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The Trump Effect: Why It’s An Essential Catalyst To Watch

|About: AK Steel Holding Corporation (AKS), BA, CENX, GD, JEC, NOC, NUE, RTN, STLD, USCR, VMC, X

Apparently, Donald Trump has the Midas touch when it comes to the stock market.

Infrastructure, cyber security and even defense stocks have benefitted from bills he has signed, or even potential bills he is promoting.

For example, in mid-2017, nearly all defense stocks rallied after the President inked a weapons deal with the Saudis worth nearly $350 billion over the next decade.

  • Raytheon (RTN) ran from $156 to $209
  • Boeing (BA) ran from $175 to $347
  • General Dynamics (GD) ran from $191 to $227
  • Northrop Grumman (NOC) ran from $243 to nearly $340

Days later, Trump asked for approval on a $668 billion defense budget for 2018 that would boost military spending. It would increase the Defense Department’s budget to $574.6 billion, buy six ships, new fighter jets, 15 new KC-46 air tankers, which are used for aerial refueling and help grow the U.S. military by another 56,000 new service members.

That news sent related defense stocks even higher.

This month, the White House released a $1.5 trillion infrastructure plan to help rebuild the nation’s roads, bridges and airports. In response:

  • U.S. Steel (X) ran from a November 2017 low of $25 to $36
  • U.S. Concrete (USCR) jumped from $71 to $84
  • Vulcan Materials (VMC) shot up from $120 to $140
  • Jacobs Engineering (JEC) soared from $58 to $72.

Then, just last week, the Trump Administration recommended steep tariffs on foreign steel and aluminum. In fact, Commerce Secretary, Wilbur Ross, is recommending three options to the President, including imposing across-the-board tariffs on steel and aluminum, targeting select countries with even higher tariffs, and/or limiting the total amounts of steel and aluminum currently flowing into the United States.

Of course, the steel and aluminum industries cheered the news.

  • Small cap stock AK Steel (AKS) shot from $5 to $6.14
  • U.S. Steel Corporation (X) ran from $39 to $45
  • Century Aluminum (CENX) jumped from $21.82 to nearly $25
  • Steel Dynamics (STLD) increased from $46.50 to nearly $50
  • Nucor Corporation (NUE) jumped from $65 to $69.50

It just goes to prove that it’s a good idea to watch what President Trump has planned. Otherwise you may miss some great opportunities.

Stay tuned to the next issue of The Cheap Investor for more.