In the immediate aftermath of Trump’s win over his democrat opponent Hillary Clinton, US markets went on a tear – the now infamous Trump Trade – buoyed by the incoming president’s election promises of tax reform, the repeal and replacement of Obamacare and a $1trn (£760bn, €863bn) spend on improving the nation’s infrastructure.
However, while the S&P 500 is up some 26% in the 12 months since November last year, Hartwig Kos, chief investment officer and co-head of multi asset at SYZ Asset Management, is unconvinced by the reality TV star’s first year in office.
“As one could expect, this season of the reality show was filled with drama, strong language and many people being fired – let alone all the twitter leaks straight form the West Wing,” says Kos. “Joking aside, what has Trump achieved in his first year of his presidency? Not much.”
Hailed as the saviour of ‘small town America’, with lots of talk regarding the revival of US manufacturing and American jobs for American people, Kos questions what has actually happened since?
“Obamacare is still in place and the debate about tax reform has barely begun. It has also gone awfully quiet on the matter of making US infrastructure ‘second to none’,” he says.
Nonetheless, Kos acknowledges the US economy has continued to “hum along nicely”, while the S&P 500 produced seven straight monthly gains and more than 50 new highs year-to-date.
“Has Trump had anything to do with the fireworks on Wall Street and the solid expansion in the US economy?” asks Kos. “Not much. The so-called ‘Trump trade’ completely reversed in the first eight months of the year, reflecting general investor disappointment with his presidency so far.”
While Kos says it is true that the prospect of tax cuts has somewhat revived the reflation trade since September, he argues any potential success in regard to the US tax reform might happen with or without Trump.
“In light of the 2018 mid-term election, the Republican Party – which has control over both the House and the Senate – is under enormous pressure to get at least one flagship legislation ratified,” he says. “With its mind sharpened by this, the GOP might finally overcome its differences and get a bill passed. Trump is largely just noise – a very loud noise though.”