Riley: Did Stock Market Rally Under Trump Help Rhode Island?
Tuesday, November 29, 2016
No doubt that Seth, convinced of family friend Hillary Clinton's victory, must have been horrified when the markets went “limit down” overnight. By 2:00 a.m. the State had lost all gains in 2016 and was down money once again for the calendar year. Then, inexplicably, the next morning the market rallied in dramatic fashion continuing for weeks into month end. A bullish pro-growth message, with inflationary fiscal policies, was perceived as far better than continuing President Obama’s “boot on the throat” business policies. It turns out that Mr. Trump did “build that” and to the benefit of Mr. Magaziner who may, for the first time in his professional life, have a gain this year end 2016. Mr. Magaziner has never had a positive Calendar year or Fiscal year gain managing money.
Rhode Island (among the worst ten pension funded states) is certainly not out of the woods but there is no doubt that the Trump election helped the State’s pension fund. Thus, it was disturbing to see and hear city and state leaders alike so remorseful and defiant. Whether it was hugging $200,000 staffers or declaring a defiance of federal law, they each displayed a complete disconnect from Rhode Island taxpayers and pension beneficiaries who benefited from a roughly $600 million gain. Had Hillary won and the market was down 5-10 % over the ensuing weeks they likely would have been overjoyed, because this administration is about advancing political careers, both their own and their staffers.
Hey Governor what about Providence?
Providence 2017 is now less financially capable of survival five years after Taveras' ballyhooed pension reform that was filled with lies and miscalculations - so disturbingly, the facts are clear. After four years of Ms. Raimondo's Municipal Pension Crisis Commission and Taveras' reforms, Providence's funding ratio is officially 26.9% down from 34% and more realistically below 20%. That’s called failure.
Yet Mr. Elorza is totally distracted and has made no progress toward solving the pension issues his two paid-for plans cited as key to the survival of Providence. These plans are now approaching one year old and as far as I know there are virtually no discussions with unions, much less a grand bargain. Mr. Elorza has loudly declared who he cares about, but what about our Governor? In a spectacular display of timid leadership, she has done nothing to address the Providence pension crisis even though she declared the problem 6 years ago, to be the reason she ran for Treasurer. Can future voters expect her to always lack toughness and decisiveness?
Based on current City financials and current law, State taxpayers will soon be bailing out Providence and supporting the retirements of thousands of Providence city employees in addition to supporting their own communities pension and health care costs. You have been warned.
Related Slideshow: Trump’s Win - What Does it Mean for Rhode Island?
"We don't really know what a Trump presidency means for the nation, never mind the smallest state. One of the unintended consequences of last night's results is that Sen. Jack Reed won't be chairman of the Senate Armed Services Committee. Chalk that up as a loss for RI."
Head of Ocean State Taxpayers' Association
"Trump’s win means that his signature issue, illegal immigration, could have a big impact on RI, hopefully reversing our course as a sanctuary state and saving the state taxpayer millions of dollars. While we agree with his 'repeal and replace' Obamacare stance, we have no idea what that means to the RI debacle known as UHIP. It is not a stretch to believe that federal funding for this kind of system will be off the table so, will RI be stuck with this massively expensive system that still doesn’t work and that is expected to cost another $124 million to fix?
Trump's belief that there is significant fraud in the Food Stamp program and the policies that may come from that belief could have a negative impact on RI's local economy since there are businesses in certain cities that rely heavily on this program, fraud and all. On the upside, we may be able to ditch the UHIP program if there is significantly less need for processing welfare program requests (ie. Medicaid and food stamps) resulting from fewer illegal immigrants and less fraud. While we are ambivalent about his touted child care policies, if enacted, it may force our legislators to revisit the ever growing state cost of subsidies in this area and possibly reduce the fraud and abuse in this system."
Professor at Rhode Island College
"With a Republican President and Congress, Rhode Island will probably be excluded from the 'fruits of victory."
The congressional delegation will be able to vocally make their presence felt, but in the long term it's more symbolic than substantive.
For Rhode Island it's a matter of holding on and waiting until '18 or '20 and a surge in Democratic influence."
Professor at American University
"The RI congressional delegation just became even less powerful than it was. With unified government, Trump doesn’t need to quell Democrats’ concerns or acquiesce because he’s worried about a Democratically-controlled Senate.
