Have investors become too optimistic about the impact of a Trump presidency?


  • Date: 17/01/2017

Have investors become too optimistic about the impact of a Trump presidency?

Investors’ optimism appears to be predicated on the hope that while the new administration will follow through on the proposed pro-business policies, its latitude to execute the less desirable policy proposals will be constrained by a combination of political realities and the vaunted US constitutional checks and balances. This could turn out to be wishful thinking.

Trump takes the helm at a time when US growth momentum is accelerating, labour market has tightened, inflationary pressures are building and valuations across key asset classes are stretched. To be clear, there is scope for further upside. Carefully designed fiscal stimulus and tax reform will boost nominal growth. However, a lurch towards protectionism will weaken global trade, hinder global economic growth and curtail corporate earnings. Likewise, any attempt to undermine the independence of the Federal Reserve will shake investor confidence.

Despite the euphoria (particularly among equity investors), at this point, the Trump effect has merely amplified the range of possible outcomes for global economic growth and financial market performance. The lasting market implications will depend on which policies are implemented. Fasten your seatbelts!


Abi Oladimeji
Chief Investment Officer

Article first appeared in:

Investment Week (19th January 2017) Have investors become too optimistic about the impact of a Trump presidency?

Opinions, interpretations and conclusions expressed in this document represent our judgement as of this date and are subject to change. Furthermore, the content is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or a solicitation to buy or sell any securities or to adopt any investment strategy.