The masters of the universe are sharpening their pencils to write about Donald Trump. The problem? Many of them aren’t sure what to say.
In commentaries such as quarterly letters to clients, money managers tackling the potential impact of the new president are sometimes bullish -- and almost always hedged. They’re going to do great, they say, but it’ll be a tough time for hedge funds generally.
Here are some excerpts from the commentary we’ve read.
David Einhorn’s Greenlight Capital
The good “We believe that the post-Great Recession easy money policies have been good for Wall Street but bad for Main Street. It’s possible that the [Trump Presidency] reverses these policies...” The bad “Ultimately, wage inflation could become a drag on corporate profitability and higher inflation may force the Fed to raise rates substantially, potentially causing the next recession.” Did you notice? “While it’s hard to know exactly where President-elect Donald Trump stands from day to day, his main economic policy objective appears to be employment.”
Andy Hall’s Astenbeck Capital Management
The good “Things certainly appear to be getting interesting as the Trump administration wastes no time in overturning apple carts...” The bad “The White House has quickly followed through on threats to shake up the old world order. A full-blown trade war with Mexico is now in the offing. The rest of the world has also been put on notice that it should not look forward to business as usual.” Preach! “During the run up to the election it was said Trump opponents took him literally but not seriously while his supporters took him seriously but not literally. As it turns out, his campaign pledges seemingly deserved to be treated both literally and seriously.” But... “Where this will all lead is anybody’s guess.”
Lee Ainslie’s Maverick Capital
The good “Investors have focused on the potential beneficial impacts of lower corporate tax rates, expensing capital investments, repatriation of offshore capital and massive deregulation across many industries. While we are fully attuned to the potential positive impact of such changes...” The bad “...we have also not lost sight of the many challenges of implementing such drastic policy changes that could have enormous ramifications for the receipts of both federal and state governments, corporate investment decisions...” The ugly “And did I mention that the President-elect has a habit of sending random and sometimes bizarre tweets in the early morning hours? Such uncertainty ... will likely breed higher volatility in the equity markets.”
Dan Loeb’s Third Point
The good “In the immediate term, we believe we will see an acceleration of economic growth at home.” The bad “We recognize that trade wars and/or escalating inflation could result in a policy mistake that could then result in a sharp sell‐off.” No duh “Winners and losers will be impacted by policies created by the Trump administration’s actions and the world’s reactions to them.”
John Burbank’s Passport Capital
The good “We are open minded about the direction of equity markets...” The bad “While investors, in the U.S. particularly, have been keen to position in many of the potentially likely beneficiaries of changes in regulation and policy from the new administration, we find many such themes overly reliant upon cohesiveness in Washington...” Huh? “Amidst the high rate of political change globally, corporate change remains a consistent focus of our search for ‘things that have never happened before’...”
Ray Dalio’s Bridgewater
The bad “Global free trade and free exchanges of ideas produce efficiencies, synergies, and competitions that are beneficial to the global wealth pie growing, whereas protectionism has the opposite effect.” The worse “We are increasingly concerned that the detrimental effects of his populist policies could be more powerful than the beneficial effects of his pro-business policies.” History lesson “Donald Trump’s buy American and hire Americans first policy, his recently announced immigration policy, and his protectionist trade policies are similar to those that typified populist governments of the 1930s.”