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President Trump’s First 100 Days

Wells Fargo Investment Institute - April 2017

Head Global Market Strategist Paul Christopher discusses how the legislative failure of a health care reform bill and low presidential approval ratings could delay and dilute the president’s policy initiatives.

Transcript: wfii-monthly-investment-outlook-apr-2017.mp4

New presidents have been graded on their first 100 days ever since Franklin Roosevelt began revolutionizing the government's role in the U.S. economy from his first day in office. 

President Trump's first 100 days showed the challenge of enacting signature legislation, as congressional leaders failed on their first attempt at health care reform. Presidents Obama and Bush also proposed major legislation that took much longer than the first 100 days to pass. President Trump has also followed earlier presidents with frequent executive orders, particularly to revoke those of his predecessor. 

An important difference with other recent presidents is President Trump's low approval rating early on could become a problem. After 72 days, the president's approval rating was lower than those for other presidents after about three months[WT1]. Of course, presidential approval ratings can swing higher and lower. But if President Trump's approval rating stays low, he may find it more difficult to influence Congress and to promote his agenda with the public. 

These comparisons leave four implications: 

First, presidents often find that executive orders are straightforward ways to make policy, but orders may have only limited scope to advance the president's deregulation plans. After all, executive orders frequently trigger court challenges that delay implementation. And some of the most important deregulation cannot be accomplished until Congress changes the law. 

Second, the president's current low approval rating may encourage him to combine popular and unpopular ideas, to encourage legislative compromises. For example, Democrats may accept tax cuts more readily if the president includes infrastructure spending. 

What's more, the divisions in Congress-even between Republicans-probably mean that tax reform will be watered down, and that corporate and individual reform bills may be worked out separately, and with long debate. We expect corporate tax reform will arrive in 2018 and benefit small companies relatively more than large companies. 

Finally, the White House seems ready to compromise on new trade tariffs applied to other countries. We believe that investors will welcome measures that prefer better enforcement of existing trade deals, instead of tariffs. 

On balance, we still expect tax reform and deregulation legislation in the coming year, but divisions in Congress and low presidential approval may postpone and thin down the economic benefits. Fortunately, the economy appears solid enough on its own to continue growing even with low inflation. That combination should support financial markets in the coming year or two, and we recommend keeping a fully invested and diversified portfolio.