SPECIAL: Presidential Reactions​

In the wake of the US Election result yesterday, we at TAMIM have asked a couple of the managers we partner with to give us a few quick reactions and thoughts on where they see opportunity now that President Donald J Trump  is a reality.

In the wake of the US Election result yesterday, we have asked a few of the TAMIM investment managers to give us a few quick reactions and thoughts on where they see opportunity now that President Donald J Trump and  "The Apprentice: Global" is a reality.

SPECIAL: Presidential Reactions​

TAMIM Australian Equity Small Cap IMA

The stocks in our portfolio are largely domestic focussed, many with strong defensive qualities. We expect these types of companies to continue to perform well operationally, and produce good financial results, irrespective of the political or economic situation in the US.

Overall market weakness presents potential buying opportunities in these domestic facing stocks, such as:

• Pioneer Credit Limited (PNC) - a purchaser of debt ledgers with good earnings visibility and with no international exposure. Click here to read our more in depth analysis.
• Paragon Care Limited (PGC) - a supplier of consumables and equipment to Australian hospitals and aged care facilities, with strong defensive qualities. 
• Joyce Corporation Limited (JYC) - the owner of three high performing national businesses, with a very strong balance sheet and no international exposure. Click here to read our more in depth analysis.

TAMIM Global Equity High Conviction IMA

There will be a lot written about the US election so we will be brief and confine ourselves, mostly, to how it affects the stock markets.
 
As Donald Trump promised the result was Brexit +++! Yet again all the polls were wrong - in some states by quite large margins, with Pennsylvania being the biggest shock. In a sense it shows how the media and pollsters create a false world that seduces outsiders in to believing their rubbish and biased reporting.
 
Just like Brexit those who clearly don't like this result have made hyperbole apocalyptic statements following this shock win. But perhaps after Brexit we shouldn't be too surprised. All of the same issues have brought about this result - changing demographics and social engineering of multiculturalism, the falling real incomes of vast swathes of America hurt by globalisation and another poke in the eye for the liberal elites.
 
People are now poring over every sentence that Trump has uttered in a long bitter campaign to show what a nightmare he will be. But as we all know, when in power reality takes hold and some of the wild statements will just be a fading echo. 
 
Trying to distill through likely implications for the US and World economy and its effects on markets, a few points stand out. Whether all of these aims can be realistically achieved - these things were never costed! - is highly doubtful but at least we have some sense of direction of travel:
 
Trump has pledged lower corporate taxes and this will aide in the repatriation of a lot of cash on some US corporate balance sheets (Apple, Google, etc) back to the US.
 
Higher infrastructure spend - a topic we have discussed on a number of occasions where there has been a notable deterioration in the infrastructure in the USA as money has been diverted to overseas wars, etc.

Less government and less regulation - no bad thing in a country which is already overburdened with too much legislation.
 
NATO - Donald Trump is quite right that Europe has been getting away with too little a contribution to the burden of the defence of the West. This should be good news for defence companies particularly in Europe (BAE Group, Thales, GKN). USA companies such as Lockheed Martin and Northrop Grumman, if allowed, will be big beneficiaries of exporting USA defence technology and hardware.
 
Pharmaceuticals - Hilary Clinton has form in being particularly harsh on the Pharmaceuticals industry. Going in to this election  the Pharmaceutical sector has been significantly de-rated and this result is likely to help lift the sector.
 
Banks - Overall it would seem that Trump's policies are likely to be more reflationary which means interest rates may be somewhat higher than the market is currently expecting. This would be helpful for direct beneficiaries like construction companies but will also help banks where a steeper yield curve is likely to help margins. Again this is something we saw as inevitable and we have invested heavily in North American financial stocks.

Happy Investing,

​The team at TAMIM