BUY SIGNAL

The CEO of the world’s biggest ad agency says “the markets are right” to rally on Trump

Obsession
2016
Obsession
2016

It’s always a bit dangerous to make quick judgments about events outside your own country. That didn’t stop Martin Sorrell, CEO of the world’s biggest ad agency, from making an early assessment of US president-elect Donald Trump’s prospects.

Speaking to an audience of British industry leaders in London on Monday (Nov. 21), Sorrell, who created WPP in the UK more than 30 years ago, said Trump may turn out to be a better president than the mourning among Democrats suggests. “I know Ivanka,” Trump’s eldest daughter and informal adviser, Sorrell said, and “anyone who produces a daughter like Ivanka can’t be all bad.” Trump’s presumed economic agenda, which has helped to push major stock indexes to record highs, “is good for business in the short and medium term,” Sorrell said. “The markets are right.”

Businesses can look forward to higher interest rates as well as inflation, which should bode well for investors in stocks. “My worry is with heavy deficit spending, that at some point in time we get into a boom and bust cycle,” Sorrell said, referring to Trump’s proposal to invest large amounts in new infrastructure projects. Ironically, Trump’s is exactly the sort of Keynesian policy that economists such as Larry Summers, the former US treasury secretary under president Bill Clinton, have been advocating. “I think Trump will get it through Congress,” Sorrell said.

The real issue for businesses outside the US is trade. Trump ran on an agenda that included scrapping a number of trade agreements, including NAFTA and the proposed Trans-Pacific Partnership—although polls suggest that his supporters don’t expect him to honor all of his promises.

WPP, with some $19 billion in annual revenue and clients everywhere from Brazil to China, has a particular interest in the topic of trade. “We don’t know what is going to happen internationally,” Sorrell said. “Trump likes to confound the cynics. He may turn out to be the greatest thing since sliced bread; we don’t know.”

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