It’s fair to say that there’s a great deal of uncertainty around what his economic policies actually will be. I don’t think he thought he’d be president, so he didn’t have much of a transition process in place – he had very few people in place to make policy, and get the administration going.
So we’re going to have a period of uncertainty. He does have a deadline. Congress is going to pass a budget from the government through next March, then there’ll have to be another piece of legislation to keep the government going. So at that point I think we’ll get some additional clarity around his policies. Between now and then, it’s going to be hard to know which way his policies are going to go.
"I don’t think he thought he’d be president, so he didn’t have much of a transition process in place – he had very few people in place to make policy, and get the administration going."
I think running a company helps you understand how to run a big bureaucracy. But there’s a lot more to running a government – and that learning curve is going to be another reason why it’s going to take a good while before we’ve got a real sense of what his policies are going to be. I think he’s under the impression that becoming president is almost like becoming the CEO of a company – that all the people are in place, and it’s just a matter of ensuring that it’s all moving in the right direction. I don’t think he completely understood that this is a big changeover, that he has to fill 4,000 positions – that it’s more like building a new company from scratch. I’m not sure he realised what he was getting into. Though I’m sure he does now.
He’s pro-business, that’s for sure. So there’s a good chance we get corporate tax reform, which will mean lower marginal rates for businesses, a more territorial taxation system away from the current worldwide system, a holiday for repatriation of cash that corporations have sitting overseas – and there’s some talk of broader, deeper reform, which I guess is possible. Another aspect of his presidency will be deregulation. Maybe not to the degree that he seems to be articulating. He says he’s going to kill Obamacare, he’s going to kill Dodd-Frank. Well, that’s not going to happen – those are so ingrained in the system now that there’s no going back, though there are tweaks and changes he can make. But there will be deregulation of energy-related activities, for example – and he can do a lot of that through executive order.
"He says he’s going to kill Obamacare, he’s going to kill Dodd-Frank. Well, that’s not going to happen – those are so ingrained in the system now that there’s no going back."
Deregulation isn’t necessarily bad. I’m a strong proponent of Dodd-Frank, but even a strong proponent of something can think it can be improved. For example, rolling back or scaling back the Volcker Rule, which requires big institutions to hive off their proprietary trading – I don’t think that was a useful idea. Even some changes to stress-testing – I think stress-testing is a great idea, it’s very useful and I don’t think we should go back on it, but some aspects are onerous and counter-productive. But if he eased the liquidity requirements that banks now have to satisfy, that would probably be a bad idea.
The markets are generally willing to give him a chance. They like corporate tax reform, they like deregulation – you can see that in the big increases in the stocks of financial companies, energy companies and healthcare companies. They like the idea of additional infrastructure spending. I think the what worries business most is his policy around globalisation – trade, immigration, outsourcing. Right now, they’re willing to give him the benefit of the doubt, but that’s key – whether he’s pro-globalisation or anti. Most businesses are pro.