What Trump Means for Your Investments
Readers have emailed, asking — in essence — “If America elects Donald Trump as president, what does it mean for energy, precious metals and minerals?”
Good question, especially at the end of a week in which we saw wild stock market gyrations. My first thought is that Donald Trump manages projects and builds things. He’s results-oriented, because that’s the nature of his business. Thus, “President Trump” would likely pursue payoff-focused policies to grow the U.S. economy and spur capital investment.
In other words, Trump’s economy would likely consume lots of basic materials — concrete, steel, copper, etc. And please, no jokes about “Mexican walls” or such. There’s more to consider, though, so let’s think it through.
First, There’s That Election Thing
Before Trump becomes president, he has to get nominated (out of 17 candidates) and then elected, against Hillary (or maybe not Hillary). There are mountains for the man yet to climb.
This summer, Trump is tearing up the track — “ahead in the polls,” as he often notes. Clearly, Trump is a breath of fresh air to many disaffected Republicans as well as quite a few Independents and even Democrats. Despite Trump’s television background, he’s definitely not from candidate central casting, that’s for sure.
Still, is Trump a quarter horse in a two-mile race? Can he make it through the Republican primaries? Will Big GOP nominate him? Or will party elders shank him, one way or another? Wait and see. It’s a jungle out there.
We have five months to the Iowa caucuses. Five months to New Hampshire. Six months to “Super Tuesday.” Where I live, we don’t vote until April. A lot can happen between now and next May. On my end, I’m observing things… and enjoying the show.
Today, however, there’s much to discuss…
Different Breed of Candidate
Right away, it’s obvious that Trump is a different breed of public figure. He says things that most people — especially the run-of-the-mill political class and their lap dog media — are not used to hearing. Sometimes, some of it sounds barstooly; then again, most other candidates hide what they mean behind a patina of political correctness. I’m generally OK with straight shooting.
Let’s discount attacks on Trump from the political left — their poison pen comes with the territory. Big Media hate Republicans; that’s a prerequisite for taking a job at The New York Times, The Washington Post, etc. Still, even usually sober guys like George Will and Charles Krauthammer are venomous toward Trump. It’s now really over the top — we’re witness to elite “brain trusters” behaving badly.
Of course, many Americans — full disclosure: including me — have long since tuned out most mainstream media (MSM) on politics. It’s all agenda, all the time. I can’t stand it.
In my view, voters are used to being lied to by “nobody” media figures — Brian Williams comes to mind — and rank after rank of raw political hacks. Long story — not here. Then along comes Trump, and he’s hitting raw nerves. Wow, ouch, he’s hitting nerves.
Sad to say, the post-Cold War presidential bar has been set quite low. For whatever reason — no more threat of nuclear annihilation by the former Soviet Union? — large numbers of voters have become mentally sloppy. They can’t discern the “right” people for the Big Job. Consider presidents Clinton, Bush (43) and Obama, with their lack of background, training and/or temperament. Indeed, the past three presidents demonstrate the truth of the old saying that “in America, anybody can be president.” Yes. Exactly. That’s the problem.
Then out of 320 million souls scattered across the dark plains of our republic, along comes Trump. He’s a celebrity in his own right. More to the point, he’s a distinct cultural reaction — an explosive blowback — to the complete failure of modern political-media dynamic.
That is, our country has followed the “Washington Way” for decades, enabled by a snarky, isolated, detached political class — elected officials, permanent bureaucracy, judiciary, lobbyists, MSM, etc. And look where we are…
Really, I mean it. Look. Where. We. Are. So like a phoenix rising from the ashes, we see… Donald John Trump. Surprised?
Who Is This Guy?
I’ve never met Donald Trump. The closest I ever came to the man was sitting in a Delta Air Lines jet taxiing behind Trump’s iconic Boeing 757 during a flight out of LaGuardia Airport. Oh, and I once ate lunch in a restaurant at Trump Tower on Fifth Avenue in New York. I think Trump was upstairs in his office. Nice restaurant. Nice lunch.
