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Wednesday, November 09, 2016

What Does President Trump Mean For Fundsters?

News summary by MFWire's editors

The 2016 presidential race is over, and now it's time for fundsters (and everyone else) to figure out what that means.

Real estate mogul Donald Trump has been elected the next president of the United States, and Wall Street is already reacting even before the NYSE opens for trading this morning. Headlines so far include: "Stock Futures Plunge as Donald Trump Posts Surprising Win", "Longer-Dated Bonds Fall on Trump Spending Bet", "As Markets Plunge, Traders Left 'In Shock' By Trump Success", and "Trump's Surprise Ends Election, Begins Uncertainty for Markets", all in the Wall Street Journal; "Stocks, futures and currencies roiled by U.S. presidential election result" in Pensions & Investments; "Victorious Donald Trump Is the Devil Wall Street Doesn't Know" in Bloomberg; and "Be Very Scared for Your 401(k) Right Now", Mother Jones.

Barbara Roper
Consumer Federation of America
Director of Investor Protection
Dale Brown, president and CEO of the Financial Services Institute (FSI) (a trade group for independent broker-dealers and advisors), issued a statement early this morning congratulating President-Elect Trump while reiterating his concerns with maintaining Americans' "access to objective and affordable financial advice."

Bill Katz, Citi's high-profile analyst covering asset managers, says that Trump's victory has "mixed short to intermediate implications" for asset managers and broker-dealers. He lays out some possible "wildcards" to pay attention to in the coming weeks and months (like what happens to taxing carried interest and who Trump picks for his cabinet). Yet Katz says he's making "no change in strategy for now" and stands behind global asset managers as "structural winners," despite worries about Trump's protectionist policies. Katz's favored post-Trump victory asset manager picks are AMG [profile], BlackRock [profile], and AB [profile].

For fundsters and others connected to the wealth management and retirement plan industries, Trump's victory also mean pushing reset on what was supposed to be a gigantic regulatory change next year: the Department of Labor's controversial, impending fiduciary regulation (scheduled to start taking effect in April). Barbara Roper, director of investor protection at the Consumer Federation of America, tells Financial Planning that "the rule could be in jeopardy." Indeed, last month Trump advisor Anthony Scaramucci called for the repeal of the impending reg and comparing it to the 1857 Dred Scott Supreme Court case that infamously upheld slavery.

Famed Nuveen [profile] investing guru Bob Doll reminds investors that in early 2016 he and his team "predicted that Republicans would win the White House and retain control of Congress." Doll's take on Trump's victory includes a "lack of clarity" as to what happens next. Doll sees the rise of Trump as indicative of a national mood "shift from hope to anger," and Doll predicts "a push toward more protectionist positions," as well as fiscal stimulus and corporate tax reform.

Janus [profile], in an unsigned note on Trump's victory, muses that "a trump administration may foster growth" and argues that the President-Elect's "promise to abolish" Obamacare will not be feasible. Janus also predicts that the Federal Reserve is now less likely to raise interest rates next month.

Bill Stone, chief investment strategist at PNC Asset Management [profile], cautions everyone not to get too freaked out about the markets today: "the day after the election, market activity is not very instructive for longer-term returns."  

Edited by: Neil Anderson, Managing Editor

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