The Trump Effect: Why it’s an Essential Catalyst to Watch

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Apparently, Donald Trump has the Midas touch.

Infrastructure cement, cyber security and even defense stocks have been solid proof.

For example, in mid-2017, nearly all defense stocks rallied after the President inked a weapons deal with the Saudis worth nearly $350 billion over the next decade.

  • Raytheon (RTN) ran from $156 to $209
  • Boeing (BA) ran from $175 to $347
  • General Dynamics (GD) ran from $191 to $227
  • Northrop Grumman (NOC) ran from $243 to nearly $340

Days later, Trump asked for approval on a $668 billion defense budget for 2018 that would boost military spending.  It would increase the Defense Department’s budget to $574.6 billion, buy six ships, new fighter jets, 15 new KC-46 air tankers, which are used for aerial refueling and help grow the U.S. military by another 56,000 new service members.  

The news sent related defense stocks even higher.

In February 2018, for example just as President Trump promised, the White House released a $1.5 trillion infrastructure plan to help rebuild the nation’s roads, bridges and airports.  

Of the $1.5 trillion, $200 billion would come from federal funding.  At the time, it was hoped that the balance of the $1.5 trillion would come from incentivized states, localities, and the private sector.  In fact, according to the White House plan:

  • U.S. Steel (X) ran from a November 2017 low of $25 to $36
  • U.S. Concrete (USCR) ran from $71 to $84
  • Vulcan Materials (VMC) ran from $120 to $140
  • Jacobs Engineering (JEC) ran from $58 to $72.

Then, just last week, the Trump Administration recommended steep tariffs on foreign steel and aluminum.  In fact, Commerce Secretary Wilbur Ross is recommending three options to the president, including imposing across the board tariffs on steel and aluminum, targeting select countries with even higher tariffs, and liming the total amounts of steel and aluminum currently flowing into the United States.

Of course, the steel and aluminum industries cheered the news.

  • Small cap stock AK Steel (AKS) ran from $5 to $6.14
  • U.S. Steel Corporaiton (X) ran from $39 to $45
  • Century Aluminum (CENX) ran from $21.82 to nearly $25
  • Steel Dynamics (STLD) ran from $46.50 to nearly $50
  • Nucor Corporation (NUE) ran from $65 to $69.50

It just goes to prove that it’s never a good idea to ignore what President Trump has planned.  Otherwise, you stand to miss out on making respectable returns.

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