Donald Trump’s 1989 Interest Income Raises Eyebrows
Author: Greg Valliere
May 9, 2019
LOST AMID THE BOMBSHELLS YESTERDAY — the contempt citation against William Barr, the subpoena of Donald Trump, Jr., and the prospect of a trade war by tomorrow morning — is perhaps the most explosive development of all: reports that President Trump had $52.9 million in interest income in 1989. To say this has raised eyebrows is an understatement.
TRUMP WAS FAMOUSLY ILLIQUID, always short of cash and similar assets, and usually reported very small amounts of interest income — except in 1989. This has prompted a frenzy of digging by reporters amid speculation in Washington about what kind of asset (and from whom) could have generated interest income of $52.9 million. Trump has been heavily dependent on Deutsche Bank loans; the German bank has been repeatedly implicated in money laundering schemes.
AT THE VERY LEAST, THE NEW YORK TIMES BOMBSHELL explodes the myth of Trump as a master businessman; virtually all of his ventures lost him — and his backers — enormous amounts of money. Whether this will hurt him politically is unclear; maybe it won’t — hosts on Fox and Friends congratulated him yesterday for his acumen, using tax laws cleverly.
TRUMP ASSERTED that New York real estate developers sought tax write offs “for sport,” but this could annoy his blue collar supporters who also hate taxes but actually have to pay them. As for the other developments yesterday, Donald Trump, Jr. won’t testify — it’s a perjury trap and he knows it. And a motion to censure William Barr would never pass in the Senate.
BOTTOM LINE: There’s only a faint chance that Trump (or Barr) will be impeached; even if they are, the Senate would never convict. But we think the $52.9 million in 1989 interest income raises some serious issues, giving the House a more credible argument that Trump’s taxes should be released. There’s a very good reason why Trump so adamantly refuses to release his taxes — they’re the smoking gun.
THE BIGGER STORY TODAY FOR THE MARKETS OBVIOUSLY is the threat that steep new tariffs will be imposed on China at midnight tonight. We still think there will be a deal — eventually — but Trump’s comments last night at Florida campaign rally were not encouraging. China “will be paying,” he said, for reneging on provisions that had already been agreed upon.
WE’RE AT THE STAGE where personal diplomacy will have to play a role, as Trump meets this weekend with Vice Premier Liu He. The spin after the meeting will be that a deal is close, but we’ve heard that before. Both sides are far apart on a handful of issues, and there are hard-liners in both countries who are unwilling to budge. A final deal, with all details resolved, probably won’t come until June — at the earliest.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Asset Management (Asia) Limited (AGF AM Asia) and AGF International Advisors Company Limited (AGFIA). AGFA is a registered advisor in the U.S. AGFI is registered as a portfolio managers across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
© 2020 AGF Management Limited. All rights reserved.