• Guy Galboiz: Advantages and Disadvantages of Trump from the Point of View of Investments

    Guy Galboiz, a capitla market expert, offers his analysis on Donald Trump's administration's first days, as it is especailly relevant to investors. Here are the pros and cons
    12/03/2017 | Paid Content

    Guy Galboiz, a capital market expert, sees that numerous topics have arisen recently - the Federal Reserve, interest rates, equity evaluations and so on, but in recent days, nothing dominates conversations more than the surprising beginning of Donald Trump's administration.

    Today I would like to describe in general terms what is being said on this topic, at least based on what I have heard. I think that many readers hear some of these things without connection to the area of their occupation.
    I don't want to frame this topic simply in terms of politics or party ideology. As we have noted a number of times in the past, this is not a way to invest your money. Perhaps it is worthwhile to frame this in terms of constructive or destructive market values.

    Galboiz believes that it does not matter whether you or I agree with the advantages and disadvantages appearing here; what matters is the thinking of millions of people holding trillions of dollars of capital. Let us begin with the constructive side of the scale:


    1. Tax reform: This is a significant reform and it includes tax reduction, simplifying corporate tax laws and return to the United States of trillions of dollars of corporate profits deposited abroad to avoid taxation. As previously mentioned it will be difficult to compete with the economic effect of tax reduction, tax reform and return of all finances from abroad. Add to this number 3 on our list and you will get a Keynesian incentive at its best.

    2. Deregulation: Here hopes arise not only in the financial sector, which benefits greatly from the flourishing of the market after the elections, but also in numerous other industries. People want to believe that the cost of doing business will drop.

    3.Infrastructure: At some stage it appeared that Trump was enthusiastic about the plan to spend up to a trillion dollars on rehabilitation and expansion of bridges, highways, tunnels, ports and the water systems in the United States. As we revealed yesterday, this is no longer on the table.

    4. Feeling: All that is mentioned above brings about optimism amongst businessmen and investors, which of course reinforces what we have seen in the markets.

    5. The end of the one-part regime: I believe that every American president would like, deep in his heart, a parliamentary system in which (theoretically) it would be easier to operate. (Hey, I said that you may not agree with it, but this is what I hear from people).

    Regarding the other side of the scale:


    1. Erroneous priorities: More stringent conditions for immigration of Moslems; challenging the independence of the Federal Reserve; strange choices of unsuitable people for the cabinet; creating a confrontation with China and other trade partners with no reason; improving relations with Russia and the unconstrained regime controlling the country. The more the president spends his time on matters connected with erroneous priorities, the less relevant the positive things described above will be.

    2. 2018 elections to congress. The elections in the middle of the previous president's term of office in 2010 had considerable repercussions since the "Tea Party" presented significant opposition to President Barack Obama. Trump caused a far greater uproar than that raised by Obama and the degree of support for him is the lowest ever in history for a new president. There is a very real possibility that his window of opportunity to reach any achievement at all will be far more limited than that of any other modern day president.

    3. Beyond presidential conduct: We are still waiting for this change. Let's be frank: If yesterday's press conference taught us anything, it's that the chance of this transformation occurring is minimal. Think about it: The strange insistence on "alternative facts" that were disproved; ignoring anything with which he disagrees, claiming that these are "fake news"; inability to concentrate; the confrontation with the intelligence community; incessant, superfluous skirmishing with the news media. This parade of unnecessary errors raises concerns with many people, and this includes Trump supporters.

    4. Scandals and legal problems. Say what you want about Obama, during the course of his administration there were no scandals in the sense of abuse of office for personal gain. Not even a month has passed since Trump was sworn in as president and already we are talking about a real potential apprehension.

    5. Uncertainty: Everything already mentioned above transformed a chaotic candidate into an uncertain president. There is simply no way of knowing how his presidency will develop since someone of Trump's type has never before been elected to the most senior office in the United States.

    For the moment, the markets are close to an all-time high and it appears that they are not concerned with these problems. I am convinced that soon we will discover which side of this disagreement will drive the discussions and the markets, sums up Guy Galboiz.

  • גלריות