12 December 2019
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They could take the steam out of our market too.

Trump and the Republicans - dumb and even dumber!

Peter Switzer
10 November 2017

By Peter Switzer

This was a thought I never wanted to contemplate but it’s now locked in the old head and it is, could the US Republicans, as a group, be dumber than Donald Trump?

Don’t get me wrong, I don’t think the 45th US President is dumb as a person or as an entrepreneur but as a president he’s no Teddy Roosevelt, Franklin D. Roosevelt or Abraham Lincoln.

His ability to build his brand and his intelligent sales process to become President shows how smart he is, but being the leader of the free world, as well as leader of a nation, is a task that finds out lots of high achievers.

Want proof? Just look at Kevin Rudd, Julia Gillard, Tony Abbott and, of course, our current day struggler Malcolm Turnbull.

Malcolm, along with Edward de Bono, are two guys I’d hate to publicly debate  — they’re really smart and have great, fast-thinking brains — but politics is a very different beast from debating and business.

So why this insulting slagging of Donald and his Republican buddies as real life versions of the dopes who starred in the film Dumb and Dumber?

Well, in their wisdom, the Senate Republicans, according to a Washington Post report, are considering a plan that would delay the President’s tax cuts until next year.

This contrasts with the House Republicans’ bill going through the House, which some say might get passed before Thanksgiving, which is November 30.

So how has Wall Street reacted to the news? Not well, with the Dow slumping over 160 points when the report was made public.

Some experts have tried to argue that the tax cuts weren’t all that important but I’ve always argued that it built in positivity about future profits for US companies and it has to have material value.

Well it does and it showed up most with tech stocks, which were down 0.9% compared to the Dow, which was off 0.6% before the close of trade.

But this isn’t just a company bottom line problem and therefore a stock price problem. It’s also a political problem.

You see, if President Trump doesn’t get some big wins sooner rather than later then the Republicans could be killed in the mid-term elections in October next year. This shooting would wing Donald, leaving him as a lame duck President.

Is this possible? Well, remember he has been rated as the world’s worst President ever on opinion polls but I guess, as he would say, it’s fake news!

I do believe Trump plays to his audience very cleverly but delaying tax cuts will hurt his credibility and influence over his own party.

So, why am I so nasty on all of this? It’s simple. Our stock market has beaten the 6000 level on the S&P/ASX 200 Index this week for the first time since February 2008 and this news could take away the positive momentum our market has picked up this week.

There’s also a bit of self-interest here, as the Switzer Dividend Growth Fund has gone from $2.46 some weeks ago to $2.60 at the close yesterday, which is a nice 5.6% gain. We listed at $2.50 nearly 10 months ago and that’s a 4% gain. And given my fund manager thinks we’re on track for about a 6% plus dividend with franking, then by February, which would be a year of trading, we could deliver a 10% plus gain for unit-holders.

I was sweating on US tax cuts being passed before December, which would give us a very merry Santa Claus rally on the stock market and that could even give us a greater return for SWTZ.

I just hope my positive expectations for our stock market, our super funds and my SWTZ aren’t spoiled by dumb and even dumber Republicans in the USA.

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