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VOL. 131 | NO. 225 | Thursday, November 10, 2016

Financial Pros Digest, Analyze Impact of Trump Win

By Andy Meek

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Money managers in Memphis were up late Tuesday night, digesting the impact of Donald Trump’s surprise election win like everybody else, and are still sorting through the impact on markets and stock sectors.

The surprising presidential win of Donald Trump sparked a bit of initial uncertainty in markets, though money managers and investment professionals in Memphis suggested it was likely to be short-lived.

(Daily News File/Andrew J. Breig)

With stock prices at Memphis-based public companies and others going into broad decline late Tuesday into Wednesday morning before returning to positive territory, the team at Memphis investment firm Red Door Wealth Management sent an email meant to calm nerves a bit.

The firm’s chief investment officer John Phillips – along with another adviser, Daniel Allen – stressed to clients the kind of reassurance that’s typical at moments like these: Don’t focus on the market fluctuations of the moment. Stay long term-focused.

“Hopefully you didn’t watch the stock market futures last night (as we did), but as the votes were coming in, the Dow lurched from flat to down roughly -800 and then rallied back to a current -325 (at the time of this writing at 4 a.m.),” they wrote. “While this confirms the expected short-term volatility ahead, we want to reiterate that this re-pricing is not due to the state of our economy, our current employment (which is robust), or our growth prospects – as Trump’s policies will offer varying opportunities as well.

“As the days unfold, we will continue to play defense where needed and look for longer-term buying opportunities. If we feel changes are necessary we will be ready to make them; however, as long-term investors and with an eye to the future, we feel well-prepared to handle this current noisy environment and help you navigate for the longer term.”

Sectors they will be watching closely in the near term include health care. Trump repeatedly stressed during the campaign his preference for a repeal – or at a minimum, wholesale changes to – the Affordable Care Act. As a result, according to Red Door, biotech and other drug stocks could see a “relief rally.” At the same time, hospitals and managed-care facilities confront more uncertainty as the rules of the road are likely to change possibly in a big way for them once again.

By mid-morning the day after Trump’s win, meanwhile, shares of First Tennessee Bank’s parent company First Horizon National Corp. (NYSE: FHN) had swung back into positive territory. That’s likely due to the tailwind for large banks and brokerage houses that Red Door sees as a result of Trump’s stated desire to eliminate and/or rollback the Dodd-Frank financial industry regulation.

“Financial markets always react to events of uncertainty,” said Marty Kelman, a principal at Memphis-based wealth management and financial planning firm Kelman-Lazarov Inc. “Since most every poll predicted Clinton winning, Trump’s victory, along with the added uncertainty of how he will lead our country, caused the initial downward reaction action. How Trump handles the many issues and many other external factors will ultimately determine whether market volatility continues on the downward path.”

Other industry professionals, meanwhile, raced to put out statements and analysis that attempted to make sense of what just happened. Chris Low, chief economist at FTN Financial, a division of First Tennessee Bank, said markets are already beginning to recover because of “checks and balances” that will prevent Trump’s more ambitious policies – things like the imposition of tariffs and the building of a Mexican border wall – from taking place.

David Waddell, CEO and chief investment strategist at Waddell & Associates, said the initial market reaction doesn’t take into account things like the possibilities of lower taxes and a more regulation-averse federal government.

“Intermediate term,” Waddell said, “I think it’s probably good for corporations and earnings.”

PROPERTY SALES 89 339 12,708
MORTGAGES 42 227 7,982
BUILDING PERMITS 171 518 29,639
BANKRUPTCIES 32 129 6,029