Now that we have a new president elected and preparing to take on the role as the world’s most powerful CEO, there is plenty of talk about what President Trump should do first.
Many say the first is to bury Obamacare. Others suggest getting a conservative Supreme Court justice. Still, others want us to put ISIS down once and for all, along with the Assad regime in Syria.
My number one wish is a little simpler.
I want Trump to cut off the bailout funds that are going to the big banks, a full eight years after those same criminal bankers almost tanked the global economy.
That’s right, they’re still getting paid from taxpayer dollars — JPMorgan Chase, Wells Fargo, Bank of America. Yep, most of the rogue’s gallery of financial thieves.
According to The Washington Post, Wells Fargo — you know, the bank that just axed 5,000 lower level workers for a scheme started by greedy execs who walked away without a scratch — is eligible for another $1.5 billion over the next seven years. JPMorgan could receive $1.1 billion; Bank of America $964 million.
These payments are the last vestiges of the $700 billion Troubled Asset Relief Program cobbled together by the banksters and their politicians. Of that enormous figure, a mere $28 billion went to help struggling homeowners.
So, after handing over $672 billion to the banks, the Fed then began its infamous “quantitative easing” (a.k.a. QE) programs. Up to now, the Fed bought $4.8 trillion of Treasuries and then lent money to the banksters at zero to near-zero interest in the hopes they would loan the money.
But the banks decided it was easier to simply buy Treasuries for 3 to 4 percent and triple their money risk free, rather than lend it out to individuals and businesses to get the economy going again.
And for all that self-serving greed, they continue to get rewarded. Unbelievable.
So, my hope is President Trump cuts off this fail upward cycle that we have seen since the financial crisis.
Now, as far as the stocks that look good here, there are a handful of sectors that will be direct beneficiaries:
Defense. As I’ve discussed before, it isn’t just a Trump administration that would promote bolstering defense, there is a major supercycle underway to rebuild the military after Iraq, Afghanistan and Syria.
Healthcare stocks (health insurers, biotechs, pharmaceuticals) will be winners because Obamacare will be completely reformed and the drug makers will not be under the scrutiny that was threatened by a Clinton presidency.
Financials (national bankster more than regional or local banks) will be strong less because of Trump but because they are major Treasury bond holders and the Fed will raise rates in December. Rising rates makes for bigger returns. Insurance companies will also be winners of this trend.
Energy will also be a winner… but it will take some time. There is still a massive oil glut, so prices will not be high enough for any U.S. firms to make much money. Although if prices go too high, consumers and fuel-intensive businesses will be hurt. The sweet spot will be $50 to 75 a barrel. Coal will still struggle because the switch to natural gas has already taken place with most industries and utilities.
Utilities will likely have less regulatory issues. Apparently, Trump is looking to completely revamp the EPA.
Infrastructure (heavy industry and manufacturing). With a lighter touch from the EPA the companies that still make things in the U.S. will have an easier time meeting environmental regulations. Plus, Democrats will support infrastructure spending, so it won’t be a battle.
This is a pretty optimistic list, but given the market’s initial reaction to the Trump win, it’s not unrealistic. Yet.
— GS Early