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The ‘Trump effect’ on stock market, mortgage rates and you

We know this much about President-elect Donald Trump: He’s been good for the stock market, not so good for the bond market.

Since the Nov. 8 election, equity indices have busted records, lifting 401ks. But demand for bonds has dropped, jolting borrowing costs.

If rising mortgage rates are cramping your house hunting, don’t blame the Federal Reserve and Wednesday’s quarter-point rate hike.

“The Fed rate hike was already built in before the election,” said Greg McBride of Bankrate.com. “This is entirely the Trump effect.”

More specifically, speculation that Trump will jack up military and infrastructure spending has boosted defense, construction and materials industry shares on the stock markets.

Sounds to me like a safe bet.

Then again, Trump has taken shots at Lockheed Martin Corp. — saying the F-35’s cost is “out of control” — at Boeing Co. — with a “cancel the order!” tweet on Air Force Ones. Those missives may have given you heartburn if you’ve stocked up on BA and LMT in the bull run.

Meanwhile, fear that Trump’s spending plans plus a growing economy will boost inflation is proving toxic to bond markets. So borrowing costs are rising to lure investors with better returns.

Add pricier loans to the housing affordability crisis in some places and the barrier to home buying and selling gets taller. Rising mortgage rates — above 4 percent now — may be making your Realtor neighbor uneasy.

Having said this, let me point out others are more bullish.

“If more infrastructure is built, that means more jobs and that’s good,” said Fabiola Brumley, Bank of America’s market president for Palm Beach County. “And if they should go in the direction of tax reform and health care reform, as they’ve said, then we can be optimistic about more jobs, more expansion.”

Truth be told, I’m not one to take the president-elect’s tweets too seriously. When it comes to Trump, what is said one day may be contradicted, walked back or outright denied the next – and the “Make America Great Again” crowd never seems to mind.

So I’m not sitting at the Twitter desk 24/7, like cartoonist Berkeley Breathed’s Opus, hyperventilating over every ping from the “Big Orange.”

Not to mention that Candidate Trump was all over the ideological map pre-Nov. 8 in mixing textbook free marketeering with Protectionism 101.

For every capitalist cheering calls for corporate tax rates reductions, there’s another laissez-faireist cringing at threats to punish job outsourcing with steep tariffs that could jack up inflation, incur stagflation and … well, why get ahead of ourselves.

So, what do we conclude?

Like President Barack Obama once famously, and infamously, said, “Elections have consequences.” The result of the 2016 vote won’t be any different. We just don’t know whose boat will be lifted, or sunk, by the Trumpian king tide.

Which leads us to this sage advice in mulling end-of-year investment decisions.

“There’s no need to deviate from your longer term strategy given all the uncertainty,” McBride said. “You can’t overhaul your portfolio just because of an election. Otherwise you just spin your wheels.”

Antonio Fins writes for The Palm Beach Post.