Sure, tariff talk is stealing the spotlight as Donald Trump takes office, but let’s not overlook the Department of Government Efficiency.
At the helm is Elon Musk — a man who thrives on controversy and chaos. With his off-the-wall takes and unpredictable moves, Musk’s already strutting into DOGE with his signature do-it-my-way style.
It’s already started with Trump’s decision, on Day 1, to reverse Joe Biden’s executive orders on affordable healthcare meant to get more Americans insured and expand access to medicines. He’s also repealed some Covid-19 related measures passed during the pandemic, along with a bunch of other stuff.
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On an annual basis, repealing all the Biden orders would save about $100 billion a year, according to JPMorgan Wealth.
Healthcare
Since we’re on the subject of health… remember all the government cash pumped into the healthcare system during Covid? Well, it’s still flowing, and the industry might be in Musk’s crosshairs as he embarks on his deficit-cutting crusade.
As the third-largest spending category, healthcare is already feeling the heat. Stocks in the sector have been struggling, with investors bracing for Trump 2.0’s cost-cutting agenda.
Think drug price controls and tighter scrutiny on health insurers, as well as pharmacy benefit managers hired by insurance companies to manage drug costs and to get rebates from manufacturers.
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Trump last month called the latter “the horrible middleman” and said he wants to knock them out.
Cigna’s Express Scripts, CVS Health’s Caremark and UnitedHealth Group’s Optum dominate the US pharmacy benefit market, and their parent companies run health insurance and pharmacy operations.
Maybe now’s not a good time to pour your money into this sector.
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Defense
Another obvious target for Musk could be defense, which accounts for the second-largest slice of government spending.
Goldman Sachs says it’s going to be difficult to ignore this corner if DOGE wants to substantially reduce total spending. Bottom line: there’ll be some uncertainty hanging over defense stocks such as Howmet Aerospace, Northrop Grumman, GE Aerospace and RTX.
Goldman’s also cautious on Lockheed Martin, with its valuation already looking stretched even at current spending levels.
Still, the direction DOGE will take remains a mystery. Musk will run it solo after reports that Trump’s other pick for DOGE, Vivek Ramaswamy, won’t be serving on this commission.
The process for implementing DOGE decisions, including what requires congressional approval and what doesn’t, is just as unclear.
The next few days and weeks could reveal more on what Trump 2.0 will mean for these stocks.
Wondering where to invest if you want to insulate your pile from Trump-related drama? Don’t worry, we got you. Read our piece on building a Trump-proof portfolio to get you through the next few months.
Edited by Lin Noueihed. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