In my view, Trump is sui generis as candidates go. He’s not a creature of elective politics, meaning he hasn’t spent years in the trenches, slapping backs and “earning” his place at the public feed trough. Plus, Trump has his own money — good for him! No naive waif is he, though. Not after a long career wheeling and dealing in super-elite real estate plays in New York, Chicago, Los Angeles, etc. He understands politics like nobody’s business, I suspect. He’s written a lot of checks.
From what I can see, Trump is intelligent. I’m totally good with his Wharton School degree. It’s a hot ticket, and always has been. Grades? Well, Obama set that bar. No need to release grades, right? Still, I suspect Trump had better SATs and grades than Obama. If not, Obama can pony it up and prove me wrong.
I’ve watched Trump speak on TV, but never in person. He looks like he thinks faster than he talks. He’s instinctive, and I mean that in a (mostly) good way. His mind seems to work at about 300 miles per hour. As someone who used to fly Navy jets, I’m fine with that. Beats the heck out of a “12-knot brain” — Navy people will know what I mean.
I take it that Trump is an excellent businessman. He knows how to negotiate and makes good deals. Really. Good. Deals. Just ask him… For example, Trump’s companies own prime locations in hot spots like Washington, D.C. (Old Post Office — wow), one of the best sites on West Georgia Street in Vancouver (down the street from the old Fairmont Hotel), the Doral in Miami and many more. Impressive.
The editorial page of TheWall Street Journal snidely — gratuitously — describes Trump as a “casino developer.” Oh, c’mon. Blow your nose, boys; you’re snotty. Trump runs businesses that acquire high-end locations. He develops upscale hotels, office spaces, condos, apartments, recreational properties. And yes, Trump puts up a casino here and there in jurisdictions where gambling is legal. What’s he supposed to do, build a new oil refinery? (Oh, wait… Nobody has built a new oil refinery in the U.S. since 1976. Sorry.)
In the latter case, regarding gambling, Trump’s casino properties actually act as tax collectors for localities, states and the federal government. That’s the true business model, right? So Trump runs a pass-through, government-sanctioned money-collecting scheme in which people lose beaucoup dollars in the vain hope of getting something for nothing. At the end of the day, I’m sure the tax authorities always cash Trump’s checks.
Bottom line with Trump? He builds big, handsome, sturdy buildings — I’ve been in a few of them for conferences and such. Nice buildings. Very clean. Well-trained staff. That’s no accident. Trump sets that tone, I’ll wager. He’s definitely the captain of his ship, and it seems like a good ship.
What Are Trump’s “Policies”?
How about Trump and his economic policies? OK, but let’s revisit that low bar issue concerning the modern presidency. In 1992, Clinton got elected based on his insightful, powerful slogan “It’s the economy, stupid.” In 2000, Bush (43) solemnly promised to be “the education president” (wow, did we pay tuition on that invoice). In 2008, Obama was the “constitutional law professor” (ha!) with his promise of “hope and change.”
After all that, you now want “policy”?
OK, here comes Trump. What’s his beat? Well… read his hat. “Make America Great Again.” That’s the message. Visceral. Primal. Appeals to a deep-seated aspect of human territoriality, coupled with the classic marketing hooks of fear and greed. It’s genius. Why haven’t any other candidates thought of it?
All that, and there’s nothing wrong with “Make America Great Again.” Is there? Versus what? A third Bush or a second Clinton? More of the same dynastic politics of the past 20-plus years? If anybody has another idea, let me see the slogan on the hat, OK?
That Immigration Thing
Back to policy. You may have noticed that what we’re (“we” as a nation) doing right now with immigration doesn’t work very well. The U.S. southern border is entirely out of control (yes, I’ve been there). Large numbers of “visitors” overstay visas (I’ve met more than a few). If I have to explain that any more, you really must not understand.
