Here in the Daily offices, we keep a report card for President Trump.
During the presidential campaign, Trump made bold promises. He vowed to drain the swamp… push GDP above 4%… and reform taxes (among other things).
We graded him based on whether he’s accomplished what he said he would do… not on whether we thought his policies are good or bad.
Here’s a picture of the current report card:
As you can see, the president’s grades range from A to F.
For example, he’s close to delivering on his promise to increase GDP by over 4%… But he hasn’t followed through on his pledge to quit the NATO alliance.
Now, there’s still time for President Trump to deliver on his campaign promises.
But there’s one promise he’s already successfully accomplished (the only “A” on his scorecard): protectionism and tariffs.
President Trump is ramping up the “trade war” on rivals and allies alike. And as we’ve pointed out before, it’s giving us opportunities to make money.
New Fronts in the Trade War
Last week, the Trump administration announced it would impose tariffs on steel and aluminum imports from these U.S. allies: Canada, Mexico, and the European Union.
Those countries threatened to retaliate with their own tariffs on U.S. exports.
For example, Canada said it would impose tariffs on U.S. steel and aluminum… Mexico on berries and pork chops… and the EU on Harley-Davidsons and blue jeans.
Trump hit back again, this time threatening to impose tariffs on German luxury cars like Mercedes and BMW… That’s how trade wars escalate.
Those tariffs are on top of separate tariffs that the Trump administration imposed on Chinese goods.
Trump is now fighting a trade war on multiple fronts.
Here at the Daily, we’ve been following Trump’s trade wars very closely since he took office. It’s not because we like to get into politics… but because we like to make money.
In fact, last month, we showed you how every major turning point in the market this year corresponded with President Trump’s changing position on trade.
I predicted the market would turn down again if he ratcheted up his trade-war rhetoric. And as expected, the market pulled back…
It was a sharp, two-day, 2% drop. Traders had to act quickly because the market rallied Friday following the release of a strong jobs report (more on that tomorrow).
How to Navigate the Trade War
It isn’t easy for investors to navigate the president’s unpredictable trade policies. But short-term traders can take advantage.
When the president’s rhetoric cools off, the market rallies. When his rhetoric heats up, the market falls.
If you’re not interested in trading around the president’s trade talk, there’s another way to play this trend.
You could consider buying the iShares Russell 2000 ETF (IWM). IWM holds smaller companies that get 78% of their revenue from within the U.S.
Companies in the large-cap S&P 500 index generate only 52% of their revenue from within our borders.
That’s why the S&P 500 index is 5% off its high, while the Russell 2000 is making new all-time highs.
As the trade war ebbs and flows, it will be difficult for international companies to plan their operations. But for companies that generate most of their sales in America, it will be business as usual.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
P.S. As I said above, we based President Trump’s report card on how well he’s kept his campaign promises. What grades would you give the president? Let us know right here…
Each month, we update our Elite 25 portfolio. We remove stocks that are too expensive and replace them with stocks that meet our three criteria for elite status.
In May, the Elite 25 took a little breather. After beating the benchmark S&P 500 the past two months, the Elite 25 returned 1.8% in May, compared to the 2.4% from the S&P.
The two biggest winners in May were health-related stocks: Natural Health Trends (NHTC) and Nutrisystem (NTRI). Both gained 30%.
Skyworks (SWKS), last month’s biggest loser, had a great May. It rose 14% last month.
On the downside, Spark Energy (SPKE) was our biggest loser, falling 18%. Investors didn’t like the first-quarter results.
Denny’s Corp (DENN)
F5 Networks (FFIV)
Ituran Location (ITRN)
O’Reilly Automotive (ORLY)
Tractor Supply Company (TSCO)
Delphi Technology (DLPH)
Hilton Grand Vacations (HGV)
MCBC Holdings (MCFT)
Shell Midstream (SHLX)
(Note: The Elite 25 system sometimes removes and adds the same companies more than once. When companies become too expensive, they’re sold. If they become cheap again, the system automatically reacquires them.)
This company is tackling one of the biggest problems our country has ever faced. It’s so big that President Trump declared it a national emergency under federal law… and Congress just approved $6 billion to fight it.
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A former corporate banking insider believes he’s found the next one to ride this unique wave. Get all the details here before it’s too late.