Staying on Course in a Changing World




As wealth managers, we are focused on meeting each client’s goals, plain and simple.

Right now, that means distinguishing between the probable and the possible consequences of the Trump Administration, and planning and investing accordingly.
The markets have so far taken the election upset in stride, following a speech from Donald Trump that was more gracious and inclusive than many observers had feared. U.S. stocks rose today and the U.S. dollar is holding steady against other major currencies as markets around the world digested the second major populist revolt in six months.
Long-term interest rates are rising, with 10-year Treasury yields above 2% since the election results came in. Ironically, Mr. Trump, with his promises of high infrastructure and defense spending, has already achieved the Federal Reserve’s hitherto unmet goal of increasing inflation expectations. Prospects have brightened for defense contractors, engineering firms and energy companies, while those for companies dependent on international trade have dimmed.
Personal and corporate tax cuts are also in the cards, albeit probably not to the extent anticipated by either Mr. Trump or the more traditional Republicans in the House. Both Mr. Trump and the House GOP have proposed lowering income tax rates across the board, with a top marginal tax rate of 33%, down from 39.6% at present. Both plans also repeal the estate tax, gift tax and generation-skipping transfer tax, although the proposed plans eliminate the “step-up” in basis of appreciated assets at death, which could result in income taxes due on the gains either at death or when those assets are sold by non-charitable beneficiaries. (Trump’s plan offers an exemption of $5 million for single filers and $10 million for couples, while the House GOP plan does not.)
We are now advising clients to consider deferring income and capital gains for the remainder of this year, if possible, and to avoid making taxable gifts.
The repeal of the Affordable Care Act and the associated 3.8% Medicare surtax on investment income seems to us another probability, although there is no clear alternative at present. Healthcare stocks are already reacting, with pharmaceutical stocks up today and hospital stocks down.
Other proposed tax reforms are possible and need to be evaluated carefully, in the context of individual portfolios and charitable goals. These include a repeal of the Alternative Minimum Tax, and either Mr. Trump’s planned cap on itemized deductions ($100,000 for single filers, $200,000 for married joint filers) or the House GOP’s plan to eliminate all itemized deductions except for mortgage interest and charitable contributions.
We have entered unchartered waters, with a President-elect who has not previously held office. This is only the first day of the many to come before his plans become clear – and no one knows what will happen next – but the initial market reaction is better than many investors had feared. We will continue to monitor events very closely as we manage portfolio risk and invest across our full range of diversified asset classes to meet each client’s long-term goals.
John Apruzzese is the Chief Investment Officer at Evercore Wealth Management. He can be contacted at
Chris Zander is the Chief Wealth & Fiduciary Advisor at Evercore Wealth Management and the President of the Evercore Trust Company of Delaware. He can be reached at