Trump policy cheat sheet

Speculating about Trump’s administration is sure to be lively conversation fodder at this holiday season’s gatherings. Here’s an early cheat sheet of insights, courtesy of CIBC economists Royce Mendes and Avery Shenfeld.

Spending and tax cuts: Together, these should drive U.S. growth of 2.1% in 2018, causing the Fed to act more quickly than expected, which in turn will blunt the growth impact of other stimulative policies.

Read: What may hold back ‘Trumpflation’

Immigration and trade barriers: Tighter immigration would drive wages higher, while trade barriers would raise import prices. CIBC has accordingly raised its 2018 core inflation forecast a tick to 2.5%. Potential trade barriers with Mexico mean Canada could have a chance to recapture U.S. market share.

Read: Are U.S. and British passports less attractive?

Oil: Trump’s support for the industry should boost the oil supply, putting pressure on WTI prices, barring renewed sanctions on Iran. His support for coal could limit future upside in natural gas.

Equities: Some equities will benefit from infrastructure spending, but the effect could be modest, depending on amounts and extended phase-in periods. Additional spending on defence, however, will boost related companies.

Banking: Banks will likely see lower regulatory compliance costs, with Trump set to repeal Dodd-Frank. But since he positioned himself as less of a Wall Street insider than Hillary Clinton, he might not be completely warm to the sector.

Pharma and biotech: If the Republicans are less aggressive about containing drug costs, biotech could benefit. While the future of Obamacare isn’t yet clear, health insurers could be relieved if there are dampened prospects for public healthcare options.

Read: Which sectors suffered last week?

Staff

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