His appointments will reflect that. His executive orders will affect that. And the conservative policy agenda he puts forward will affect that."
Professor at University of Rhode Island
"Well there's a few things -- because there's not going to be gridlock, that's a big difference if it had been Hillary and a GOP Congress, in which nothing would got done. We'll at least get a half a billion in infrastructure that's going to pass which will have an impact.
I think you'll see there will be reduced reliance on government nationally -- and that's where we'll stick out like sore thumb. We've relied way too much on government -- and our government is highly inefficient and ineffective. Maybe, just maybe, in this who cycle of things we might be forced to be small and more efficient for once.
A couple of other things -- interest rates jumped. The one to follow is the ten year government bond rate -- which is tied to mortgages. It went from 1.7% to 2.05% in one day. The point is -- if the ten year stays high, mortgage rates will start going higher -- and in the short time people will run to re-finance.
That's the short term impact -- but then if rates stay hight, that will make mortgages more out of reach. And we just passed a bond issue to limit open space -- housing has limited upside here.
The next thing -- the Fed Reserve will go ahead with tightening next month. A strong dollar will hurt manufacturing. When the dollar is strong our exports become more expensive overseas.
Our goods production sector -- manufacturing and construction -- in the near term will do a little better, but as time goes on will be more limited. But something you won't hear, is there are lags in fiscal policy, of six months to year. So we won't really see the effects until the third our fourth quarter of 2017, going into 2018."
RI Center for Freedon and Prosperity
"As the unbelievable turned into reality this morning, it struck me that the presidential election was not really all about Donald Trump and Hillary Clinton. It was about a fed-up people, revolting against a corrupt system - the "beast" - that relentlessly favors insiders. Hillary personified the beast, while Donald personified the slayer.
Sadly, based on election results in our state, Rhode Island's version of the beast lives on. I fear our political class has not learned the lessons from the Bernie Sanders and Donald Trump movements - and will continue with their government-centric, anti-family, anti-business status quo."
Kristina Contreras Fox
VP of Young Democrats of America
"A Trump Presidency means the validation of the ugliest part of America. In RI, as with the rest of the country, the hammer of his hatred will fall hardest on minority communities. Being a blue state doesn't make us immune from this danger.
Trump won over 35% (39.5) of the vote here! We need to look in the mirror, and not lie about what the reflection shows us. No more hiding underneath a blue blanket. I expect those who claim Democratic values to be true to those values. The gulf between words and actions have turned into fertile ground for Trump's message to grow here in RI. If you call yourself a Democrat, if you claim to stand in opposition to Trump, now is the time to prove it. Show up and fight back."
- Riley: Magaziner & Elorza Pension Assumptions Ridiculed by Special Master Feinberg
- Riley: Magaziner Throws Raimondo Under the Bus
- Riley: Elorza - Providence Has Plan to Make Pension Payment on Time
- Riley: RI Pension Shortfall Far Outweighs Budget Surplus
- Riley: Magaziner Drowning in Raimondo’s Hedge Funds Gone Wild
- Riley: Puerto Rico and Providence on My Mind
- Riley: Default, Theft, and Renewed Call for SEC Providence Pension Investigation
- Riley: A Lively Thought Experiment
- Riley: Mr. Achorn Do You Still Want Door Number 1?
- Riley: Dear SEC, Say Hello to Mayor Elorza & Governor Raimondo
- Riley: Wainwright Issues Cash Flow Report That Points to Providence Asset Fraud
- Riley: Pension Assets Valuation Scam, Elorza Style
- Riley: No Need for Commission
- Riley: More Providence Pension Abuse of Public Employees
- Riley: Close, But No Cigar for Providence
- Riley: Time to End Politics in the Rhode Island Treasury
- Riley: Outside Forensic Audit Will Show Providence Financial Lies
- Riley: Will Trump’s SEC Chair Go After Misleading Mayors?
- Riley: Lousy Pension Returns Put One More Nail in Providence Coffin
- Riley: Did Smiley Use Bankruptcy Threat to Get Grant, Proving Prov is Lying?
- Riley: Time to Ditch Hedge Fund Strategy
- Riley: Brexit Slams RI Pension Funds
- Riley: A New Low Cost Strategy for Treasurer Magaziner
- Riley: Providence in Big Trouble - Pension Plan Assets Lowest Since 2007
- Riley: Raimondo’s Biggest Problem is Providence