2016 started in a tailspin with spiraling China meltdown fears. Those fears proved to be ill-timed, and against most prognostications, despite BREXIT, the start of Fed rate hikes, and the looniest election anyone can remember with a shocker outcome, the market went on to have a gangbuster 2016, producing a total return of 12%. The Trump rally surprised most, and despite highly unpredictable tweeting habits, and inflammatory comments, the markets took to the perception of the return of a business friendly administration. 2017 started with complacency, and the Trump driven market getting “the benefit of the doubt”. Interest rates are modestly higher, though this isn’t thought to be problematic because stimulus is proposed to support US GDP growth. Jobs are being talked/threatened back into the US. The financials exploded on higher rates, the prospects of the end of financial repression, and the potential for a more favorable regulatory environment. Industrials, infrastructure, construction, and housing sectors are all very strong on Trump. The VIX hit multi-decade lows with a 10 handle. Lower corporate taxes (proposed by Trump) will support earnings, particularly for small caps (Russell) which tend to be domestically oriented companies. Even multinationals which are somewhat out of favor, will […]
2016 started in a tailspin with spiraling China meltdown fears. Those fears proved to be ill-timed, and against most prognostications, despite BREXIT, the start of Fed rate hikes, and the looniest election anyone can remember with a shocker outcome, the market went on to have a gangbuster 2016, producing a total return of 12%. The Trump rally surprised most, and despite highly unpredictable tweeting habits, and inflammatory comments, the markets took to the perception of the return of a business friendly administration. 2017 started with complacency, and the Trump driven market getting “the benefit of the doubt”. Interest rates are modestly higher, though this isn’t thought to be problematic because stimulus is proposed to support US GDP growth. Jobs are being talked/threatened back into the US. The financials exploded on higher rates, the prospects of the end of financial repression, and the potential for a more favorable regulatory environment. Industrials, infrastructure, construction, and housing sectors are all very strong on Trump. The VIX hit multi-decade lows with a 10 handle. Lower corporate taxes (proposed by Trump) will support earnings, particularly for small caps (Russell) which tend to be domestically oriented companies. Even multinationals which are somewhat out of favor, will […]