• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Industrials

Is the 'Trump Trade' Alive and Well?

Irish building-materials giant CRH's $3.5 billion deal for Kansas cement maker shows you might want to buy U.S. infrastructure and industrial plays after all.
By MARTIN BACCARDAX
Sep 21, 2017 | 12:30 PM EDT
Stocks quotes in this article: CRH, ASHG

A below-the-radar deal that expands a European construction company's U.S. footprint could signal a return to Wall Street's hottest bet: the so-called "Trump Trade."

CRH plc (CRH) , a London-listed group based in Ireland, was one of the U.K. stock market's top-performing names Thursday after it agreed to shell out $3.5 billion for Overland Park, Kansas-based Ash Grove Cement Inc. (ASHG) . CRH, North America's largest building-materials company and the second largest worldwide, earned about half of its profits from the U.S. market last year.

The merger could suggest that investors and company bosses are positioning themselves for a return of the Trump Trade, which investors use a shorthand description for a sharp rise in "old-economy" stocks focused on government infrastructure spending and broader commercial construction. The Trump Trade is also associated with small-cap U.S. stocks that many see as best-placed to take advantage of major changes to America's corporate tax code. In fact, the Russell 2000 -- the benchmark of small-cap U.S. stocks -- has risen nearly 7% over that past month, or nearly double the gains that the broader S&P 500 and Dow Jones Industrial Average saw over the same period.

That's a big change from the summer, when research from Bespoke Investment Group issued research critical of the Trump Trade. Bespoke found that large-cap financials and industrials gained the most between Trump's November 2016 election and January 2017 inauguration, but got dumped the fastest as the president lurched from one self-made crisis to another during his first few months.

So what's brought this seemingly dormant trade back to life? Answer: Trump's recent overtures to Democratic leaders on issues such as the Deferred Action for Childhood Arrivals program (DACA) and a suspension of the federal debt ceiling. Those moves have many wondering if the president is laying the groundwork for bipartisan cooperation on some form of the "phenomenal" tax plan that Trump touted earlier this year.

In fact, a cynic would argue that Trump's recent, vocal support for the Graham-Cassidy healthcare-reform bill -- which is certain to be rejected by Senate Democrats if it ever comes to a floor vote -- is merely a Machiavellian move. Critics say it will allow him to approach Democratic Senate minority leader Charles Schumer (D.-N.Y) and House minority leader Nancy Pelosi (D-Calif.) later this year and say: "OK, you win on healthcare. Now give us something on tax that will be good for everyone heading into the midterm elections."

China has a business tax rate of 15%. We should do everything possible to match them in order to win with our economy. Jobs and wages!

-- Donald J. Trump (@realDonaldTrump) September 14, 2017

The president's newfound allies across the aisle might also help with another electoral ambition: a $1 trillion spending bill that would reshape the country's creaking infrastructure and create hundreds of thousands of new jobs.

The devastation wrought by Hurricanes Harvey and Irma, which by some estimates will cost around $500 billion to repair, offer both the president and the country's most-senior lawmakers a chance to appease two critical electoral states -- Texas and Florida -- while simultaneously kick-starting a post-storm rebuilding process that will need federal money regardless of who takes the credit for spending it. Furthermore, with the Federal Reserve poised to raise interest rates later this year -- and three times in 2018 -- the president can plausibly argue that the "cheap money" window is closing fast.

I wrote last month that Trump's sure-footed response to Harvey, his measured reaction to North Korea's missile testing and stronger-than-expected U.S. economic growth might have saved his fledgling presidency. If that turns out to be true, it might have revived the Trump Trade, as well.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Investing | U.S. Equity | Transportation | Industrials | Basic Materials | Markets | Economy | Politics | Stocks

More from Industrials

Bearish Bets: 3 Sluggish Stocks You Should Consider Shorting This Week

Bob Lang
May 15, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Bearish Bets: 3 Slumping Stocks You Should Consider Shorting This Week

Bob Lang
May 8, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Bears Remain in Control of Rockwell Automation

Bruce Kamich
May 4, 2022 9:12 AM EDT

ROK continued to weaken Tuesday. Here's our latest outlook.

Plug Power Is a Strictly Speculative Name: Here's My Trade Idea

Stephen Guilfoyle
Apr 19, 2022 10:35 AM EDT

PLUG has a number of high volume clients and that could be huge going forward.

Are Linde's Charts Foreshadowing Economic Weakness?

Bruce Kamich
Apr 18, 2022 2:58 PM EDT

Here's what to avoid with LIN.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • 03:07 PM EDT PAUL PRICE

    Why Is Walmart Down Big Today?

    Besides its poor earnings report Walmart was way...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login