Stocks are down small today, for the first day in the past six days. Yields are lower following two days of Janet Yellen on Capitol Hill — though the interpretation of her remarks were said, in the news, to be hawkish. Gold is higher on the day. And the dollar is lower.
Of the market action of the day, the dollar and yields are the most interesting. The freshly confirmed Treasury Secretary, Steven Mnuchin, held a call with Japan’s Finance Minister last night, early morning Japan time.
What did USD/JPY do? It went down. Just as it did the week leading up to the visit between President Trump and Japan’s Prime Minister Abe.
Remember, the yen has been pulled into the fray on trade fairness and currency manipulation. The subject has cooled a bit, but with the new Treasury Secretary now on his post, the world will be looking for the official view on the dollar.
As I said before, I think the remarks about currency manipulation are (or should be) squarely directed toward China. And I suspect Abe may have conveyed to the President, in their round of golf, that Japan’s QE is quite helpful to the U.S. economy and policy efforts, even if it comes with a weaker yen (stronger dollar). Among many things, Japan’s policy on keeping its 10 year yield pegged at zero (which is stealth unlimited QE) helps put a lid on U.S. market interest rates. And that keeps the U.S. housing market recovery going, consumer credit going, U.S. stocks climbing, and that all fuels consumer confidence.
Yesterday we talked about the Q4 portfolio disclosures from the world’s biggest investors. With that in mind, let’s talk about the porfolio of the man that’s best position to benefit from the Trump administration: the legendary billionaire investor, Carl Icahn.
Icahn was an early supporter for Trump. He was an advisor throughout the campaign, and helped shape policy plans for the President.
What has been the sore spot for Icahn’s underperforming portfolio in recent years? Energy. It has been heavily weighted in his portfolio the past two years. And no surprise, it’s contributed to steep declines in the value of his portfolio over the past three years. Icahn’s portfolio is volatile, but over time it has produced the best long run return of anyone alive, including Buffett (spanning five decades). And he’s worth $22 billion as a result.
Here’s a look at what I mean: In 2009 he returned 33%, 15% in 2010, 35% in 2011, 20% in 2012 and 31% in 2013. But he’s given a lot back — down 7% in 2014, down 20% in 2015 and down 20% last year.
Even with this drawdown, Icahn doesn’t see his energy stakes as bad investments. Rather, he thinks his stocks have been unfairly harmed by reckless regulation. And he’s been fighting it.
He penned a letter to the EPA last year saying its policies on renewable energy credits are bankrupting the oil refinery business and destroying small and midsized oil refiners.
And now that activism is positioned to pay off handsomely.
The new Trump appointee to run the EPA was first vetted by Icahn – it’s an incoming EPA chief that was suing the EPA in his role as Oklahoma attorney general. Safe to assume he’ll be friendly to energy, which will be friendly to Icahn’s portfolio.
And as we know, Icahn has since been appointed as an advisor to the President on regulation!
To peek inside the portfolio of Trump’s key advisor, join me in our Forbes Billionaire’s Portfolio. When you do, we’ll send you my special report with all of the details on Icahn, and where he’s investing his multi-billion dollar fortune to take advantage of Trump policies. Click here to join now.