We're nearly 100 days into Trump's presidency, and the campaign promises of lower taxes, infrastructure spending, and tighter restrictions on trade have yet to materialize.
Additionally, Trump's first major legislative push — the American Health Care Act — failed to garner enough support among Republicans and was pulled from the House floor minutes before a vote.
The market has not missed this lack of progress. Sectors that would theoretically benefit from Trump's policies, like industrials, have given back a chunk of their post-election gains while those that would be hurt, like retail, have recently gotten a boost. These moves appear to be investors telling the president they haven't seen enough progress.
Massive investors like Bridgewater and firms like Bank of America aren't helping matters, having thrown cold water on the idea of a seamless implementation as recently as Wednesday.
Even financials, the golden child of the S&P 500 post-election rally that reached as high as 12%, have faltered of late.
The most highly-taxed stocks in the US enjoyed a double-digit rally following the election on expectations that Trump would lower the corporate tax rate. During the campaign, the president suggested lowering the rate to 15% from 35%, a cut that would have an outsized impact on companies paying the most.
However, Since the election, Trump has backed off his 15% goal, telling manufacturing CEOs on February 9 that it would be "15% to 20%." Additionally, reports suggest that the tax plan could end up with a corporate rate as high as 28%.
Trump's campaign promise was to put $1 trillion towards infrastructure spending and he recently held a meeting with corporate titans on the President's Strategic and Policy Forum regarding the proposed infrastructure spending.
There has been no definitive plans for the spending, and reports suggest the White House is planning to move the investment back to 2018 at the earliest.
No group benefited more from Trump's victory than financials, and a large part of that is due to expectations of looser regulation.
Trump signed an executive order on February 3 instructing the Treasury Department to look into changing or repealing the Dodd-Frank Act, the largest piece of post-financial crisis regulation on banks. The president also said on April 4 he wants to give Dodd-Frank a "haircut."
Despite this, there have been no plans advanced regarding Dodd-Frank and members of the Trump administration including Mnuchin and Cohn have suggested that they support a new version of the Glass-Steagall Act that would separate commercial and investment banks.
The S&P 500 Financials Index surged as much as 26% after the election through March 1 to its highest level since the start of the bull market in March 2009. However, as skepticism around Trump's proposed measures has mounted, the sector had slipped 8.5% from March 1 through Wednesday's close.
Source: Bloomberg
Junior Trader Stefan Panteleev
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