Why We Should Give Donald Trump A Chance

Personal Jan 02, 2017 No Comments

Were you surprised when Donald Trump won the US presidential race over Hillary Clinton? I was.

Still, I am not sure I fully understood the world’s reaction. Much of it seemed to be shocked that Americans could have voted the controversial billionaire into the White House. Even world leaders were stunned and struggled to find suitable diplomatic responses, and Americans themselves staged protests across the country. The market initially seemed unenthusiastic but how it later moved on offers a clue to all of us.

Donald Trump giving the thumbs up gesture

Donald Trump deserves a chance

Over a month after the Republican’s win, the Dow Jones index is up 8.2%. Investors have set off a ‘great rotation’ – switching to equities, from bonds – and the American dollar has risen 5% against the euro. What is driving this exuberance? I think it is Trump’s clear pro-business stance. A cut in corporate tax rate, a potential fiscal stimulus and the rising American dollar are all at play as the market places its bets with gusto.

It might be useful to remember that Trump is a successful businessman. Many point to his bankruptcy once or the inheritance he got from his father. But nothing can take away from his success. He has established his brand all across the world – here in the UAE, too. If he runs the US as he has run his businesses – displaying opportunism, business smarts and taking risks – I think he and America will do really well.

Let’s first take his pledge to cut the corporate tax rate by half to 15%. If he delivers on the promise – and I don’t see why he won’t – it will have a huge direct impact on the bottom line of companies. Jefferies estimates an 18% gain to the bottom line of S&P500 companies. Such a far-reaching move will also have positive impact on investment, the broader US economy and, therefore, the world market.

Given Trump’s protectionist views, you might question the latter. He wants to bring jobs back to the US, revive US steel, hit China’s cheap exports with tariffs, re-examine trade deals, etc. Obviously, Trump is eyeing US interests and he is prepared to go all-out to recapture the edge America may have lost over the years.

Some of his threats might materialize. Some might hurt some countries – at least over the short term. But if history is any guide, it is this: Whenever America wins, the rest of the world wins, too. Such is the strength of the world’s largest economy and the world’s most powerful nation.

I find a lot of people still struggling to understand why Trump won. Many see it as a trend that started with Brexit and one that continues with rejection of reforms in Italy’s referendum. I think we’re going to see more of that around the world. I see it as people’s way of saying, “Well, I’m not really happy with the things are,” and seeking change. It’s obviously not a bad thing, and I don’t think it’s going to be permanent.

Among other things, Trump is ready to challenge the status quo, and look for alternatives. In short, he embraces change. His personality matters, too. Trump has never sought to be politically correct, and never shown much interest in gaining ‘popularity.’

Now that he has been voted into the White House, he is even more likely to carry on in the same vein. So expect him to make inspired but controversial hires for key positions, take risks and ring in changes. I think his policies may shock initially medium- to long-term will benefit the US economy. Overall, I have to believe he’s got a plan and going about it the right way.

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