Trump Speech Gives Investors a Campaign Peek But Few Trade Ideas

(Bloomberg) -- Some Wall Street analysts see Tuesday’s State of the Union address as more of a 2020 election campaign launch than a policy blueprint, offering investors little to trade on.

“Trump’s re-election campaign began last night with mission accomplished: no real damage and a little uptick in the polls,” Horizon Investment’s Greg Valliere wrote in a note. “There were no real surprises for investors, who have to expect headline risk for drug companies and tough talk on trade.”

Valliere also gave out a “chutzpah award” for Trump’s “plea for civility and bipartisanship.” He added that Trump’s remarks won’t alter the outlook for legislation, as “everyone agrees on the need to improve the country’s infrastructure and control drug prices, but there’s no agreement on the details.”

Read more: Trump’s Drug Pricing Vow Weighs on European Health Care Stocks

The address “could easily be seen as more of a start to the re-election campaign of President Trump than a speech that will produce much in the way of legislative accomplishments,” Raymond James analyst Ed Mills wrote in a separate note.

Mills flagged a few policy highlights, including “a hard line on wall funding, generally positive statements on the China trade negotiations, a call to lower prescription drug pricing, a hawkish tone on defense spending, and call to resist Congressional investigations.” Trump’s wall stance raises the risk of another shutdown, Mills said, though the announced deployment of an additional 3,750 troops to the border may offer “political cover.”

Regarding trade, Trump positioned negotiations and protecting U.S. intellectual property “as two separate issues,” which shows that some trade-related actions, particularly regarding technology, may “outlast the current trade dispute.” Mills expects a face-to-face meeting with China’s President Xi ahead of North Korea summit, which Trump said will take place in Vietnam Feb. 27-28.

U.S. futures were mixed early Wednesday morning.

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Courtney Dentch

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