Scoundrel Or Agent Of Change
As more and more damning evidence emerges in the Donald Trump election campaign/Russia interference probe I wonder more and more what the President’s legacy to the US will be. Will he be known as the biggest crook in American politics or the President that got things done?
I admit that his entanglement with the law and potential criminality is a problem but you have to admit he’s been right about a lot of things and is trying to force overdue change on major issues.
His trade war with China has caused a global slowdown in economic activity but have also garnered the support of industry executives on both sides of the political line who confirm the need for change, and led China to the negotiating table. Without him, this wouldn’t be happening and the indications are good that there will soon be a positive resolution to the dispute that will result in increased, sustainable, global economic activity.
The trade war has also led to renewed terms on NAFTA, the USMCA as it is called didn’t bring sweeping change but it will improve the lives of millions of North Americans, specifically those Mexican workers now guaranteed higher wages.
Mexico has long been a source of manufactured goods, it is fast becoming a powerhouse of international trade and expected to see GDP accelerate over the next five years and average 2.5%. A resolution to the US/China trade dispute is sure to spark an increase in those estimates.
In terms of the government shutdown and immigration it seems he may go down in history as the President who broke America but I think not. Most Americans agree some form of comprehensive immigration reform is long-overdue and he wants to see it done. His request for a wall is an obvious and ridiculous solution that is, in my opinion, nothing more than smoke and mirrors.
From the perspective of negotiations, and thinking back on all those times he told the press he wouldn’t tell them what he was really doing or what he really wanted because it would tip his hand, the wall isn’t what he wants. If he asks for immigration reform he won’t get it because the name of the game on Capital Hill is compromise, if he compromises on what he wants he won’t get what he wants.
The ball is now in the hands of the Democrats. Nancy Pelosi as Speaker of the House holds the power. If she can organize Congress to come together, compromise, and put together one her “real bills”, immigration reform will happen and the government will reopen. If not, well, if not then she may get labeled as an obstructionist and her own people may begin questioning her motives. In either case, Trump wins; he’ll either get the immigration reform he wants or he’s going to break the Democratic leadership.
What does this mean for you and your money? It means now is a great time to get invested if you already aren’t. If you are invested you need exposure to global equities including Mexico, China, Canada, and the US. My top pick for growth over the next three years is Mexico though, as it has multiple tailwinds not-excluding the new USMCA.
Number is that the newly elected President Andres Manuel Lopez Obrador has promised a number of reforms that are already taking hold. These reforms, including a pledge to fiscally responsible spending, will build on what former President Enrique Nieto began earlier this decade and help sustain Mexico’s growth long into the future.
Managers at the Mexico Fund (NYSE: MXF) make note of Obrador’s pledge and evidence he’s following through on his promises in their December fund update. In their view Obrador’s increase of surplus requirements is a step in the right direction and generated optimism in the Mexican economy.
“The 2019 budget includes an increase in the primary surplus(which excludes interest payments) to 1.0% of GDP, higher than the 0.8% of GDP approved for 2018. The budget announcement generated optimism in the Mexican economy and enhanced the performance of the Mexican peso …”
So, what will President’s Trump’s legacy be? It’s hard to tell right now but one thing is certain, the world economy will be in better shape when he’s gone than it was when he took office. If you don’t believe me just look at the stock market. Sure, it corrected over the last two months but that correction was needed, has put equities at their lowest valuations in a decade, and opened up new opportunities for investors. The markets are now moving higher again, in line with long-term economic trends and outlook, and likely to set new all-time highs in 2019.
*This is my personal opinion and not that of Financeandmarkets.com.