Cash & Investment Management

Donald Trump – The first 100 Days

Friday 30th June 2017

Donald Trump was inaugurated as the 45th President of the United States of America at noon on January 20th 2017. The 48th Vice President of the United States, Mike Pence, was inaugurated on the same day. Donald Trump completed his first 100 days as President on April 29th. The first 100 days of office is seen as the high water mark for presidential power, the time in which presidents enjoy both popularity and momentum from campaigning to set the agenda for the next four years and to push through legislation in congress. Trump first announced his plan for the first hundred days of his presidency in Gettysburg, Pennsylvania, on October 23, 2016, before the election. His “100-day action plan to make America great again”. The 18 actions and 10 congressional bills spelt out President Trump’s priorities for his presidency. These included construction of a wall on the Mexican border, suspending illegal immigration from terror prone countries and labelling China a currency manipulator.

Progress thus far has been slow. Although at the time of writing, President Trump has now issued more than 30 executive orders, 10 more than Barack Obama over the same period. His presidency defining health care reform and immigration bans have so far been thwarted by Congress and the judiciary. This has greatly frustrated President Trump, but has not deterred his supporters. Having lost the popular vote but won the Electoral College, he took office with the lowest approval rating of any incoming president. In addition, he now has the lowest approval rating of any president at the 100-day mark, although polls suggest his base remains loyal.

A recent poll asked a sample of Americans whether their president had exceeded their expectations or not. Of those who identified as Republican or Democrat, 30% thought that Trump had met their expectations. Yet the remainder were sharply divided, 41% of Democrats thought the president had performed much worse than expected, while 28% of Republicans thought he had performed much better. These sentiments are reflected in Mr. Trump’s approval ratings. The country is divided by party loyalties. 88% of Republicans approve of the president, while 82% of Democrats disapprove. Mr Obama, by contrast, was far less divisive. Mr. Trump was a polarising figure on the campaign trail and he is no different in office.

The most notable achievement of President Trump’s first 100 days in office was the appointment of Neil Gorsuch to the Supreme Court, despite concerted opposition from Democrats, which forced Republicans to change Senate rules. Conservatives craving a worthy successor to Antonin Scalia warmly received his selection. Trump has also signed a record 13 resolutions to roll back regulations, billed by the White House as getting government out of the way to create jobs, and pulled out of the Trans-Pacific Partnership trade deal. He was also received praise or his swift response to Syria using chemical weapons.

Unfortunately, his list of failures during those first 100 days is much longer. Trumps hurried attempt to repeal and replace Obamacare, which crashed in the House of Representatives was a debacle. Trump, who often refers to himself as the ultimate dealmaker, could not strike the deal and reports suggested that he had little grasp of the details. In addition, not long after taking office, Trump signed an executive order banning visitors from seven Muslim majority countries; the result was an outcry over betrayal of American values, chaos at airports and defeat in the courts. This was an early victory for America’s system of checks and balances, which greatly frustrated the President. The travel ban was widely criticised as rushed with a chronic lack of basic consultation and fact checking. The healthcare bill fared no better, with the Congressional Budget Office warning that it would result in 24 million more uninsured Americans by 2026.

He has reversed his position on a number of issues including labeling China as a currency manipulator, NATO, launching the 2017 Shayrat missile strike without congressional approval, the North American Free Trade Agreement (NAFTA), re-nomination of Janet Yellen as Chair of the Federal Reserve, and the nomination of Export-Import Bank directors. Supporters claimed that as the first to have been elected President in present times who has held neither military nor political office, he therefore faced a steep learning curve.

One day after his inauguration, press secretary Sean Spicer berated the media over its reporting on the size of the inaugural crowd, falsely claiming that Trump’s had been bigger than Obama’s and setting the tone for 100 days of belligerence and combative relations with the press. The sexism and racism that plagued his election campaign has been less explicit since he took office, but there have been many other been bizarre incidents such as his failure to shake German chancellor Angela Merkel’s hand and the blunt language of radical Islamic terrorism. Since becoming president, Trump has posted nearly a thousand tweets, impulsively fired off at all hours of the night and often in response to items broadcast on Fox News.

The darkest cloud currently hanging over the president and the Republican Party is the ongoing investigation into Russian involvement in the election. US intelligence agencies concluded that Moscow backed hackers meddled in the presidential election to tip the scales against Hilary Clinton in favour of Trump. The burning question is whether Trump’s campaign actively colluded with a foreign adversary, which could lead to a bigger scandal than Watergate. Mike Flynn became the first major casualty of the administration when he was forced to resign for misleading the vice-president, Mike Pence, over his conversations with Russian ambassador Sergey Kislyak. Attorney general Jeff Sessions also faced calls to quit.

Near the end of the 100 days, the Trump administration introduced a broad outline of a sweeping tax reform focusing on deep tax cuts. While it is intended to encourage economic growth, there were concerns from some members of the United States Congress about raising the national deficit In spite of the sharp decline in gross domestic product in the first quarter of 2017, representing the weakest quarterly economic growth in three years. However, at the time of writing markets have rallied since Trump sook office and the S&P 500 was near an all-time high, representing a 12% rise from the first quarter of 2016, as investor confidence remained elevated. Although Trump had to concede to delay funding for the U.S. / Mexico border wall, he had promised. Narrowly avoiding a government shutdown a few days before the end of the first 100 days, his rhetoric may have contributed to a sharp drop in the number of illegal crossings at the Mexico–United States border.

So what does the first 100 days suggest for the remainder of his term? More unpredictability? No doubt, there will be another attempt at healthcare reform. Few in markets expect the comprehensive tax reform initially promised, but have been heartened by President Trump vowing to axe the corporate tax rate from the current headline rate of 35% to just 15%, even if it increases the fiscal deficit.

Renewed hopes are even more apparent in the Russell 2000 and Nasdaq Composite. The Russell tracks small listed US companies that are domestically oriented and would mostly benefit more from tax cuts than the multinational blue chips of the S&P 500. The NASDAQ also boasts a host of smaller companies that benefit from faster economic growth and inflation. However, investor scepticism is still apparent in the dollar, which has become a reliable market indicator for judging President Trump’s impact. The index that measures the dollar against its peers rose 4.4% between the US election and the end of 2016, but is down 3.4% this year, slipping to a five-month low recently despite the US stock market’s renewed optimism.