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Trump Agenda Webinar Slides - Dec 2016

Trump Agenda Webinar Slides - Dec 2016

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Trump Agenda Webinar Slides - Dec 2016

  1. 1. Trump Agenda 15 December 2016 War Room
  2. 2. HiddenLevers War Room Open Q + A Macro Coaching Archived webinars CE Credit Idea Generation Presentation deck AccountabilityScenario Updates
  3. 3. Market Update Trump vs GOP Agenda Potential Policy Impacts Scenario: Trump Agenda Trump Agenda NEW
  4. 4. HiddenLevers MARKET UPDATE
  5. 5. Market Update sources: HiddenLevers, NYTimes, CNN, Crain’s, WSJ, CNBC Fed 2017: 3 Hikes Automation En Vogue Schwab Intelligent Advisory = 28 bps - First Amazon drone delivery in UK - First Uber self-driving cars in SF - Carrier jobs saved will be lost to tech - Obama warns of robot takeover + jobs
  6. 6. HiddenLevers TRUMP VS GOP AGENDA
  7. 7. TRUMP + GOP: Tax Cut + ACA Repeal Sources: Tax Policy Center, HiddenLevers • Income tax plans are aligned, small gaps can be bridged • Bigger difference on corp. taxes, but principles are the same • ACA Repeal: Mandate and 3.8% cap gains tax will be first to go
  8. 8. $1T Infrastructure Plan GOP will torpedo any national debt increase Big invitation to corruption / kleptocracy Emphasis on public-private partnerships Trump butting heads with GOP here Silicon Valley cares most, needs skills TRUMP v GOP: Infrastructure + Immigration sources: HiddenLevers, PBS, Trump White Paper, HuffPo, NY Times, Obama has most deportations ever Immigration Ban Unlikely Democrats support Trump’s debt financing 700k Dreamers will stay – political suicide
  9. 9. TRUMP v GOP: Populist Takedowns sources: HiddenLevers, CNN, NPR, Sept 2015
  10. 10. HiddenLevers POTENTIAL POLICY IMPACTS
  11. 11. POLICY IMPACT: Corporate Tax Rate Cuts sources: S&P, US Treasury, US GAO, CNBC, HiddenLevers Do companies really pay 35%? S&P’s Estimate: 26.7% US Treasury Estimate: 20% GAO Estimate: 14% Corp. tax rates by Sector Tax Reform Winners - Telecom - Consumer-Oriented - Industrials Tax Reform Losers - Technology - Energy - Health Care
  12. 12. POLICY IMPACT: $1T Infrastructure Spend sources: CATO Institute, USAToday, HiddenLevers Moody’s Analytics • 0.4%/year economic growth • Higher inflation/interest rates from spending Trump Economic Advisors • 3.3 million new jobs
  13. 13. POLICY IMPACT: Immigration Curbs sources: NBER, FRED, HiddenLevers Legal Immigration adds ~1% to GDP Growth – lost with curbs Undocumented aliens add about 3% of total GDP -> substantial risk in a mass deportation scenario Sharply limiting immigration lowers GDP growth by 1%, by killing population growth
  14. 14. POLICY IMPACT: No Immigrants = No GDP Growth sources: HiddenLevers, HuffPo, Forbes, Why do Immigrants help US? WARNINGS Labor Force Participation JAPAN Entrepreneurship Human Capital BANNON CAMBODIA
  15. 15. POLICY IMPACT: Externalities sources: HiddenLevers Environmental Impact Growth-induced Inflation
  16. 16. HiddenLevers SCENARIO: TRUMP AGENDA
  17. 17. SCENARIO: Post Election Historical Analysis sources: MarketWatch, HiddenLevers Election President Election- Inauguration 1y after inauguration 1920 Harding -12.9% 14.1% 1924 Coolidge 17.1% 19.9% 1928 Hoover 12.5% -8.7% 1932 FDR -21.5% 63.4% 1952 Eisenhower 6.1% -1.3% 1960 JFK 8.4% 13.7% 1968 Nixon -1.4% -12.3% 1976 Carter -0.1% -13.6% 1980 Reagan 2.0% -12.9% 1988 GHW Bush 4.1% 16.8% 1992 Clinton 3.2% 9.1% 2000 GW Bush -6.4% -17.4% 2008 Obama -22.2% 32.7% AVG. -0.85% 7.96% S&P return since Trump election: +5.5% Doesn’t say much about 2017
  18. 18. GOOD: Tax Cuts + Infrastructure source: HiddenLevers Trump + Congress move on fiscal spending Yellen: Hike faster if spending leads to inflation Modest GDP bump Tax Cuts Personal > Corp
  19. 19. BAD: Nothing Done source: HiddenLevers Trump more sizzle than substance – can’t deliver distractions overwhelm agenda populist measures backfire US economy loses first priority
  20. 20. UGLY: Xenophobia source: HiddenLevers Immigration shutdown kills GDP growth Dreamers likely get a pass Skilled workers needed most Immigration majority of GDP growth Muslim registry/ban looks fictional for now
  21. 21. SCENARIO: Trump Agenda Good: Tax Cuts + Infrastructure Bad: Nothing Done Ugly: Xenophobia 10y UST -0.25% S&P -25% 10y UST FLAT S&P -8% 10y UST +1% S&P +20% In the best case, a combo of tax reform and fiscal spending push rally into next leg. Scenario currently 20% priced into market. If Trump administration gets bogged down in populist agenda or in bickering over Russia etc, S&P could give up post-election gains. Sharp limits on immigration make US look more like Europe, cutting GDP growth by 1%. Mass deportations likely set stage for recession.
  22. 22. Trump Agenda – Take Aways Post election rally doesn’t predict next year Limiting immigration takes US into Japan-style stagnation Corporate tax cuts smaller and less impactful than they appear ACA Repeal and tax cuts likely As Trump + Ryan agree

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