President Trump’s joint address: Investors shouldn’t be concerned with lack of specifics

Investors should have a positive reaction to President Trump’s first address to both houses of Congress last night, even though the markets may not have been told what they wanted to hear.

Generally speaking, the President’s joint address had a tone of optimism about it, akin in some respects to Reagan. Up to now, it was his best and most presidential speech by far.  Watching it, it was like Trump actually became the President of the United States last night.

Overall, he delivered a positive, pro-business, pro-growth message, that will satisfy the markets.

That said, there was a significant absence of detail on tax reforms, deregulation and infrastructure – three key areas for investors – which could stifle the mood of the markets to a degree.

Indeed, the markets were expecting a laundry list on tax reform, deregulation and stimulus. The fact this didn’t happen will be disappointing. Cold, hard facts and figures would have sustained the post-election stock rally, and hopes that the economy will receive a further boost.

Furthermore, despite Trump not using last night’s speech to delve into the details, doesn’t mean that the details aren’t imminent. In fact, the President stated that his economic team is working on an ‘historic tax reform’. The Trump administration has said on previous occasions that their objective is to pass tax reform legislation by August this year.

As such, this lack of detail shouldn’t represent a major obstacle for investors in the longer-term.

The financial markets favour Trump and his economic pledges – as we’ve witnessed in their reaction to his stated policies so far – and this is unlikely to change significantly following last night’s address.

Naturally, whilst there will be criticism over the lack of specifics in the President’s speech, for the majority of shrewd investors, it is exactly this lack of detail that has generated great enthusiasm.

As such, although the markets were not given what they wanted, investors should be positive following Trump’s speech.

The President appears determined to fulfil his election pledge of shaking up the status quo. Of course, as a result of this shift, there will be winners and losers.

As an example, if Trump sticks to his election promises, the banking sector is likely to benefit from the lifting of regulations; and mining and oil will receive a boost with the repeal of some of the environmental laws passed during the Obama era.

Therefore, investors need to ensure they have a good fund manager, who selects investments targeting the winning sectors, and maintain diversification in overall structures.

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