Meanwhile, illegal drugs crossing the border are a $700 billion business annually — I heard the commandant of the Coast Guard say exactly that at a recent conference. Call me cynical, but the current political class clearly doesn’t want to do anything to fix the problems, and there’s bipartisan consensus for kicking the can down the road.
Thus, after decades of bipartisan nonaction on immigration, along comes Trump to raise the immigration issue. His comments hit nerves — on both sides of the argument. And good! It’s! About! Freaking! Time! We! Had! This! Talk!
As I noted above, we have many months to refine the terms of the debate. I don’t vote until next April, remember? Anyone is welcome to write in and explain why tens of thousands of unaccompanied minors washing up on Texas riverbanks is a good thing.
Then again, immigration isn’t just a U.S. problem. Europe is swamped by what they politely call “refugees.” Or consider China, where — per TheEconomist magazine — about 150 million “internal migrants” are moving about the landscape, searching for jobs, housing, food and more. Mass movement of wretched swaths of humanity is a global problem.
So we — here in the US of A — are not alone with the immigration problem. It’s just that we have Trump to seize the issue from the lying, deceitful MSM and politicians and place it above the fold in newspapers. Thanks a lot, useless MSM and lying politicians.
What About Trump’s Economics?
Trump says he’s going to “bring those jobs back from China” and other places that have developed while the U.S. deindustrialized in the past 25 years. Hmm… Seems kind of “protectionist,” doesn’t it? And everybody knows that protectionism is bad and free trade is good, right?
Yes, except what the world has now is far from “free trade.” It’s much more in the nature of “managed” trade with long, complex regulations governing the movement of goods and services. Plus, I assure you that if U.S. markets are open to most foreign-made goods, most foreign markets are quite heavily rigged against U.S.-made goods. Another long story, not here. Still, I’d like to see what happens when U.S. negotiators focus on America’s national interests. Just once, maybe?
Would Trump be good for oil and other energy plays? I’m inclined to think yes. A Trump economy would focus on growth, and that requires energy. He’d approve the Keystone XL pipeline and probably oil exports. He’d likely rein in the EPA and its never-ending war on carbon and its “hit list” for coal and other fossil fuels. (I’ll discuss the EPA “hit list” for coal in your October issue of OI.)
How about the mining sector? Again, a Trump economy would move toward capital investment, meaning fixing old things and building new things. That means concrete, steel and other metals. Maybe some of Obama’s “shovel-ready projects” will be ready to pour concrete by 2017.
Taxes? Trump wants to rationalize the tax code — “Not a moment too soon,” some might say. From what I can gather, it’s not tweaks and touch-ups around the edges. Instead, it’s a major overhaul of everything, from rates and deductions to tax credits. Fine. Go for it.
Government spending? I’m inclined to think Trump would challenge entrenched government bureaucracies — moving much more toward a “zero-based budget” approach. One indication is that, per news accounts, Trump is running his campaign from a New York office with all of 12 paid staff. By comparison, Hillary has over 350.
Precious metals? The fate of metal prices depends on the value of the dollar. Strong dollar means weaker gold and silver prices, and vice versa. I expect monetary tumult as the current economic and monetary policies unwind. We’ll have excellent investment opportunities in gold, silver, platinum, etc.
Right Now He’s Still a Candidate
I’ll wrap up where I began. Trump is just a candidate now — although he’s sure sucking the oxygen from many rooms. Still, much can happen in the next year and more, through primaries, nomination conventions and the election. Wait and see. Meanwhile, listen and learn. At least we’re airing national laundry that’s usually buried at the bottom of the heap by the worthless MSM and its associated PC-ness.
Why am I discussing Trump? Because several — more than a few — readers asked about it. Funny how nobody asks about any of the other candidates. Just as well, because my personal and editorial preference is to discuss focused investment ideas.
That’s all for now.
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