There are words…
And then there are actions…
The words sounded OK, don’t you think? Inclusive, hopeful and reassuring. Have a read…
From Trump’s inauguration speech last Friday in the US:
‘Today’s ceremony, however, has very special meaning because today, we are not merely transferring power from one administration to another or from one party to another, but we are transferring power from Washington, D.C. and giving it back to you, the people.
‘For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished, but the people did not share in its wealth. Politicians prospered, but the jobs left and the factories closed. The establishment protected itself, but not the citizens of our country. Their victories have not been your victories. Their triumphs have not been your triumphs. And while they celebrated in our nation’s capital, there was little to celebrate for struggling families all across our land.
‘That all changes starting right here and right now because this moment is your moment, it belongs to you.
‘It belongs to everyone gathered here today and everyone watching all across America. This is your day. This is your celebration. And this, the United States of America, is your country.
‘What truly matters is not which party controls our government, but whether our government is controlled by the people.’
Not quite as pithy as Ronald Reagan’s ‘Government is not the solution to our problem — government is the problem’, but a worthy sentiment.
Then there are the actions.
Donald Trump is a multiple bankrupt. While there is no shame in bankruptcy (not any more, anyway), Trump uses it as a strategy to turn his losses into winnings.
That’s why he refuses to release his tax returns to the public. What they contain would be shocking. I’m guessing, but I doubt Trump has paid much in the way of taxes as his business empire has grown. The losses from his past failings are still subsidising his successes.
In other words, he is a part of the ‘elite’ that he so successfully demonised to propel himself into the most powerful position in the world.
The top end of town pay little in the way of taxes relative to their wealth. But the masses don’t have this advantage. They get slugged, or go to jail.
They are the host, and the parasitical elite feed hungrily from them.
The genius of Trump is that through his words, he has positioned himself as the champion of the people, while remaining firmly embedded in the ranks of the elites through his actions.
He has a sprawling real estate and business empire. But of course, he is not divesting his interests while he goes into bat for the little people. He is handing the day-to-day management of it over to his adult children. In other words, he’ll still be very much involved.
Conveniently, the president of the United States is exempt from federal conflict-of-interest laws. But that won’t stop damaging speculation that policy moves are designed to enrich the Trump brand.
Back in November last year, the Trump family appeared on 60 Minutes. Trump’s daughter, Ivanka, wore a US$10,800 diamond bangle. The company — hers — then promoted the bangle on the back of the appearance.
More dubious actions…
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Like the promotion of her husband, Jared Kushner, to a special presidential advisory role that doesn’t require him to divest any of his business or real estate assets.
Regardless of his skills and aptitude for the job, this is simply poor governance. For a man who tries to demonise the elite, he’s certainly doing a great job emulating them.
A particular characteristic of the elite is that rules that apply to the common person don’t apply to them. Where simple morals or common decency dictate a course of action, the elite ignore it and do as they please.
They have a different morality. And so does Donald Trump.
So far, all his words are about reinforcing the views of his base. That is, the American heartland that won him the presidency.
Trump campaigned on a bluster of words, promising to levy a 45% tariff on Chinese goods, and to build a wall between Mexico and the US — and get Mexico to pay for it. Trump didn’t just single out the elites as the enemy. ‘Globalisation’, Mexicans, Chinese, immigrants and other minorities are all ‘enemies’ in Trump’s quest for power.
It is only by creating an enemy that you can galvanise the masses. Trump did that perfectly. He assessed the mood and manipulated the situation to get into the most powerful position in the world.
I don’t know what a Trump presidency will come to mean for America’s social cohesion. At this stage, it doesn’t look good. But emotions are high. And when emotions are high, you never see clearly.
Putting my investor hat on, I ignore all that and look at the team Trump is putting together. I want to know what it means for markets and the US economy.
And as far as I can tell, the news is good. It’s hard to say that when you have a moral opposition to someone and their actions. But if you want to invest successfully, you must ignore your emotional impulses.
In sporting parlance, you must play the ball, not the man. In the case of Trump, way too many are playing the man.
Peggy Noonan, writing in The Wall Street Journal, made what I think is a common mistake in analysing Trump’s speech:
‘The essential message: Remember those things I said in the campaign? I meant them. I meant it all.’
I think that is exactly what Trump wants everyone to think.
But if you look at how Trump is putting his team together, you’ll see he is staffing it with hard-core capitalists and entrepreneurs. They’ll be no winding back globalisation with this lot in charge. There will be no return to protectionism.
Instead, you’ll see lower taxes, less regulation and more borrowing to ‘get America back to work’ (despite an already low unemployment rate).
It will recall the days of America’s 19th-century cowboy capitalism. If this is indeed the case, it will be good for stocks. The improbable bull market will continue beyond nearly everyone’s expectation.
I could be completely wrong, of course. I’m no political analyst, nor do I want to be. I’m just saying that you need to ignore the words of a master manipulator and persuader, and focus on his actions.
His past actions tell you he is a cowboy capitalist. The team he has tells you there will be more of the same in the years ahead.
It could well turn out that his supporters become disappointed and his critics surprised. The definite losers will be those who believe in big government, or that the government IS the solution to our problems.
If nothing else, at least we can be thankful to Trump for that…
For Markets and Money
Editor’s Note: This article was originally published in Money Morning.