January 18, 2017 / 4:58 PM / in 9 months

A Trump FAQ for American business leaders in Davos

DAVOS, Switzerland (Reuters Breakingviews) - What does President Donald Trump mean for the world? That’s the first question out of the mouths of the 3,000-plus earnest globalists gathered in Davos, Switzerland for the annual World Economic Forum. Unfortunately for them, the principal actors in the impending regime change in Washington aren’t around to answer in person. That leaves the few hundred American business leaders in attendance to field their international counterparts’ queries. Herewith, Breakingviews offers a handy cheat sheet for some of the most frequently asked questions.

Swiss special police officer observes the area from atop the roof of a building during the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 17, 2017. REUTERS/Ruben Sprich

WHY ARE YOU AMERICANS SO OPTIMISTIC?

The Standard & Poor’s 500 Index has risen 6.4 percent since the election, so my stock options are worth more and many of my employees are also feeling a bit richer. Also, the dollar is up since the election, so the Davos fondue didn’t cost me an arm and a leg this year. Hey, I like your sweater – did you buy that on the Promenade? (Optional extra for financial services executives: The yield curve is steepening so I can finally make some net interest income from the assets on my balance sheet).

WHAT ARE YOUR INVESTORS SO GIDDY ABOUT?

First, lower corporate tax rates will plump up our companies’ bottom lines. Second, the $2 trillion or more we collectively have stashed away will come home, and we can probably spend half of it on dividends and stock buybacks. Third, though regulators aren’t going away they will probably stop hassling us so much. Fourth, there’s a good chance Trump will persuade the Congress to spend a lot of money building things like better airports and roads. Fifth, all of this will bump up GDP growth a bit, and that will create positive operative leverage for our earnings.

BUT WHAT ABOUT THE BAD PROMISES, LIKE IMPOSING TARIFFS AND RIPPING UP TRADE AGREEMENTS? AREN‘T YOU WORRIED ABOUT A NEW SMOOT-HAWLEY ACT?

Yeah, that’s sort of a drag. But remember, that law - which raised import duties on 890 products in 1930, helping to precipitate the Great Depression - was put forward by Congressman Willis Hawley and Senator Reed Smoot. There is no appetite in today’s Republican Party-controlled House of Representatives or Senate to do anything remotely like that.

AREN‘T YOU WORRIED TRUMP WILL COME AFTER YOU ON TWITTER FOR SOME RATIONAL BUSINESS DECISION YOU MAKE – OR EVEN WORSE, CREATE A MAJOR DIPLOMATIC INCIDENT?

I recommend you stop following @realDonaldTrump immediately. We have instructed all our senior managers to do so. Our board is doing the same.

THE ONLY CABINET MEMBERS I‘VE EVER SEEN AT DAVOS ARE GARY COHN, WHO WAS A REGULAR AS PRESIDENT OF GOLDMAN SACHS, AND FORMER EXXON MOBIL BOSS REX TILLERSON. SHOULD THAT WORRY ME?

No. Trump has put lots of experienced people in charge, even if they aren’t veterans of Salesforce.com founder Marc Benioff’s famous Davos parties. Many of them, as you may have seen from recent testimonies to Congress, aren’t totally aligned with the president-elect’s more radical views. One thing for sure is that most of them hail from the business and financial communities, so won’t be bashing us as much as the last president’s people did.

WHAT ABOUT MERGERS AND ACQUISITIONS? IF YOU DO DEALS THAT CUT AMERICAN JOBS, WON‘T TRUMP PILLORY YOU?

He might, but think of it this way: it gives us CEOs a once-in-a-tenure excuse to do “transformative” deals that allow us to expand into other industries. For some of us, with businesses that look under threat from technological change, obsolescence or malaise by finicky millennial, this could be a life saver.

AREN‘T YOU WORRIED HE WILL GO TO WAR WITH CHINA?

Donald Trump builds hotels and golf courses. He’s the last guy in the world who will want to get into a fight over rocky outcroppings or artificial islands in the South China Sea incapable of supporting either.

WHAT ABOUT ALL THIS NOISE WITH RUSSIA?

What about it? Trump has a chance of improving relations with Vladimir Putin, maybe by giving the Russian president a big role in sorting out the Middle East, where the absence of American leadership has created a vacuum. At best, Putin sends around some compromising photos.

HOLD ON, HOW WOULD THAT BE GOOD?

Have you ever met the vice president?

THIS IS ALL FINE FOR YOU, BUT WHAT ABOUT THOSE OF US OUTSIDE THE UNITED STATES?

Hey, look over there: I think I see Gillian Anderson!

Breakingviews

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