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By Gabriel Shpitalnik

November 10, 2016

Did your neighbor claim she will relocate to Canada and sell all her investments if Trump wins the elections?  Although there are plenty of radicals around, many investors hedged their odds for after-election volatility by timing the market using highly speculative instruments across many sensitive industries. With Obamacare on the verge of being written off as an 'extraordinary expense' the very first ones to react to Trump push for new type of market economy were the biotech stocks. Given that Democrats are more hostile to drug companies then Republicans, the biotech positions have posted substantial gains this week. 

Some Americans are Trumped Between Mexican Wall and Canadian Wall Street

What does it have to do with Canada? The answer is -- nothing other than the fact that the entire health care system in US is the exact opposite of what it is in Canada. By default it is assumed that republican lawmakers will be good to drug companies and the current bullish sentiment to go long with biotech will continue for some time and is totally justified by the market. However, this is rather a dangerous outlook. 

While Canadian health care system is mostly financed by Canadian federal government, many health care providers in the country do not work for the government. Instead, doctors are typically reimbursed by the government at negotiated rates. We do not know if Trump will adapt some of these principles to replace Obamacare. Possibly but unlikely given the average physician in Canada earns about $130k while doctors in the United States make about $186k on average – a very substantial difference.

Another angle, in his speech after the election on Tuesday night, Trump made a public commitment to increases spending on infrastructure including roads, bridges, schools and hospitals. And who will benefit from this infusion of government funds into the economy? I dare to say we’ll all benefit. Trump also promises to tax U.S. companies that ship factories to Mexico and this along can be bigger than the wall itself. These companies that have enjoyed so called ‘freedom to employ’ will now lose their free passes and will end up paying more in tariffs and taxes than ever before. So from Canadian health care wall to Mexican tax wall, where can your poor American neighbor go?

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