Well we made it through Trump’s first full week as President.
Actually I guess we haven’t made it yet. Let me rephrase. We made it through Trump’s first full business week as President.
Yes, the new commander-in-chief moved forward with plans to wall us all in. Yes, he did further alienate Mexico and its President. Yes, he did take the patently absurd step of essentially declaring his own inauguration day a holiday. Yes, he did put a gag order on government agencies. Yes, he did begin the process of dismantling the healthcare system. Yes, we were forced to come to terms with a concept called “alternative facts”, which I imagine we’ll be getting quite a lot of going forward. And yes, he did institute a Muslim ban. Oh wait, it’s not a “Muslim ban,” it’s just a ban on people from countries where everyone is Muslim.
But all that aside, there was no nuclear holocaust and no zombie apocalypse, so sh*t, I guess we made out ok. Hell the Dow even hit 20,000.
Of course the problem is that dodging catastrophe for a week is one thing while dodging catastrophe for four straight years is entirely another, especially when the rising tide of populism in Europe threatens to further undermine the very foundation of Western democracy. This push will now be underwritten by the President of the United States.
Given that, and given the distinct possibility that global trade and commerce is about to be completely upended by an unhinged real estate developer with delusions of grandeur and his cabinet of billionaires, it isn’t any wonder that when Goldman asked fund managers what they were concerned about, geopolitics and global trade topped the list.
Below, find excerpts from Goldman’s latest.
Via Goldman
Investor optimism drove the US equity market to new record highs during the first full week of the Trump Presidency. The S&P 500 crossed 2300 and news anchors heralded “Dow 20K” as markets embraced hope for better growth driven by regulatory reform and fiscal expansion.
The equity market surge supported the results of a survey we posed to nearly 2,000 clients attending the Goldman Sachs Global Macro Conference in Hong Kong this week. Investors believing in accelerating global growth and reflation chose equities (45% of respondents) as the asset class poised to post the strongest returns in 2017, followed by commodities (34%). The US was viewed as the best region (33%), and 70% of investors expected global equity markets to return between 0% and 10% this year. When asked about the biggest risks, 61% of investors pointed to geopolitics and elections while 21% cited rising interest rates.
Our meetings with clients across Europe and Asia this month revealed a focus on the growth risk from geopolitics on global trade. Compared with a generally hopeful sentiment among US-based investors, global fund managers emphasized protectionism and trade wars as key concerns. President Trump’s election campaign prioritized domestic employment and manufacturing at the expense of foreign trade. In addition to withdrawal from the Trans-Pacific Partnership, which President Trump made official earlier this week, his other proposals included renegotiating NAFTA and labeling China a currency manipulator. On Thursday the possibility of 20% import tariffs was raised in context of funding a border wall with Mexico. Despite President Trump’s anti-globalization stance, share price performance suggests that US and global equity investors assign low risk to trade conflict.
The great Orange julius and his presidential decree pen may have much more to say about this matter. Equity managers better have more than just a “low risk assessment” of this possibility. Could this fool blow-up “mucho” trade for awhile before the Republicans get the “strait jacket” on him. U BET….