Trump’s First 100 Days: Should Investors Take Notice?

100 days

U.S. President Donald Trump is close to completing his first 100 days in office, a somewhat arbitrary marker that entered the American lexicon during President Franklin D. Roosevelt’s time.

While many believe a president’s influence and capacity for action may be greatest in this period, there is nothing particularly magical or predictive about the first 100 days in office. For some presidents, a productive first 100 days has translated into a relatively industrious time in office (Ronald Reagan is one example), while others who have struggled in the first 100 days have gone on to achieve key elements of their agendas (e.g., Bill Clinton). Looking at several metrics – legislative achievements, staffing in key areas and executive orders – President Trump’s first-100-day track record has been mixed.

On one hand, Trump has had no major legislative achievements, and his relationship with Congress – a predictor for future legislative success – is not particularly strong (at least as of now). Additionally, vacancies in vital positions remain throughout the executive branch, potentially hindering President Trump’s ability to advance his agenda at the executive level.

On the other hand, the president has been active in terms of issuing executive orders, ranging from financial deregulation, to trade, to the tax code. Of course, executive orders without subsequent congressional action often have limited effectiveness and are frequently more symbolic than substantive. Nonetheless, President Trump, similar to his predecessor, is finding executive orders the most straightforward way to leave his fingerprints on Washington.

While the first 100 days will make headlines, the first year is arguably a more important gauge of success, making the balance of 2017 critical for the Trump administration. This is for the simple reason that as we get closer to the midterm elections in November 2018 – when every House seat and a third of the Senate seats are up for re-election – it becomes increasingly difficult for members to take politically difficult votes. For instance, if we do not see some action on healthcare in the next few months, it’s doubtful Congress would bring it up again in 2018.

The same can be said about tax reform, another potentially politically thorny, not to mention highly complicated, issue. Real tax reform has not been done for 30 years – and even then it took several years to complete – for the very reason that it entails winners and losers. And the unveiling of the president’s tax plan may in some ways complicate tax reform even further, given that it is somewhat different from the House Republicans’ tax plan. It will likely take time to reconcile the different plans to get to one unifying, comprehensive tax bill that both chambers can pass.

We’ve been skeptical that comprehensive tax reform would pass through Congress quickly; our view remains that if we see action on tax reform at all, it won’t be until the end of 2017 or the beginning of 2018, and it will likely be smaller in scale and scope than any of the proposals we have seen to date. And if action on taxes slips beyond that time frame, it would become increasingly likely that we won’t see action until after the midterm elections (if at all), a development that markets would not welcome.

Written by Libby Cantrill is PIMCO’s head of public policy

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