Trump 2.0 and Your Money: Investing during the Trump Presidency. No Dumb Questions with Connell McShane and Doug Flynn, CFP. Ep. 4

No Dumb Questions with Connell McShane and Doug Flynn, CFP

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Connell and Doug discuss the potential impact of Donald Trump's presidency on the stock market and the economy, including the effects of lower corporate tax rates and tariffs.
Trump's Presidency and Economic Impact

Doug suggested that Trump's administration might lead to less regulation in energy and financial sectors, which could result in increased mergers and acquisitions. He also noted that the economy is in good shape, with the consumer being a significant contributor. However, Doug acknowledged the risk of going too far with business-friendly policies, which could lead to unnecessary risks and potential economic dangers. They also discussed the potential impact of Trump's proposed corporate tax rate of 15%, which could be a significant factor in the economy.
Corporate Tax Rates and Earnings

Doug discussed the potential impact of lowering corporate tax rates on company earnings and stock market valuations. He suggested that a lower tax rate could lead to increased earnings and potentially higher stock prices, making the market more fairly valued. Doug also emphasized the importance of considering the domestic revenue of companies when assessing their potential for growth. He used Walmart as an example, noting that 68.2% of its revenue is from the US. Doug also discussed the potential for onshoring due to tariffs, suggesting that this could benefit smaller companies with a higher US presence. However, he acknowledged that there might be short-term negative impacts from tariffs, such as higher inflation and a temporary hit to GDP.
Tariffs, Politics, and Economic Implications

Doug and Connell discussed the potential impact of tariffs on their company's profitability and the overall US economy. Doug suggested that while the tariffs might slightly increase costs, the long-term benefits of keeping production in the US could outweigh these costs. They also discussed the implications of the recent change in the US political landscape, with the GOP now controlling both the White House and Congress. Connell expressed concern about the potential for the GOP to go too far with their policies, leading to a ballooning deficit. Doug noted that the highest percentage of promised legislation ever passed was 8%, and that any significant increase could lead to extreme policies. They concluded by speculating on the potential for extending tax cuts, which Connell believed the GOP would support.
Tax Cuts and Bond Market Impacts

Doug discussed the impact of tax cuts on the middle income spectrum, noting that most people now file with the standard deduction due to the increased standard deduction amount. He also mentioned the potential for economic growth and the need for smaller government to control deficits. Connell then shifted the discussion to the bond market, asking about the implications of Trump's policies on bonds. Doug explained that short-term interest rates may remain higher due to anticipated higher inflation, but could eventually decrease. He suggested that a safer investment strategy in the current market is to stay shorter term on the yield curve.
Tax-Free Bonds and Economic Growth

Connell and Doug discussed the current economic situation and the potential for growth. Doug emphasized the benefits of tax-free bonds for those in higher tax brackets, highlighting their potential for high after-tax effective yields. He also expressed optimism about the economy, noting that the market is anticipating positive changes. Doug agreed to participate in a longer discussion on financial literacy topics in future episodes of their podcast.

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