Market Week in Review

Trump’s first 100 days, Europe’s economic performance

In this week’s video update:

  • Looking beyond the first 100 days, what does the Trump administration’s agenda mean for U.S. markets and the economy going forward?
  • Impact of the French presidential election and European Central Bank (ECB) policy meeting on European markets
  • What does the weak Q1 U.S. GDP figure indicate about the U.S. economy and U.S. equities in 2017?

On this week’s Market Week in Review, Senior Investment Strategist Erik Ristuben was joined by Program Director, Advisor Insights, Todd LaFountaine, to cover what the first 100 days in office for U.S. President Trump may mean for U.S. markets; European political and economic events; and what the new Q1 U.S. GDP figure may mean for U.S. equities this year.

100 Days

Ristuben first assesses the first 100 days of U.S. President Trump in office from a policy and market perspective, then he covers the president’s four big policy efforts that appear to matter most to the markets.

  • Trade policy: While somewhat moderated from his highly protectionist stance, how Trump’s administration manages current and upcoming international trade agreements may play a role in U.S. equities performance this year.
  • Infrastructure spending is still on the administration’s agenda, but near-term budgetary hurdles may delay some market watchers’ expectations of big spending.
  • Deregulation of U.S. corporations: Many market watchers continue to anticipate a positive impact to U.S. corporate earnings if the president is able to effectively fulfill this campaign item.
  • Tax reform is a hot topic for U.S. markets and President Trump released his vision for a reform package this week. However, as Ristuben pointed out in a September article, the American government is designed to not make change speedy or easy. He thinks that although tax reform is likely to have a modest impact in the long term, real impact in 2017 is unlikely.

Busy days in Europe: French politics and ECB policy meeting

Ristuben next discusses how European markets have reacted to the first round of French presidential elections and the ECB’s dovish policy statements this week, citing the approximate 2.5% increase on the week for the STOXX® 600. France’s presidential election results on Sunday appear to have eased market concerns about a potential exit of France from the EU, a “Frexit”. Additionally, Ristuben notes that the ECB’s latest policy statements, along with the lack of any hawkish moves, reflect a subtly improved confidence in the European economy.

U.S. economic data and growth expectations

Lastly, while noting that Q1 GDP figures appear weak in general, Ristuben points out that the real concern about this week’s U.S. GDP figure is something that he and his team have been talking about for weeks: the disconnect between survey data and hard economic numbers.

Despite recent consumer and CEO confidence survey data being high, he notes the most recent evidence points toward much lower than anticipated consumer spending and corporate capital investment, and he continues to be underweight in U.S. equities.

As Ristuben points out, although many market watchers expect the S&P® 500 to see upwards of 10% growth for 2017, due to this disconnect between sentiment and data, he thinks the S&P 500 will be hard pressed to finish 2017 up even 6% for the year.

For more on our investment strategists’ views on the markets and economies of Europe, the U.S. and other regions, see our latest Global Market Outlook Q2 Update report.

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