Highlights: 2nd Quarter Produces Portfolio Gains on Broadening Economy

After 8 years of the Obama Administration’s hostility towards the business community, The Trump Administration appears to be creating a different set of economic and political problems for investors. First, the Trump Administration is off to a bad start with our largest trading partners including China, Canada, and Mexico. Already a duty has been added to the cost of Canada lumber adding about $1,600 to the cost of new home. Duties on imported steel are being rumored this week that has brought about negative comments from every notable economist from Dr. Ben Bernanke to Adam Smith. Duties on steel would increase the cost of many products.

Next, the 2018 Federal Budget is being significantly cut across many departments with the EPA being the most significant, but other departments will also be negatively impacted including scientific research, NOAA, the arts, and even 10% to 15% in National Park staffing. While infrastructure spending has been believed to be to stimulate the economic broad-based budget cutbacks in important programs will have the opposite impact in reducing economic activity. Third, the recent announcement of energy independence strategies places emphasis on outdated technologies and misses two important components to the objective including conservation and renewables. There is no better way to reduce the dependency on foreign oil than to consume less. Since oil is primarily a transportation fuel, increased driving efficiency holds the key. On the issue of renewables, the technology gains over the past few years have driven down the cost of installing solar panels. Next Era Energy recently signed a power supply contract at 3 cents per kilowatt hour, the lowest ever. A look at Next Era’s stock gains over the past year suggests renewables are pretty profitable.

Solar also offers a tremendous infrastructure project as the installation process requires human labor that can’t be done in Mexico, China, or somewhere else besides the job site. Summing up the potential negative economic impact of these policies may be about the same positive impact of possible tax cuts and infrastructure spending.

The last political issue that is troubling investors is the growing power of Russia in concert with the unique relationship with the Trump Administration. The largest stock market drops this year have all been precipitated by legal issues of the Trump Administration. While the many legal issues are complicated, the investment ramifications warrant close attention. Russia wants to be the dominant world power and is using its technology and influence to gain their position. The pending divorce of the United Kingdom, influenced by the Syrian refugees, from the European Union has worked to Russian’s advantage.