The next 4 years, politics and investing

I was recently quoted in Forbes.com.  Below is my full review and you can click on the link to read my excerpt.

Click here to read full article in Forbes.com

I’ve been predicting politics for many years and I’ve been quite accurate. Back in December 2015 I had predicted that we would have Hillary Clinton and Donald Trump in the general election.  It has been evident for some time that anyone trying to overcome the electoral college “blue wall” has a real challenge. In July, I predicted the Democrats will control the Executive office by a score of 312 votes to 226 votes for the Republicans – I see no change. The Democrats also have a very strong opportunity to control the Senate in the Legislative branch. The House will stay in firm Republican control so no real spending bills will pass in this environment. The Democrats will have a path to forward their agenda in the Judiciary branch as judges are only confirmed in the Senate.

What is an investor to do?

Vanguard REIT ETF (VNQ): Since the Department of the Treasury is an office of the Executive branch, I see existing monetary policy not changing.  Fiscal spending policy will stall as getting legislation passed will be impossible.  I would prepare for the continued low rate environment with slow growth. This should be a net positive for the REIT space in the long run. In addition, the Global Industry Classification Standard (GICS) recently added the REIT headline sector and may push up valuations over time. Low rates will help in making REIT dividends more attractive than yields on other money market and fixed income accounts.

iShares U.S. Aerospace & Defense ETF (ITA) is well positioned to benefit from this political environment. The one area the House can reach agreement with the Senate and the Executive office is on defense spending. A Clinton administration could raise Pentagon spending. On the Clinton website it states, “Invest in innovation and capabilities that will allow us to prepare for and fight 21st-century threats. That includes leveraging our information advantage through what’s called “net-centric warfare” capabilities and preparing for asymmetric threats.” Defense contractors - particularly those focused on technology - should see this benefit. In 2018 the Republicans are well positioned to retake the Senate so look for most of this spending to happen early in the administration.

Thomas Marino, Financial Advisor

Atrium Financial LLC

[email protected]

www.atriumfinancialLLC.com

Securities offered through Questar Capital Corporation (QCC), Member FINRA/SIPC. Advisory Services offered through Questar Asset Management (QAM), a registered Investment Advisor. Atrium Financial Associates, LLC is independent of QCC and QAM. Internal Doc Number: 4559-2016