President Trump

Will Trump win? What then?

America has robust economic growth, falling inflation, virtually-full employment, rising incomes and record stock markets. Yet polls show almost half of Americans think conditions suck and just a quarter feel things have stabilized. As in Canada, people can’t get over higher prices since the pandemic and believe interest rates at 5% are a disaster.

The angst and anger has been fed by opposition politicians who keep telling folks conditions are abysmal, getting worse, and sitting governments are to blame. Add in social media, plus the decline and death of traditional reporting, and what people feel becomes fact. Everything else is fake news. Elections will never be the same again.

In the States, there’s another serious, irrefutable factor sweeping the nation: ageism. Republicans have painted the 81-year-old president as senile, incompetent and suffering from dementia (as opposed to the 77-year-old Trump). The fact it’s untrue is irrelevant. Biden’s in trouble.

Look at the the latest NY Times poll. Almost three-quarters swear Joe’s too old. And a growing cadre of Democrats agree.

To date, the Trump juggernaut has only gained momentum. He controls the party. The last opposing voices have been silenced. MAGA nears cult status amid the social media torrent, the economic angst and the age factor. Polls show most people don’t really like either candidate, but this is what America is offering. Despite Trumps’ coming criminal trials, his 91 felony charges, his loss in a sexual abuse case, his fraud conviction and massive defamation and punitive judgments, he’s leading in the polls.

A lot can change between now and November. But if it’s Biden v Trump on polling day – and current sentiment holds – will this poll be prophetic?

Okay, so if Trump wins we can expect enhanced tariffs, an America-first policy, a trade war with China and increased US isolation in the world.  Trump has dissed NATO and spoken fondly of Putin. It may mean Russia wins its Ukraine war, Europe is more threatened and militarization ensues. That will impact global trade and world GDP. In addition, Trump has said he wants to ensure easier monetary policy and may do to the Fed what he did to the Supreme Court. So, lower interest rates, more government spending and debt and inflation would seem to be reasonable outcomes. Plus, if the pattern of his last presidency continues, expect a drop in tax rates, helping corporate bottom lines and equity markets.

What does this mean for your portfolio?

Likely more volatility as we move towards the end of 2024, especially as the Israel-Arab situation deteriorates and Moscow takes full advantage of what US Republicans are currently doing to their new enemy, Zelenskyy. But beyond that, will a Trump presidency destabilize the world and crush your TFSA and retirement plans?

Nah. Unlikely. There’s no reason to go to cash, flee to a GIC or sell off your current holdings. In fact maintaining a balanced and diversified (and global) portfolio is probably the wisest move most people can make. Sixty per cent growth assets, 40% fixed income and small cash component – with equal hunks in Canada, America and international.

Beyond that, be aware of this…

Tech will continue to outperform. The Magnificent 7 have been market-makers with AI injecting new dramatic energy into the sector. These are globally-important corporations throwing off huge amounts of cash and likely impervious to any political changes. Do not abandon your US equity ETFs.

Interest rates may come down faster than anyone expected in 2025 under a President Trump. He wants growth. He sees the stock market as a barometer of his success. He has a mandate to, well, make America great again, which means cheaper mortgages, more real estate sales, lower household debt charges and less-burdened corporations creating jobs though enhanced earnings and reduced foreign competition. The result would be higher bond values. And more validation for staying with a B&D approach.

China? Loser. Trump has a hate on for Xi and it’s possible quick and punitive action could be taken against that country – already whacked by a real estate meltdown and stagnant growth. Most diversified portfolios these days should have a minimal exposure to that country.

Canada? Meh. Harder to tell the impact overall, since we can expect some trade disruptions (despite the new deal 45 did with us last time), but a better environment with regard to energy and pipelines. Biden killed the Keystone XL that Trump approved in 2020. Will the tables turn again? There’s a good chance, as with a MAGA administration flipping on the Democrat green agenda. No wonder Albertans love Tucker Carlson.

On balance, do nothing. We’re in for an epic nine months. But don’t bet against America. Even when they deserve it.

About the picture: “Hey Garth, here’s a good photo of our dog George I thought I would send over for the blog,” writes George, in Oakville. “Mini labradoodle who was about 10 weeks old in this pic.  He is my wife’s shadow and follows her from room to room, never leaving her side.  Just started reading your blog again.  Personal finance is a hobby and despite crazy taxes and a liberal government trying to bankrupt our country, Canada is the only place I’d want to live.”

To be in touch or send a pcture of your beast, email to ‘[email protected]’.