Every new administration brings new challenges and new opportunities. Six months into the Trump Administration, there hasn’t been as much movement as we might have thought, but there are still some smart strategies you should keep in mind.
First up, taxes. President Trump officially released his latest tax proposal in April. In it, he made a lot of suggestions. For example, he’s suggesting a cut in the corporate tax rate, from 35% to 15%, and pass-through entities like corporations and LLCs would also qualify for the 15% tax rate. He’s also suggesting doubling the standard deduction, and reducing the number of tax brackets from 7 to 3 – 10%, 25%, and 35%. He’s also suggesting eliminating the federal estate tax, repealing the alternative minimum tax, and Net Investment Income Tax.
In terms of repealing and replacing Obamacare, another major campaign promise, The American Health Care Act(AHCA), was proposed in the House of Representatives on March 6th but failed to make it to a vote March 23rd. However, the MacArthur (R-NJ) Amendment to the AHCA allowed states to opt out of two of the law’s central provisions:
1. Requiring coverage for “essential health benefits" and
2. Barring insurers from charging people with certain preexisting medical conditions more than others in their general insurance pool
The AHCA passed the House 217-213 on May 4th. It now moves to the Senate, where substantial revisions are expected. And, if they do pass it in its new form, it will go back to the House for approval (and probably further debate). So, there is a lot of uncertainty over where that will end up.
President Trump is also a proponent of deregulation, and his proposals affect sectors like energy, oil and gas, net neutrality, as well as deregulation in the financial and banking sectors. He also has an infrastructure spending proposal (he’s proposed spending $1 trillion in infrastructure over 10 years), although, like many of his other proposals, we still don’t have specifics.
So, that’s a lot of information – and you may be wondering “So what does that have to do with my finances?” And the answer is quite a bit!
Markets and sectors often move as much based on what is happening in the economy as what may happen in the economy, and, as President Trump’s agenda takes shape, it will continue to shape markets. And so be aware of the challenges and opportunities that this presents. In terms of opportunities, take a look at this chart.
Source: Source: iShares ETF Data, Morningstar through 5.11.17
These are the top 3 sectors that have benefitted from Trump’s proposals so far. The first is technology, then consumer discretionary, and then financials. And so we recommend to all our clients and all our readers, that you take a look at how you are allocated, and be forward thinking. You may want to consider re-allocating in terms of those sectors that are thriving and will likely to continue to thrive as the President’s agenda continues to unfold.
It can be complicated, and so we’d like to offer a no-obligation wealth planning session for all our readers. We can review your portfolio and make sure it is meeting the challenges and the opportunities that will be presented by the Trump Presidency. You can contact us by calling us at 216.520.1711, emailing us at Quarterback@Lineweaver.net, or clicking here.