A new investor playbook for the Trump economy
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios. Photo: Samuel Corum/Politico/Bloomberg via Getty Images
President Trump said Wednesday that he would seek to ban institutional investment in single-family homes, then shortly after said he'd work to ban defense companies from offering dividends or doing buybacks.
- Stocks in both sectors sold off as a result. More on that below.
Why it matters: Such moves from the Trump economic playbook are only going to ramp up as the midterms draw near. Here's how investors can find clarity in the noise.
Driving the news: Trump announced that he is "taking steps to ban large institutional investors from buying more single-family homes," linking the move to housing affordability.
- Two hours later, he posted again, saying big stock buybacks and dividends from defense companies will "no longer be tolerated." He also said defense executives are paid too much and should not earn over $5 million a year.
- This all comes after the president said oil companies were ready to invest billions of dollars into Venezuelan energy infrastructure, which many of those companies have yet to verify themselves.
- A White House spokesperson said the defense policy was not aimed at addressing affordability specifically, though it's certainly a focus of the administration.
What to watch: Brace yourself for more market-moving statements from the White House, market strategists say.
- This White House, says Terry Haines, founder of Pangaea Policy, wants "to make sure that they are showing as many voters as possible that they're doing absolutely as much as possible, on affordability, on defense, on all kinds of things."
- Still, these proposals" might not translate into actual, enforceable policy," Joe Brusuelas, RSM's chief economist, tells Axios.
Between the lines: "It's going to be wild going forward," Haines says.
- Investors can find clarity by monitoring Trump's goals: If he is focused on affordability and national security, more policy to that end is likely.
- The Trump administration also knows that it has the votes, albeit barely, needed in Congress to push policy through at the moment.
Zoom out: The recent announcements could also be a signal to investors about how the administration approaches its goals on interest rates.
- "I think you have to look at this administration. They are telling you they want 3% overnight rates," Peter Tchir, head of macro strategy at Academy Securities, said on a call with reporters. "As we just saw with what they did with (Nicolás) Maduro, I would not think they will stick to traditional methods to accomplish their goals."
- "They want to win the midterm elections," Tchir added. "They know they need a strong economy. They want rates lower. I think we're going to see big shifts in that in the coming months as well."
The bottom line: Investors will need to discern what's real and what's noise to determine which proposals could actually impact their portfolios.
