The election of President Trump has led to marches, street protests and mass hysteria in the media yet business confidence in the United States has never been higher. The Dow Jones share index broke through the 20,000 point barrier for the first time ever in a resounding demonstration of growing investor confidence.
So, what is going on and how do we explain this disparity?
I would argue that it’s because business leaders are innately practical and understand the need to look at the longer-term picture. Forget all the talk of a rigged campaign or an electoral system that’s no longer fit for purpose, Trump is President and nothing is going to alter that fact. Far better to focus on what the next four years hold in store instead of being swept up in the current frenzy. Strip away the bravado and, at his core, Trump is a president whose promises hinge on his pro-business stance. One thing the new commander-in-chief has already demonstrated is a willingness to follow up on his promises – see how quickly he withdrew from the Trans-Pacific Partnership and enacted the controversial travel ban.
It is therefore safe to assume that Trump will be equally predictable in his unwavering commitment to stimulating American business. Investors don’t have to admire Trump the man to be enthused about Trump the deal maker who can turbo-charge the US economy. As a businessman, he understands how to create an environment that allows businesses to flourish. Business likes certainty and he will certainly offer that. A move to a lower-tax economy, deregulation and removal of red tape will benefit US companies. I have business interests in the United States, including my role as board member at Customers Bank; it’s a very dynamic challenger bank which has attracted Millennials who prefer virtual banking to an outdated bricks and mortar model and we instinctively welcome anything that strips away needless regulation.
Meanwhile, Trump’s promise to boost US infrastructure spending will stimulate key sectors of the economy, with echoes of President Roosevelt’s new Deal in the 1930s. Theresa May wasted no time in moving to forge a relationship with the new president, and she is not alone in her thinking. The Japanese government are actively courting closer ties with the new Trump administration. Prime Minister Abe is gathering information from major corporates regarding their levels of investment in the US ahead of a concerted move by Japan to form closer ties with the White House in the coming years.
It is not just politicians who can see that there is potential. Despite Trump’s criticisms of Boeing throughout, and then after his successful presidential campaign, Boeing CEO Denis Muilenberg has spoken of how impressed he has been by the way Trump is engaging directly with business leaders – something that Muilenberg believes bodes well for the future. I expect this practical approach to be taken up increasingly by key figures across business and politics. A boost to the US economy can be a catalyst to facilitate growth on a global scale. Trump’s unflinching willingness to take on vested interests – evidenced by his withering attacks on the entire pharmaceutical sector – will cause disquiet in some quarters, but will also win him popular support as long as he chooses his targets wisely. Entrepreneurs will not want to see the president sinking entire industries on a whim.
Question marks do remain over Trump’s intentions globally. While he has been pragmatic and outward looking about forging a trade deal with the UK he has taken an incendiary stance to the EU and his immediate withdrawal from the Trans-Pacific Partnership betrays an insular undercurrent to his thinking. He certainly has no qualms in admitting that he is not, contrary to his predecessor Barack Obama, globalist in his worldview. Overly-vociferous protectionism, border tax and some of the astronomical tariffs that have been mooted over the past 12 months would be bad news for investors. Some believe it could help China assert itself as the major trading power on the world stage.
Free movement is a point of contention that looks set to run and run. Some of America’s biggest brands are particularly unhappy about the travel ban, given the diversities of their workforce, while tariffs are set to impact upon their various lines of supply from around the world. And for all of Trump’s straight-talking, it’s only natural that people harbour concerns about the volatility of some of his rhetoric.
Given our global interests at C&C Alpha, we will be watching developments on tariffs closely as we instinctively welcome free trade rather than protectionism. Trump will see his first duty as to the American people, but he must ensure he does not alienate external entrepreneurs and investors as he shapes a dynamic economy revolving around American products and American jobs. I take a balanced view on the future. As an investor, it would be counterproductive to view the coming years as an unparalleled disaster before they have begun. As is ever the case with change, opportunity knocks. And where many people see risk, savvy investors will see fertile ground to turn this change to their advantage.
(Bhanu Choudhrie is founder of C & C Alpha Group, a private equity business headquartered in London)
