Presidents' Day— an occasion to honor the incumbent president and all those who have served as president before — falls on the third Monday of February. This is also celebrated as Washington day in memory of the birthday of the first president of the United States, who was born on February 22, 1732.
We have taken this opportune moment this year to honor our incumbent president Donald Trump and the ETF securities that have benefitted or should benefit ahead greatly in his presidency. Below we highlighted those.
Dow Jones – SPDR Dow Jones Industrial Average ETF (DIA - Free Report)
While the overall broader market went into a rallying mode, the 30-stock blue-chip index jumped more than 31% since Trump's inauguration. This represents the index's best performance during the first year of a president since Franklin Roosevelt, when Dow Jones skyrocketed 96.5%.
The passing of lower tax, hopes of deregulation, economic buoyancy, earnings recovery and subtle recovery in the oil patch — all contributed to the Dow rally. Investors should note that against Dow’s 30-plus percentage returns, the S&P 500 has managed to tack on 23% gains during Trump's first year in office. Shares of Boeing (BA - Free Report) and Caterpillar (CAT - Free Report) have been one of the best-performing Dow stocks in Trump presidency.
Defense – SPDR S&P Aerospace & Defense ETF (XAR - Free Report)
Trump is a staunch proponent of higher defense budget. His recently rolled-out 2019 budget proposal raises military expenditure by $195 billion over the next two years and non-defense spending by $131 billion. The White House is offering $540 billion in nondefense spending for 2019.
The administration's national security budget of $716 billion in fiscal 2019 “would add more troops, combat aircraft and start rebuilding the Navy fleet while also supporting modernization of the nuclear triad and boosting research spending for cyber, electronic warfare, artificial intelligence and space.” A 14% increase in proposed funding should help defense ETFs like XAR (read: Trump's 2019 Budget Blueprint: ETF Winners & Losers).
Industrials – Industrial Select Sector SPDR ETF (XLI - Free Report)
Trump is a believer of the "Buy American and Hire American" theory. With Trump highly expected to bring U.S. manufacturing jobs back to the country and strictly oppose outsourcing, manufacturing or industrial ETFs should get a boost.
There was a promise of a $1-trillion infrastructure overhaul made during Trump’s campaign. Though the actual plan launched lately is a $200-billion federal infrastructure plan — way short of market watchers’ expectations — infrastructure and industrial ETFs should do good in the Trump administration (read: Will Infrastructure ETFs Get a Boost from Trump's Plan?).
Financials – SPDR S&P Regional Banking ETF (KRE - Free Report)
Hopes of easing relations, increased inflationary expectations and the Fed’s policy tightening, which translated into higher treasury yields, should benefit the sector in the coming days. The President’s promise of repealing the 2010 Dodd-Frank financial law, one of the regulations undertaken in the height of the 2008 financial crisis, is an encouragement for financial companies (read: 4 Leveraged Financial ETFs to Buy on Fed and Trump).
Coal – VanEck Vectors Coal ETF (KOL - Free Report)
This was once a struggling area but surged 169.7% in the last two years (as of Feb 13, 2018). President Trump promised to revive the stressed American coal industry. And keeping his campaign promise, the American President has pulled the country out of the landmark Paris climate change agreement, which was expected to bring an end to the fossil fuel era.
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