actually getting him confirmed by the Senate. With Washington D.C. in one of the most polarized political states of recent time, it’s important to have nine Supreme Court Justices who have an adequate judicial review for whatever cases may lie ahead. Besides Neil Gorsuch, Trump passed quite a few executive orders covering a wide variety of topics from reversing Obama-era drilling restrictions, to reviving both the Keystone XL & Dakota Access pipelines. While it is quite obvious that President Trump is pro oil, all this new production has put the commodity under pressure pushing it progressively lower. In response to an inhumane chemical attack on the citizens of Syria under Bashar al-Assad, President Trump ordered 59 Tomahawk cruise missiles at an airbase that housed planes that carried out the chemical attacks. A week later, President Trump then dropped the largest ever non-nuclear bomb (MOAB) on ISIS militants in Afghanistan. On top of all of this, tensions in the Korean Peninsula have continued to grow as Kim Jong-Un has continued to test ballistic missiles, some of which are capable of carrying a nuclear warhead.

   While we now know what he has accomplished, a more important question to ask may be what has he not accomplished. When Trump took office the markets reacted in a very optimistic fashion. However, most of the promises of the current president are yet to be put into action. The promise to “repeal & replace” Obamacare became one of the first challenges President Trump attempted to tackle. However, the healthcare bill President Trump supported failed in the House. The health care bill was flawed in many ways and did not pass for a good reason. It is hard to avoid criticism though when your party overwhelmingly controls the House of Representatives and your first important bill fails. Below, you can see how the S&P 500 reacted after the failed healthcare bill struck a bit of fear in investors. Another big promise of President Trump along the campaign trail was to label China as a “currency manipulator”, but this is yet to happen.  In fact, President Trump seems to have forgotten about all his rage over China’s currency manipulation for the past several years.

   The one thing that could make or break the Trump presidency is how they handle the tax reform. Being the pro-business president that he is, tax reform is vital to whatever legacy he may leave. The current administration has released only snippets of what is promised to be “the biggest tax cut” in US history. The details of the tax reform are still in the works, but in a nutshell, they plan to “simplify” the tax code for the American people. Also, the plan calls for a 15% corporate tax as opposed to the current rate of 35%. That is a huge break and could incentivize more companies to stay in the United States rather than go elsewhere for a lower tax rate. What corporations do with all the excess money they get to keep will be interesting.

   To summarize, President Trump has had a rather unimpressive first 100 days, but it is important we remember this an artificial milestone in his presidency. The market may have overreacted to what is to come out of the Trump administration, but since he is unpredictable we will have to wait and see. The upside potential for the American economy is still very present and it will come down to execution. Execution of the Trump administration as they tackle the many issues which they face will be vital as the market continues to climb and geopolitical tensions rise in various parts of the world.