STRATEGY + TACTICS
With GDP, inflation, and interest ratesforecasttoriseunder Donald Trump’s presidency, many have
considered the Republican alignment of the
House, Senate and White House administration a green light for making policies conducive for reductions in regulations, tax cuts for
businesses, and changes in fiscal spending at
the federal level. By early January, concerns
surfaced as to whether the President’s promises of prompt repeals would be delayed. With
skepticism and uncertainty crawling into
the marketplace, some investors began questioning their post-election asset allocations.
Although the markets were pricing for
a quick and seamless route focused on tax
reform and cuts right after the election, things
might be changing with the administration’s
initial focus on protectionism through its
stance on trade, immigration and vocal
comments about various countries, such as
Mexico, says Larry Hatheway, chief economist and head of GAM investment solutions
“There were a few moments of doubt that
crept in in early January,” Hatheway says.
“With the swearing in and [Trump’s] presi-
dency, questions began to arise about whether
that agenda would be the top priority for the
administration and to some extent, the lead-
ership up on the hill.”
Those questions have become more
pronounced with the initial emphasis of the
Trump administration. “Which has arguably
been mostly about protectionism in one form
or another, in trade, Mexico or areas around
immigration,” Hatheway says.
That’s transferred over to expectations of
what will happen to the marketplace, with the
Dow Jones industrial average posting its worst
daily loss since mid-October in the wake of
the immigration ban, dropping below 20,000.
“I think there is some doubt if not
outright disappointment that is beginning
to enter investors’ minds about whether this
is actually going to be what they believed
it was going to be when they were making
their asset allocations in November and
December,” Hatheway says.
Although many aren’t necessarily ready
to relinquish the view that this still is a
pro-growth administration, Hatheway says
many investors are concerned the adminis-
tration and leadership on the hill are now
distracted by other things, which will push
the Republican agenda later than expected
at the potential risk of losing political capital
being spent on other priorities.
“I think those doubts are beginning to
creep into the marketplace,” Hatheway says.
Still, Hatheway is quick to point out
that the US and world economies have
fundamentally been more resilient than
many think, even in the long term.
For Long-term implications
Timothy Ng, CIO and head of the Clear-
brook Investment Committee at Clearbrook
Global Advisors, says every CIO needs to ask
“Based on what we know today, what is the
probability it is going to occur in the overall
Regardless of if you are managing a