Between the presidential election in November 2016 and the end of April 2017, American equities as measured by the S&P, have vaulted an eye-popping 11.6%. In additional, volatility in the first quarter has been its lowest since 1965, and the tech-heavy Nasdaq broke records recently, crossing the 6000 mark. That performance has been attributed to the “Trump trade,” aka the reflation trade, which essentially represents ambitious pro-growth policies reflecting tax cuts, infrastructure spending and deregulation. Meanwhile, global growth and higher crude oil prices also helped. In March, however, markets pulled back when Trump’s Republican party was unable to muster sufficient votes to repeal healthcare legislation, despite their control of both houses of Congress. That stumble made investors question whether the administration would be able to follow through on other proposals, especially a new tax plan. Which sectors and companies would gain most from implementing Trump’s policies? Those with the highest tax rates stand to gain most, along with financial firms (deregulation) and infrastructure (spending proposals). In recent weeks, a short squeeze has revived some sectors, like biotech, technology and basic materials. Will political infighting subvert the optimism of the Trump trade? So far, markets seem to be powering ahead. Requirements: Looking in particular for asset managers an pension fund managers
Is “Trump Trade” still intact for US Equities?