Getting bullish on Trump

Nov. 10--After a quick attitude adjustment, U.S. investment pros have decided that President Donald Trump could be a second coming of Ronald Reagan, a pro-business figure who will help companies and owners pay less taxes and keep more money, so long as he behaves as he did in his high-minded victory speech early Wednesday.

"The market had a big psychological change in the middle of the night," said Brad Bernstein, senior vice president at the Philadelphia office of Swiss bank UBS, which manages $2 trillion.

At first, stock index futures "turned down hundreds of points when it became clear Trump had won. But when he gave his speech and made it clear he was very conciliatory, it started going up" -- stocks, bonds, and bets on future Federal Reserve rates, Bernstein added. "He was a different person."

The morning after, drug stocks, especially, rallied -- Malvern-based Endo Pharmaceuticals up 12 percent, Pfizer up 9 percent, Merck up 7 percent -- as it became clear that voters had rejected, with Clinton, her calls for pharma price controls.

Consumer financial companies were up sharply, too, on hopes Trump will gut Obama-era consumer-protection rules. Navient, the Wilmington student-loan finance company, rose 17 percent, the best performance of any S&P 500 stock.

Sunoco Logistics, which is scheduled to operate the controversial Dakota Access Pipeline, was up 7 percent. Lockheed Martin and Unisys each rose more than 6 percent on hopes that Trump will make good his pledge to boost military spending. But firms tied to Obama and Clinton policies lost value. Health-care management stocks, including King of Prussia-based Universal Health Services, were down sharply. So were some trade-related stocks, including the U.S.-Mexico rail shipper Kansas City Southern.

Isn't this all very fragile -- reliant on Trump not returning to wild-man attack mode? "We have to wait and see," Bernstein said.

Jack McIntyre, bond manager at $70 billion-asset Brandywine Global in Philadelphia, had questions. "Will he overturn Obama's executive orders? Will the Republicans pass comprehensive corporate tax reform, infrastructure investments, energy investments, decreased regulations? I'm not sure Trump knows. He's like, 'Oh, my God, what do I do?' "

Gov. Christie "sure got lucky," McIntyre added. "Instead of being unemployed, he heads the Trump transition team."

PNC Bank economist Kurt Rankin anticipates that Trump and the Republicans who run Congress will make good on proposals to lower corporate income taxes, including taxes on foreign profits for GE and Apple. "That could bring hundreds of billions, even trillions, back from overseas," says Rankin.

"Trump's a pro-business guy. I don't see how that's bad news for the U.S. stock market," says Sean O'Hara, a founding partner of Pacer ETF, a year-old, 50-employee Paoli fund distributor that invests $700 million for clients of Merrill Lynch, Morgan Stanley, Charles Schwab, and other big brokerages. He says his faith in U.S. stocks has been renewed.

Jim Meyer, chief investment officer at $1 billion-asset Tower Bridge Investments, wrote to clients of Boenning & Scattergood that "there are three obvious centerpieces of Mr. Trump's economic agenda": corporate tax cuts, "economically viable" health insurance reform, and a "rollback" of "regulations that choked growth."

Uncertainty over Trump and GOP policies may still be "a near-term drag to GDP growth," costing the economy 0.5 percent lower expansion in early 2017, writes Ethan S. Harris, global economist at Bank of America Merrill Lynch. Noting that high tariffs on goods from Mexico and China are "the centerpiece of Trump's economic platform," he said that retaliatory tariffs, along with Trump's proposed Mexico wall and mass worker deportations and tax cuts would have "dramatic impacts on the U.S. economy."

For urbanists such as the band of tech investors seeking to build software companies in Center City, one message of Trump's victory is not to expect more aid from Washington.

"The real work of building our country happens in cities and neighborhoods, not in D.C.," said Bob Moul, CEO of Cloudamize and a director of the Philadelphia Industrial Development Corp. "We have to improve our education system and make more jobs available for all Philadelphians."

JoeD@phillynews.com

(215)854-5194@PhillyJoeD

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